New Zealand retail trade volumes rebounded on the quarter in the three months to March, increasing 0.5 percent after falling 1.8 percent in the three months to December. This is the first quarter-over-quarter increase in retail sales in two years, with consumer spending impacted by aggressive policy tightening by the Reserve Bank of New Zealand over this period. The volume of sales fell 2.4 percent on the year after dropping 4.1 percent previously. This is the smallest year-over-year decline in six quarters.

The increase in headline sales volumes in the three months to March was broad-based across most major categories. Motor vehicles, fuel, food and beverage services, supermarkets and grocery stores, and clothing, footwear and accessories recorded increases, partly offset by declines in sales volumes for department stores and hardware, building and garden supplies. Sales also rose in values terms, up 0.7 percent on the quarter after a previous decline of 1.4 percent, with year-over-year growth in sale values picking up from a fall of 0.4 percent to an increase of 0.6 percent.

Retail sales are expected to fall 0.4 percent on quarter in the January-March period, with the pace of decrease decelerating from a 1.9 percent fall in October-December. The retail sector has been reeling under the weight of aggressive policy tightening by the Reserve Bank of New Zealand.

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.