NZ: Retail Trade


Sun Aug 13 17:45:00 CDT 2017

Consensus Actual Previous
Q/Q percent change 1.0% 2.0% 1.5%
Y/Y percent change 5.4% 4.6%

Highlights
New Zealand retail trade sales volumes rose by 2.0 percent on the quarter in the three months to June (seasonally adjusted), up from an increase of 1.5 percent in the three months to March and above the consensus forecast of 1.0 percent. Year-on-year growth in sales volumes accelerated from 4.6 percent in the three months to March to 5.4 percent in the three months to June.

Headline growth in sales volumes on the quarter was supported by the influx of a large number of foreign tourists visiting New Zealand to attend international sporting events. Food and beverage services saw a record increase in sales volumes of 4.2 percent on the quarter, with accommodation volumes up by a three-year high of 6.1 percent. Electrical and electronic goods retails also saw a large increase in volumes, offsetting weaker growth in motor-vehicle and parts retailing.

Core retail sales volumes (excluding motor vehicles and parts and fuel) rose 2.1 percent on the quarter in the three months to June, up from 1.5 percent in the three months to March, with year-on-year growth increasing from 3.8 percent to 4.7 percent.

The value of retail sales rose 1.6 percent on the quarter in the three months to June, down from 2.5 percent the previous quarter (revised from 2.6 percent). This drop in quarterly growth reflected weaker sales growth for motor vehicles and parts and fuel. Core retail sales values rose 2.0 percent o the quarter, up from 1.8 percent in the three months to March, again reflecting stronger growth in food and beverage services and accommodation.

Definition
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.

Description
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.