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Miles Workman, senior economist at ANZ, notes that New Zealand’s retail sales volumes rose 0.7% q/q in Q1 (sa) following Q4’s solid 1.7% q/q rise.

Key Quotes

“A slightly softer print in Q1 was due, and we had pencilled in a 0.6% rise. Annual growth slowed 0.2%pts from Q4 to 3.3%, but remains above the run rate of the previous three quarters.”

“Core retail volumes, which exclude volatile components like petrol, were also up 0.7% q/q – to be up 3.9% over the past year. All up, there still appears to be a healthy spending pulse out there, but the 4.7% drop in accommodation and 0.3% fall in food and services spending suggest the recent dip in international visitor arrivals has weighed.”

“Today’s print was broadly as expected, so is not a game changer for our Q1 GDP pick of 0.5% q/q. But there’s still plenty more information to come on that front. That said, with the RBNZ forecasting GDP growth of 0.4% q/q, the hurdle for disappointment remains high. But we need to keep an eye on capacity indicators too.”

“Overall, consumer spending appears to be holding at a healthy level, but high levels of household debt, slowing population growth, a softer housing market, around-average consumer confidence, and some concerning global growth signals mean upside is limited.”