NZ: Retail Trade

Sun Feb 15 15:45:00 CST 2015

Consensus Actual Previous
Q/Q percent change 1.3% 1.7% 1.5%
Y/Y percent change 4.7% 4.1%

December quarter retail sales were up a greater than expected 1.7 percent, driven by the motor vehicle industry. Sales increased 1.6 percent in the September quarter. The last time the sales volume rose more than 1.7 percent was in the June 2012 quarter, when sales rose 1.9 percent. On the year, retail sales were up 4.7 percent.

Twelve of the 15 retail industries had higher sales volumes. Motor-vehicle and parts retailing was up 3.4 percent and food & beverage services added 3.0 percent. However, supermarket & grocery stores sales were down 1.2 percent. The volume of sales in core retail (which excludes the vehicle related industries) was up 1.5 percent.

When the effect of price changes is included, the total value of retail sales was up 1.6 percent with sales rising in 10 of the 15 retail industries. This is also the largest total value increase since the June 2012 quarter, when sales rose 1.8 percent. For core retail (which excludes the vehicle related industries), the sales value rose 1.6 percent.

Retail trade data tracks changes in New Zealand retail sales. As consumption contributes heavily to New Zealand's GDP, a rising retail sales figure can be indicative of rising demand and subsequent inflation. While strong economic growth is typically good for the New Zealand economy, uncontrolled growth and rising inflation may lead to instability and corrective action from New Zealand's central bank. The release was recently changed from monthly to quarterly. The headline numbers are the percentage change in retail trade from the previous quarter and the percentage change in retail trade from the previous year.

Consumer spending accounts a large portion of the economy, so if you know how consumers are behaving, your will have a good indication as to where the economy is headed. Needless to say, that is a big advantage for investors. The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth. Retail sales not only give you a sense of the big picture, but also the trends among different types of retailers. Perhaps auto sales are especially strong or apparel sales are showing exceptional weakness. These trends from the retail sales data can help you spot specific investment opportunities, without having to wait for a company's quarterly or annual report.