New Zealand July Retail Sales Unexpectedly Fall 0.5%
New Zealand’s retail sales unexpectedly fell for a second month in July, adding to signs the economy faces a slow recovery from the worst recession in three decades.
Sales dropped 0.5 percent from June when they declined a revised 0.1 percent, seasonally adjusted, Statistics New Zealand said in Wellington today. Core retail sales, which exclude car yards, fuel outlets and workshops, fell 0.5 percent.
Reserve Bank Governor Alan Bollard last week said the economy faces a “patchy” recovery after contracting for six straight quarters as the jobless rate rises and a stronger currency curbs exports. He kept the benchmark interest rate unchanged at record-low 2.5 percent on Sept. 10 and said he doesn’t plan to raise borrowing costs until late 2010.
“The recovery in demand is likely to be muted,” said Jane Turner, economist at ASB Bank Ltd. in Auckland. “The Reserve Bank may be relieved too see consumer spending remaining soft.”
New Zealand’s dollar fell to 70.42 U.S. cents at 11:40 a.m. a.m. in Wellington from 70.56 cents immediately before the report was released.
Sales were expected to rise 0.4 percent, according to the median estimate in a Bloomberg News survey of 12 economists. June sales were revised from a 0.1 percent gain reported last month.
Job Losses
Bollard said last week the economy may grow just 0.1 percent in the three months ending Sept. 30. He expects consumer spending will contract in the year ending March 31.
Curbing spending, the jobless rate rose to a nine-year high of 6 percent in the second quarter. The Reserve Bank forecasts it will increase to 6.9 percent by mid-2010. The Treasury Department last week forecast a peak of 7 credit reports free.5 percent.
Retail sales fell in 15 of the 24 store categories measured in today’s report, led by fuel outlets and department stores.
The monthly sales series isn’t adjusted to exclude price movements and sales. Fuel costs fell 3.5 percent in July, according to government figures.
Supermarket and grocery store sales, which make up a fifth of the total, fell 0.3 percent. Department store sales declined 2.2 percent following a 2.8 percent drop in June.
Vehicle dealer sales increased 2.1 percent. Purchases from fuel outlets fell 2.9 percent.
House Sales
The core retail trend series, which excludes irregular movements as well as seasonality, rose 0.1 percent from June. The monthly pace of decline has slowed from about 0.3 percent in the three months through May, the statistics bureau said.
Economists expected an increase in consumer confidence, fanned by a recovering property market, would bolster spending.
House prices rose 1.2 percent in August, according to a Real Estate Institute of New Zealand Inc. index published earlier today. House sales fell from July, though rose 39 percent from a year earlier. The number of days it took to sell a property was the lowest since December 2007, the institute said.
“The recent pickup in housing demand comes when listings have been very low, causing the market to become slightly heated” said ASB’s Turner. “Recent stabilization in the market is likely to tempt sellers back into the market, restoring the balance between supply and demand.”