Retail sales fall and tipped to stay down

WELLINGTON: Consumer spending fell through the floor as the economy went into lockdown and is expected to be subdued for the foreseeable future.

Retail sales volumes for the first quarter of the year had their largest fall in eight years, falling a seasonally adjusted 0.7%, excluding the effect of price moves. Sales had been flat in the previous quarter.

Stats NZ said the closing of borders to foreigners started the process, and the effects were exacerbated by the closing of all but essential businesses in the last week of March.

‘‘This hit car yards, takeaways, restaurants, hotels and motels hard, with sales dropping sharply,’’ Stats NZ retail manager Karen Hicks said.

Vehicle sales were hit the hardest, falling 7.5%, followed by hospitality and accommodation, but supermarket and liquor sales surged as consumers bought up large before the lockdown.

Core retail spending, which excluded vehiclerelated sectors, rose 0.6%.

The spending slump was the biggest quarterly drop since 2012, and partial sales figures for April show spending to be half that of March.

‘‘These falls may continue into the June 2020 quarter, with a record fall in monthly electronic card sales already reported for April, as many businesses went into hibernation because of the Covid19 lockdown,’’ Ms Hicks said.

An economist said the drop was not as bad as had been expected, but consumer spending would be subdued for some time as financially hardpressed households preserved their money.

‘‘New Zealanders are going to be reluctant to get out and spend for some time yet, especially with a lot of households facing job losses,’’ Westpac senior economist Satish Ranchhold said.

‘‘There’s also a lot of nervousness about the economic climate, and that’s going to be a drag on spending levels for some time yet.’’