Retail sales unexpectedly fall in third quarter, kiwi slides

New Zealand retail sales volumes unexpectedly fell in the third quarter, led by supermarkets and motor vehicles, sending the kiwi dollar lower on speculation the economy is weak enough to warrant a rate cut from the Reserve Bank next month.

The volume of retail sales fell 0.4%, seasonally adjusted, in the three months ended September 30, for a 2.1% gain from a year earlier, Statistics New Zealand says. A quarterly gain of 0.5% was forecast in a Reuters survey, for an annual increase of 2.9%.

The third-quarter retail sales data comes after figures showed the jobless rate unexpectedly jumped to 7.3%, suggesting the economy's pace is stumbling.

Reserve Bank governor Graeme Wheeler has said he has room to cut interest rates if needed and his next review is on December 6. Markets were pricing in a 24% chance of a cut to the official cash rate next month.

The kiwi dropped to 81.54 US cents after the numbers, from 81.91 cents immediately before the report was released.

Nine of the 15 retail industries had lower sales volumes in the latest quarter. Excluding vehicle-related categories, retail sales volumes were down 0.3%. The value of sales fell 0.8%.

Supermarket and grocery store sales slid 1.5%, accommodation was down 3.2% and motor vehicles and auto parts fell 0.9%.

Hardware, building and garden supplies recorded the biggest gain, up 4.2%, which the government statistician says reflects increased sales in Canterbury.

The value of sales in the North Island fell 0.4% in the latest quarter, while South Island sales rose 0.7%.

(BusinessDesk)

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8 Comments & Questions

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Why the surprise, if the tax take is consistently down then either Retail sales/Gst/Paye is lower reflecting declining economic activity or the treasury tax estimates of tax are way out. Whilst I believe NZ stats are not manipulated I have noticed how convenient improvements are in the US and China at the time of new administrations and do wonder if some manipulation has occurred!

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The world is broke read all about it...
Just get the cash rate down and lets start the spending..

P.s cap the interest rates on credit cards and loan sharks at 15% everyone wins and greedy people like the Banks will start to listen to the consumer dollar rather than the over inflated fractionally divested dollar they have borrowed and invested in each other..

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Not unexpected for those at the coal face of business. People's hard earned money has lost a lot of it's purchasing power since the increase in GST to 15%. The average Joe Bloggs from that moment on, has been far worse off. My business stopped growing overnight, prices went through the roof at the supermarket, petrol etc and my staff have all been financially worse off, since. Thanks John Key. Idiot.

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Just because the Government is in a state of denial that the country has serious 'business' problems - your paper should be aware of what is happening

The dollar is too high, for the productive businesses in the engine room.
The cost of basic Government /quasi Government controled prices continue.to rise unabated, petrol, road user charges rates, etc with no ability for the individual let alone buiness to pass on and oh and add insurance to that list

Bank OD rates for these business are at punitive levels = dont borrow to maintain business - retrench lay off staff, cut expenditure to the bone, shift production off shore or just shut down.

thats how it is, and for most the out look is looking grim

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Business banking rates are not conducive to expansion. If OCR is at 2.5%, why does it take 8-10% for a business bank loan? (and higher for short term OD)

That is a really nice, big, fat whack of 6-10% cut for doing very little by the bank that promptly sends it offshore. I can't believe these economists that say screaming high Aussie bank profits are good for NZ ... especially when the economic numbers are clearly saying otherwise.

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As house prices go through the roof and incomes stay virtually stagnant, people have to borrow more and more to buy a house, then it is logic that people wil cut back to pay their mortages.
This Government have their head in the sand if they think the housing market is going to get this country out of debt.
It is only going to get worse

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Where are the jobs? If there is nothing much done to create jobs, by reducing the rates will it help? When the OCR goes down, savings rates go down too and disposable income reduces. Furthermore, when the jobless numbers remain high(er), how so can they/we spend more even when tax rate had been cut. There is a snowballing effect as more money will be given out for benefits and I guess it will be more reasons for more money borrowing by the government and landing NZ into more debts. We can 'squeeze' income from internally by finding ways to do so through wages increase but what are the resultant effect on businesses? No businesses = no jobs = no income = benefits payout = more revenue gap. ...... We always compare ourselves with Australia which is good but did we all realise the minimum wages in countries like USA? I think we need to find fixes to some of the fundamental issues and inexcusable if them is where are the jobs?

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Where are the jobs? If there is nothing much done to create jobs, by reducing the rates will it help? When the OCR goes down, savings rates go down too and disposable income reduces. Furthermore, when the jobless numbers remain high(er), how so can they/we spend more even when tax rate had been cut. There is a snowballing effect as more money will be given out for benefits and I guess it will be more reasons for more money borrowing by the government and landing NZ into more debts. We can 'squeeze' income from internally by finding ways to do so through wages increase but what are the resultant effect on businesses? No businesses = no jobs = no income = benefits payout = more revenue gap. ...... We always compare ourselves with Australia which is good but did we all realise the minimum wages in countries like USA? I think we need to find fixes to some of the fundamental issues and one of them is where are the jobs?

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