New Zealand retail trade volumes fell 0.6 percent in the three months to December after advancing 0.6 percent in the three months to September, with year-over-year growth weakening sharply from an increase of 4.9 percent to a decline of 4.0 percent. Volatility in year-over-year growth largely reflects the base effects of changes to public health restrictions twelve months earlier. Retail sales values rose 1.7 percent on the quarter after increasing 3.4 percent previously, while year-over-year growth in values slowed from 15.4 percent to 5.4 percent.

The fall in headline sales volumes in the three months to December was broad-based, with most categories of spending recording weaker growth. Supermarket and groceries stores saw a 0.5 percent decline in sales volumes after no change previously, while department store and clothing sales slowed sharply. Sales of motor vehicles, however, recorded stronger growth.

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.