Data Flash (New Zealand) NZ Retail Sales - October 2000
Key points Statistics New Zealand estimate that total nominal retail sales fell -0.1% mom in October - unchanged from
the provisional estimate - but were 5.7% higher than a year earlier.
We estimate that price increases can account for a little over 4 percentage points of the growth in nominal sales over
the past year.
Eight of the fifteen storetypes recorded increased sales. The largest increases were recorded in the cafe, restaurant
and takeaway storetype (+$6m, possibly due to school holidays) and hardware storetype (+$4m). The clothing and softgoods
storetype recorded the strongest fall in growth (-$10m), although this followed very strong growth in September.
Both the motor vehicle sales and services storetypes recorded a $3m increase in sales in October (the latter despite an
estimated 3.8% fall in average petrol prices during the month, again perhaps reflecting the timing of school holidays).
Excluding these storetypes, total sales would have declined by 0.3%mom.
Sales in the North and South Islands are estimated to have increased 0.4%mom and 0.3%mom respectively, thus indicating a
marginally stronger outcome than implied by the storetype analysis.
Direct seasonal adjustment of total retail sales - as opposed to aggregating data seasonally adjusted at the storetype
level - also yields marginally stronger growth of +0.3%mom.
The volume of retail sales in Q3 was revised down 0.1pps to 0.1% reflecting reclassification of some sales from retail
to the wholesale industry. This has no implications for our forecast of GDP growth during Q3 (currently a below market
+0.5% qoq).
Commentary
As noted when the provisional data was published, the October result is consistent with our forecast that consumption
demand will remain broadly flat in volume terms during Q4, with GDP growth of around 0.5% qoq driven by net exports.
Although there is mounting evidence of a turnaround in consumer sentiment, a variety of negative factors appear likely
to lead to a continuation of relatively subdued growth in retail volumes, in aggregate, over the foreseeable future.
These factors include a depressed housing market (leading to falling household net wealth, especially in real terms) and
rising consumer prices (so that real wage growth is, at present, flat at best).
Darren Gibbs, Senior Economist
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