Retail sales rise a record 2.7% in first quarter on electronic good surge

New Zealand retail sales rose at a record pace in the first three months of 2015 as the start of the school year underpinned demand for consumer electronics such as laptops and tablets.

The volume of sales rose a seasonally adjusted 2.7% in the three months ended March 31, accelerating from a pace of 1.9% in the December quarter, according to Statistics New Zealand. That beat the 1.5% growth predicted in a Reuters survey of economists. Stripping out vehicle-related spending, retail sales rose 2.9%, led by an 8.9% gain in sales of electrical and electronic goods. The actual volume of sales in the March quarter was 7.4% higher than the same period a year earlier. (See graph below)

"Our discussions with retailers suggest that there's no one thing in particular behind this but there may be a strengthening back-to-school effect," Statistics NZ acting business indicators manager Tehseen Islam said in a statement. "This seems to mean that spending on things like laptops and tablets is having an impact on overall spending at the start of the school year."

The kiwi dollar rose to 75.5USc from 75.17USc immediately before the report was released, on speculation signs of stronger growth will, at the margin, reduce the prospects for Reserve Bank interest rates cuts this year.

Consumer electronics have been under pressure in recent years as technology advances, a strong New Zealand dollar, and intense demand has led to price falls and increased discounting by retailers. The volume of electrical and electronic goods sales was 19% higher than the same quarter a year earlier, while the value rose 7.5% to $664 million.

Warehouse Group, the country's biggest listed retailer, this month reported a 5% increase in sales for the three months ended April 26, saying its 'Red Shed' general merchandise stores benefited from a strong performance during its 'back to school' period.

Consumer confidence has been bolstered by low interest rates, cheap petrol and a general recovery in the economy, though recent wage data and tepid inflation has raised some concerns that retail spending might come under pressure if household earnings remained static and figures for electronic card spending showed a slowdown sales in April.

Today's data show the total value of retail spending, which includes price adjustments, rose a seasonally adjusted 1.7% in the quarter, accelerating from a pace of 1.4% in the December period. Stripping out vehicle related spending, the value of sales rose 3%. The actual value of sales rose 5.1% to $19.25 billion in the March quarter from the same period a year earlier.

The volume of spending on supermarket and grocery goods, the biggest component in the data, rose a seasonally adjusted 1.2% in the quarter, for a 2.7% increase in value. On an actual basis, the volume of spending on supermarket and grocery goods was up 2.2%, while the value rose 3.9% to $4.4 billion.

The volume of spending on fuel rose a seasonally adjusted 3.5% in the quarter, while the value was down 5.7%. On an actual basis, the volume of spending on fuel was 7% higher than the same quarter a year earlier, while the value of spending on fuel fell 8.8% to $1.82 billion.

The volume of spending on hardware, building and garden supplies rose a seasonally adjusted 3.9% in the quarter for a 3.6% increase in value, while furniture, floor coverings, houseware and textile spending volumes advanced 3.3% for a 3.1 rise in values.

On an actual basis, the volume of spending on hardware, building and garden supplies was 9.1% higher than a year earlier, for a 9.5% lift in the value of spending to $1.5 billion. The volume of spending on furniture, floor coverings, houseware and textiles advanced 11% in the March quarter from a year earlier, while the value climbed 11% to $514 million.

Accommodation spending got a boost from the Cricket World Cup in the quarter, with the seasonally adjusted volume up 7.1% and the value rising 6.9%. the volume of spending on food and beverage rose a seasonally adjusted 1.2% in the quarter for a 1.9% lift in value.

On an actual basis, the volume of accommodation spending was 14% higher than a year earlier for a 15% rise in the value of spending to $1 billion, while food and beverage volumes climbed 9.3% for a 11% increase in the value of spending to $2.17 billion.

(BusinessDesk)