Sales lose Lions’ roar in patchy winter trade
Tourist spending has dropped off but Kiwis are continuing to spend up large in hardware and electronics stores, the latest retail sales figures suggest.
The number of retail sales in the June quarter rose 4.5 per cent on a year earlier. Although seemingly healthy, this was the weakest growth rate in four years.
The main drag, according to Infometrics economist Mieke Welvaert, was accommodation, which dropped 1.4 per cent compared with last year, when the British and Irish Lions rugby team visited New Zealand, bringing thousands of supporters.
The tourist dip appeared to also flow through to food and beverage spending, which increased 1.7 per cent in June but was at its slowest pace in 5.5 years.
Some of that easing was not just due to tourists, said Retail NZ’S Greg Harford.
The grocery sector was still significant, ‘‘but we’re seeing internationally that people are spending more in hospitality . . . We’re spending a lot more food outside the home.’’
ASB said June’s retail figures showed the sector was actually quite resilient, despite weakening consumer sentiment and soft electronic-card spending data.
Core retail sales, which exclude car-related sales, showed ‘‘considerable vigour’’, up 1.4 per cent on March, confirming that inflation was still low.
But with overall retail sales coming off an annual growth rate of more than 6 per cent at the start of last year, ‘‘Some of the heat looks to have gone out of the retail sector,’’ ASB economist Mark Smith said.
And even if the Lions’ effect was taken out, July’s visitor numbers were struggling to grow, ‘‘indicating downside risks to further growth in tourism-related retail sales’’, Infometrics said.
Nevertheless, while the winter tourist trade was patchy, Kiwis continued to spend up in certain areas, particularly electrical and electronic goods, where sales are up a whopping 15 per cent in the past year.
Non-store and commissionbased retail (such as e-commerce traders) and liquor sales went up 11 per cent a year and 9.3 per cent a year respectively in the period.
Kiwis were also spending up large on hardware, building and garden supplies. Sales shot up 4.7 per cent over the June quarter, the biggest lift for any quarter since September 2009.
Harford said there was still a lot of construction going on and people were still keen to do alterations.
The sales figures defied sentiment surveys and electronic-card spending figures, which fell 0.2 per cent in the June quarter compared with March.
‘‘It highlights the difficulties in relying on sentiment-based measures to provide an accurate steer of the state of the economy,’’ Smith said.
Although the Reserve Bank expected that a weaker housing market would dampen household spending, ASB remained ‘‘constructive’’ about future household spending.
‘‘Household spending growth has undoubtedly slowed. However, the prospect of increased government support, increasing wages and higher producer incomes are expected to translate into still-reasonable rates of household income growth and consumer spending.’’
Harford said a bit of winter gloom was normal.
‘‘But there is a sort of underlying malaise in the retail sector where customers are under a lot of pressure in terms of household budgets,’’ he said.
‘‘The economy is still ticking over reasonably well but there’s a lot of pressure on household budgets that are not reflected in the sales spending,’’ including the cost of insurance, council rates and petrol, he said.