New Zealand retail trade volumes posted renewed weakness in the three months to June, falling 1.2 percent on the quarter after advancing 0.4 percent in the three months to March. The volume of sales fell 3.6 percent on the year after dropping 2.4 percent previously. Officials at the Reserve Bank of New Zealand cut policy rates by 25 basis points to 5.25 percent earlier in the month, and officials noted then that household spending had slowed in recent months, citing the effect of restrictive interest rates, falling net immigration, and a softening housing market.

The fall in headline sales volumes in the three months to June was broad-based across most major categories. Motor vehicles, fuel, electrical and electronic goods, department stores and clothing, footwear and accessories recorded declines, partly offset by increases in sales volumes for supermarkets and grocery stores and pharmaceutical and other store-based retailing. Sales also fell in values terms, down 1.6 percent on the quarter after a previous increase of 0.6 percent, with year-over-year growth in sale values weakening from an increase of 0.6 percent to a fall of 1.3 percent.

New Zealand retail sales volumes are forecast to fall 0.8 percent on quarter in the April-June period after posting their first increase in just over two years in January-March, when they rebounded 0.5 percent after falling 1.8 percent in the previous quarter. Last week, the Reserve Bank of New Zealand lowered the official cash rate by 25 basis points to 5.50 percent for its first rate cut in this rate since March 2020 in light of easing inflation and slowing consumer spending.

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.