New Zealand retail trade volumes recorded steady growth in the three months to March, advancing 0.8 percent on the quarter an increase of 0.9 percent in the three months to December. This is well above the consensus forecast for no change. The volume of sales rose 0.7 percent on the year after advancing 0.2 percent previously. Officials at the Reserve Bank of New Zealand began to cut policy rates in August and have now reduced rates by a cumulative 200 basis points over their last five meetings. This appears to have boosted consumer sentiment.

Steady growth in headline sales volumes in the three months to March reflects offsetting moves across major categories. Sales fell on the quarter for household goods and were basically flat for supermarket and grocery stores but there was a strong rebound in sales of motor vehicles and stronger growth in sales of clothing. Sales also rose steadily in values terms, up 1.5 percent on the quarter after a previous increase of 1.6 percent, with year-over-year growth in sale values picking up from 0.2 percent to 1.4 percent.

After an upbeat Q4 boosted by household durables, sales fizzled in Q1. Real sales are expected flat on the quarter with the risk of a weaker number.

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.