Retail sales feel winter’s chill
Retail sales have declined for the second quarter in a row, according to new data from Stats NZ. The much weaker than expected retail volumes raised the risk that New Zealand was in a technical recession in the first half of 2022, ASB senior economist Mark Smith said, although he noted this was still not ASB’s core view.
The volume of total retail sales fell 2.3 per cent in the June 2022 quarter, after a 0.9 per cent decrease in the March 2022 quarter when adjusted for price and seasonal effects, Stats NZ said yesterday.
This is the second time retail sales volumes have fallen over two consecutive quarters since the Covid-19 outbreak. The first was in the March and June 2020 quarters.
Without accounting for price effects and seasonal patterns, in actual terms the value of total retail sales was $28.5 billion in the June 2022 quarter, up 3.8 per cent ($1b) compared with the June 2021 quarter.
However, that rise reflects a period of high inflation, with annual consumer price index inflation at 7.3 per cent in the quarter.
“The trifecta of soaring living costs, weaker household balance sheets and sluggish population growth are expected to weigh on household spending activity over the remainder of 2022, said ASB’s Smith.
“The RBNZ will continue to hike nonetheless and, while a 4 per cent OCR is unlikely to sink the household sector, it will eventually pave the way for OCR cuts.”
Ten of the 15 industries had lower sales volumes in the June 2022 quarter compared with the prior quarter.
Motor vehicle and parts retailing had the largest fall, down 5.8 per cent seasonally adjusted, after a 5.3 per cent fall in the March 2022 quarter.
Electrical and electronic goods retailing had the second-largest decrease in the volume of sales, down 6.1 per cent; followed by supermarket and grocery stores, down 2.9 per cent. The largest rises were in food and beverage services, up 3.3 per cent, and accommodation, 11 per cent.