NZ economy 'ticking along nicely'

Retail sales data out yesterday provided further evidence the New Zealand economy was ''ticking along nicely'', BNZ head of research Stephen Toplis said.

Total retails sales volumes rose 0.5% in the three months ended March to be up 3.5% for the year, Statistics New Zealand data showed. If vehicle sales were excluded, the increase was 0.6% for the quarter and 2.6% for the year.

''The quarterly outcome was of particular merit given that growth in the fourth quarter of 2012 had been so strong that a correction might well have been expected.''

New Zealand's extended summer had its expected negative impact on apparel sales and spending on clothing was down 2.4% (in real terms) for the quarter, Mr Toplis said.

There were several factors behind the strength in retail, including the ongoing recovery in Christchurch, the strength in the construction sector, very low interest rates, rising house prices, solid consumer confidence and falling prices for many goods.

The Christchurch impact was notable, he said.

Although there was no retail sales data by volume on a regional basis, Mr Toplis noted that nominal sales in Canterbury were up 6.1% on year earlier levels on a seasonally adjusted basis, compared with an ex-Canterbury reading of 2.7%. Strong dairy sector returns in the region would have helped.

Aucklanders were not to be outdone and sales there were up a solid 4.3%.

''At the other end of the spectrum, Wellington's relative misery is again emphasised with its sales falling 0.8% on year earlier levels. It is the only region to record a negative reading.''

The combined impact of heightened activity in the housing market and low interest rates revealed itself in the strong growth occurring in the sales of furniture, hardware and appliances, Mr Toplis said. Hardware sales were especially strong, rising 10.6% in real terms. Vehicle sales were up 9.7%.

''The other point to note from the price data accompanying the retail trade series is the fact that the strength in the exchange rate is clearly playing a significant role in driving prices lower. It is yet another reminder that not everyone will be happier with a lower currency.''


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