New Zealand retail sales volumes rise slightly below expectations in Q2 2019

New Zealand retail sales volumes rose in the second quarter, rising 0.2 percent quarter-on-quarter. This was below market expectations of 0.3 percent. On a year-on-year basis, retail sales eased to 2.9 percent. Core retail volumes, which strip volatile components like petrol, were slightly stronger than the headline at 0.3 percent. Sales volumes are holding at a high level but struggling to accelerate.

In line with a slight weakening in the housing market in the second quarter, housing-related spending volumes dropped in the quarter, with furniture, floor coverings and houseware down 3.3 percent quarter-on-quarter. However, higher prices might be a factor too. Recreational and electronic goods volumes were outperformers, and imply consumers stay happy maintaining their discretionary spending, said ANZ in a research report.

The values of sales were up 0.7 percent quarter-on-quarter, reflecting higher prices in the quarter, including for fuel where volumes dropped 0.8 percent while values rose 2.4 percent.

In all, consumer spending seems to be holding at a decent level, and some forward-looking indicators imply this was the case heading into the third quarter.

“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”, added ANZ.