Retail sales growth tapers off
RETAIL sales volumes and values were nearly flat in the June quarter, up just 0.1 per cent, after strong gains in the previous two quarters, but more people are turning to the internet to buy goods, latest figures show.
Shop sales appear to have peaked, though New Zealandbased online-only sales jumped about 8 per cent in the June quarter, to be up more than a third in just a year.
Retailers said sales had been hit by recent bad weather, growing economic uncertainty and more people buying goods on global websites.
The softer pace of shop spending growth was expected to continue, with some rural regions starting to feel the hit from plunging dairy farm payouts.
That would be partly offset by more recent falls in petrol prices, lower mortgage rates and cheaper car registration fees, ANZ Bank said.
Seasonally adjusted sales volumes and values rose just 0.1 per cent in the June quarter compared with March.
Volumes of sales were up 2.3 per cent in the March quarter, boosted by lower petrol prices earlier in the year. As petrol prices rose, shoppers reined in spending on other things in the June quarter.
Tourism also got a boost in the March quarter from the Cricket World Cup and warm weather helping hotels and the restaurant and bar trade.
So while the pace of growth has slowed to a near standstill, that has come off the strongest quarterly growth for almost a decade. And annual spending growth remained strong, with volumes up about 6 per cent in the June quarter, compared with a year ago.
But Westpac Bank said with consumer confidence down and a weaker job market, retail sales figures were likely to weaken in the coming year and the Reserve Bank would keep cutting interest rates.
Bank economists said the sales volumes were much weaker than expected with market expectations of 0.5 per cent growth in the quarter.
ASB economists said the sectors that gained a boost from the Cricket World Cup in the March quarter had slowed down in the June quarter, as expected. Spending was down on hotels and motels, and eating out after the Cricket World Cup boost.
Retail spending had peaked and was now levelling off, but at still high levels. The ASB said the figures reinforced expectations that the Reserve Bank would cut official interest rates twice more this year.
Retail NZ said the slower growth in the June quarter was disappointing, but not surprising.
Retailers reported that business was steady, but not stellar through to the end of June, Retail NZ chief executive Mark Johnston said.
There was no doubt sales growth slowed between April and June, after good gains in the previous two quarters. Sales were expected to remain steady in the coming quarter and jobs to remain stable, he said.
Retailers had mostly hit sales targets for the past quarter, but they had not seen the growth of earlier in the year. That reflected greater economic uncertainty and the particularly bad weather which hit sales up and down the country, Johnston said.
Shops were also competing with international online sales. New Zealand online stores saw sales up almost 8 per cent in the past quarter, compared with a general lift of 0.1 per cent.
‘‘New Zealanders are increasingly turning to the internet and mobile devices to complete their shopping,’’ Johnston said. And while there were no figures on spending by New Zealanders on foreign websites, it was thought to be rising fast.
Recent Bank of New Zealand estimates suggest total online retail spending in June was up 19 per cent compared with June 2014 levels, with double-digit annual growth in purchases at both local and international sites.
Spending at international sites boomed in June up 29 per cent on June last year.
However, the New Zealand dollar has slumped heavily from about US85c a year ago, to about US65c recently.