Increased motor vehicle sales have driven the retail sector
to a stronger-than-expected level. Photo by ODT.
Retail sales for the quarter to June were stronger than
anticipated, but not enough to force the Reserve Bank to bring
forward interest rate hikes, otherwise expected early next
Retail sales rose more than expected, as vehicle sales
increased at the fastest pace in two years.
''The motor vehicle and parts retailing industry has driven
this quarter's increase in both sales volumes and values,
recording their largest increases in two years,'' Statistics
New Zealand business indicators manager Neil Kelly said.
Eleven of the 15 industries had higher sales volumes for the
Actual sales were up 3.8% in value from the corresponding
quarter a year ago, better than the 3.4% estimate in a
Reuters survey of analysts' expectations.
Westpac senior economist Felix Delbruck said the retail trade
survey was consistent with other recent evidence the domestic
economy regained momentum by mid-year, but continued to run
at a slightly lower boil than seen in late 2013.
''Along with signs that the housing market is picking up
again, that will keep the Reserve Bank focused on its
medium-term hiking plans,'' Mr Delbruck said.
However, it was unlikely to bump the Reserve Bank off its
current pause of interest rate hikes, particularly given the
drop in dairy prices which had occurred since the June
''We continue to expect the Reserve Bank to keep the official
cash rate on hold until January next year,'' he said.
ASB economist Nathan Penny said households were continuing to
report high levels of confidence, in particular reflected in
the 2.8% lift in food and beverage sales.
''This is the second consecutive strong quarter for this
category and indicates households are willing to spend on
discretionary items like eating out,'' Mr Penny said.
BNZ head of research Stephen Toplis said the strength in
retail spending ''has some way to run''.
''We expect annual growth in retail sales to remain in excess
of 3% right through until the end of 2015,'' he said.
Numerous reasons indicated this, in particular, employment
growth continued at a strong pace, which meant falling
unemployment, so consumer confidence tended to remain
supported, which in turn promoted retail spending.
An overarching factor was that population growth, led by net
migration, was ''running hot''.
Overlooked by many was yesterday's revelation by Statistics
New Zealand that the country's population grew by 67,800
people in the year to June, with net migration having
contributed 56% of that increase, Mr Penny said.