Retail spending up again

By Phil Boeyen, ShareChat Business News Editor

Thursday 6th September 2001

Retail sales are continuing their upward trend, rising 0.6% in July compared with the previous month.

Statistics New Zealand says the core retailing group, which excludes the motor vehicle services and retailing stores, increased 0.4 % over the same period.

The trend for total retail sales in New Zealand has been rising since May 1998. Since that time retail sales have grown by 20.6%.

Latest figures show that results by storetype were mixed in July, with rises outweighing falls. Food sales remained virtually unchanged compared with June.

The strongest growth was recorded in the recreation sector, followed by furniture and chemist storetypes, while hardware and footwear sales were lower.

Deutsche Bank economist, Darren Gibbs, says the market had expected growth of 0.3% and consumer spending continues to gather pace supported by rising wage and salary settlements.

He says increased employment levels, strong growth in farm incomes, robust levels of confidence and low interest rates are also factors.

Mr Gibbs says the next likely move for the Reserve Bank will be to increase interest rates by 25 points next March.

"However, if there is to be a change in the OCR this side of Xmas, we think it is still far more likely to be a rate cut than a rate hike, with global growth concerns likely to be the initiating factor."

Deutsche Bank says yesterday's rate cut in Australia will be of direct benefit to New Zealand exporters but is unlikely to influence the what the Reserve Bank here will do.

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