Retail sales rise 1.7% in fourth quarter, beating estimates, on autos, food, drinks

New Zealand retail sales rose more than expected in the fourth quarter, led by vehicle-related transactions, food and beverages, adding to evidence that cheap credit and a growing jobs market are encouraging consumers to spend.

Sales rose 1.7 percent, seasonally adjusted, in the fourth quarter from three months earlier, according to Statistics New Zealand. Actual sales climbed 5.9 percent from the year-earlier quarter by volume and rose 4.7 percent to $20.9 billion in value, the first time sales have exceeded $20 billion. Sales were expected to rise 1.3 percent in the quarter and to increase 4.2 percent from a year earlier, according to a Reuters survey. (See graph below)

Sturdy consumer spending may continue in the face of low credit costs and strong employment growth. Core retail sales spending on credit and debit cards rose 0.9 percent in January, figures showed last week. Spending on consumables rose for a fourth straight month. Reserve Bank governor Graeme Wheeler noted a falling jobless rate, strong migration, robust labour force participation and upbeat business and consumer sentiment in a speech this month that downplayed the prospect of interest rate cuts.

The New Zealand dollar jumped as high as 74.82 US cents after the data was released, from 74.48 cents immediately before. The trade-weighted index climbed to 77.51 from 77.25.

The 1.7 percent quarterly gain is the first of that magnitude since the June 2012 quarter. Core retailing, which excludes vehicle-related spending, rose 1.5 percent in the fourth quarter.

Twelve of the 15 retail industry types measured rose in the latest period. The gains were driven by a 3.4 percent increase in the volume of motor-vehicle and parts retailing. Sales in the food and beverage services industry climbed 3 percent in the latest quarter, matching the third-quarter gain, while the value rose 3.5 percent.

Clothing, footwear and accessories retailing rose 4.4 percent and accommodation gained 4.6 percent. Supermarket and grocery sales fell 1.2 percent, after a 1.6 percent gain three months earlier while fuel retailing dropped 0.9 percent.

Sales were strong in both the North and South islands. The value of sales in the North Island rose 1 percent while sales gained 1.6 percent in the south

The total value of stock held at Dec. 31 rose 4.5 percent from a year earlier to $7.1 billion, the first time stock held has exceeded $7 billion. The value of stock for the core retail industries rose 3.7 percent to $5.4 billion.

(BusinessDesk)