New Zealand’s retail sales rise in Q3 on increased vehicle sales

New Zealand’s retail sales came in line with market consensus in the third quarter. The overall sales volumes rose 0.9 percent, as compared with a larger 2.2 percent rise recorded in the second quarter. On a year-on-year basis, retail spending grew a strong 5.3 percent. Most of the rise in retail spending was attributed to the volatile vehicle and fuel categories.

Stripping these groups, retail spending grew slightly modes by 0.3 percent. But it still leaves a strong underlying scenario of spending in New Zealand’s economy, with spending in core retail categories rising 5.2 percent year-on-year.

Continued gains in spending on building supplies and hardware, along with increased spending on accommodation recreational goods were recorded in September. These increases were balanced against a reduction in spending in some other categories after recording robust gains in the second quarter, noted Westpac in a research report.

On the prices front, retail inflation continued to stay low. But it has began rising. In the past year, core retail prices are estimated to have risen 0.5 percent, the most rapid pace of rise in five years. Weakness in prices has mainly been underpinning spending in recent years. This might be an important area to keep a watch on in the months ahead, particularly given the signs that demand in the economy is increasing, added Westpac.

Low interest rates, increased levels of tourist arrivals and strong population growth continue to underpin spending in New Zealand.

At 06:00 GMT, the FxWirePro's Hourly Strength Index of New Zealand Dollar was neutral at 40.3363, while, the FxWirePro's Hourly Strength Index of USD was slightly bullish at 53.4119. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex