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Miles Workman, senior economist at ANZ, notes that New Zealand’s retail sales volumes rose 0.2% q/q in Q2 (sa), with annual growth slipping 0.4%pts from Q1 to 2.9%.

Key Quotes

“Core retail volumes, which exclude volatile components like petrol, were a touch stronger than the headline at 0.3% q/q (up 3.6% y/y vs 3.9% in Q1). All up, sales volumes are holding at a high level, but struggling to accelerate.”

“Sales values rose 0.7% q/q (sa), reflecting higher prices in the quarter, including for fuel where volumes fell 0.8% while values lifted 2.4%.”

“Today’s print was broadly as expected, so is not a game changer for our Q2 GDP pick of 0.4% q/q. Overall, consumer spending appears to be holding at a decent level, and some forward-looking indicators (such as the proportion of households who think now is a good time to buy a major household – a component of our consumer confidence survey) suggests this was the case heading into Q3. However, the employment components of business surveys have recently dipped which alongside high levels of household debt, slowing population growth, a softer housing market, and some concerning global growth signals suggest downside risks are heightened and upside is limited.”