Housing and low interest rates are playing a key role in driving the pick-up in consumer spending, BNZ senior economist Craig Ebert says.
Commenting yesterday on Statistics New Zealand's latest June quarter retail spending figures, Mr Ebert said the quarterly 3.4%, 3.7% and 5.5% increases in real spending on furniture, hardware and appliances respectively, for annual outcomes of 10.6%, 13.9% and 10.9%, were big numbers in anyone's books.
''Also consistent with housing being a prominent driver is the news that annual retail sales growth was strongest in the areas where house price inflation is the hottest, namely Auckland [5.9%] and Canterbury [5.3%]. The spillover is clearly there,'' he said.
The Reserve Bank might not be inclined to see it as a problem by the fact it was regionalised and related to housing.
But it was evidence of spillover and related to the construction element of housing that would keep rising, Mr Ebert said.
The role of low interest rates seemed no coincidence in that the strongest parts of the retail growth had been in durables.
In real terms, they increased 3.9% in June and 8.8% for the year, excluding vehicles. Vehicles were up 5% in the quart-er to be 5.3% up on a year ago.
Forsyth Barr broker Suzanne Kinnaird said durables sales were led by hardware, building and garden supplies up 14%.
Recreational goods reported negative growth for the fourth consecutive quarter. Clothing and footwear was flat in June, as a small lift in volumes was offset by a slight decline in prices.
Mr Ebert said strong momentum looked to have carried on into the third quarter, judging by recent registrations data.
''All the while, household credit is picking up the pace. The role of low interest rates should be clear, or should at least be taken seriously.''
The 1.7% surge in June quarter retail sales was not indicative of the sort of expansion the BNZ anticipated for GDP economic growth in the quarter.
The second-quarter GDP, published on September 19, could look slower as the lagged impacts of the early 2013 drought continued through the economy.
''New Zealand's macroeconomic undercurrents are patently strengthening, in our view. The housing trends and presently low interest rate settings can only add to this, as today's retail figures already attest.
The spillover the Reserve Bank has been waiting around for is surely here,'' Mr Ebert said.
