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NZ: Retail spending loses steam through September quarter - Westpac

Satish Ranchhod, Senior Economist at Westpac, expects New Zealand’s retail sales growth pulled back in September as earlier boosts to spending faded and expect spending growth to remain modest over the coming year.

Key Quotes

“Retail spending eked out only a very modest gain in September, with volumes rising just 0.2%. The result was close to our own forecast and to market expectations.”

“The modest September quarter gain followed solid gains earlier in the year. Retail volumes are up 4.1% over the past year.”

“Looking at the details of spending in the September quarter, some of this quarter’s softness was due to declines in the volatile vehicle and fuel categories. However, even looking at core spending (which excludes those items), there was a slowdown in spending growth.”

“In part, the slowdown in spending was a normal pullback following temporary boosts to spending mid-year related to high profile sporting events like the Lions tour. Looking at other categories, things were more mixed, with strong gains in areas like electronics and apparel, but falls in spending on recreational goods and furnishings.”


One of the big drivers of spending in recent years has been strong growth in house prices. This has been a particularly large driver of spending on durable household items like furniture. However, the housing market has slowed, and we expect house price inflation will remain weak over the coming year. This has already been reflected in a slowdown in spending on household furnishings over the past year. Combined with a slowdown in migration and population growth, it looks like New Zealand is in for a period of softer growth in retail spending over the coming year.”


Overall retail prices were essentially flat over the quarter, leaving them up 1.2% over the past year. Much of the increase in prices over the past year has been due to fuel costs. Looking at prices for other goods, things continue to look modest.”


Looking at spending by region, the past year saw spending rise by 3.2% in Auckland, 0.5% in Wellington, and 0.8% in Canterbury. There were also solid gains in several areas outside of the main urban centres. However, there has been some softness in the West Coast, where spending levels were essentially flat over the past year.”

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