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Miles Workman, senior economist at ANZ, notes that New Zealand’s retail sales volumes rose a solid 1.6% QoQ in Q3 (sa), with annual growth accelerating 1.6% points from Q2 to 4.5% YoY.

Key Quotes

“Core retail volumes, which exclude volatile components like petrol, were a touch stronger than the headline, at 1.8% q/q (up 5.4% y/y vs 3.6% in Q2).”

“Consistent with revival in the housing market, housing-related spending also rebounded, with furniture, floor coverings and houseware up 5.1% q/q and hardware, building, and garden supplies up 1.0% q/q.”

“Despite today’s print coming in on the stronger side of our expectation, we don’t see this as a game changer for our Q3 GDP pick of 0.4% q/q (which we’ll keep under review until all the partial GDP indicators are in).”

“Stepping back, a robust household sector is one of the bright spots in the economy at present, with still-positive (but easing) migration inflows, modest real income growth, low unemployment, buoyed sentiment, low interest rates, and more recently, renewed strength in the housing market all supporting.”

“There’s certainly no evidence in today’s data that recent weakness in manufacturing is spilling over into the household sector, or that households are starting to worry about their debt levels. The data supports our forecast that it will be some time before the RBNZ cuts the OCR again.”