Our take on the latest Retail trade survey (Tue 24 May 2022)
Retail sales volumes eased 0.5% (sa) in the March quarter
Electrical and electronic goods retailing fell 13% (sa)
Total stocks increased 2.3% (sa)
The key numbers...
- Retail spending volumes edged down 0.5% (seasonally adjusted) in the March quarter, as the Omicron outbreak meant many people were isolating at home.
- The biggest falls by store type over the quarter were electronic and electronic goods retailing (down 13%), non-store and commission based retailing (down 10%), and motor vehicle and parts retailing (down 5.6%, all figures seasonally adjusted).
- The West Coast and Otago saw the biggest regional falls in spending of 5.6% and 1.7%, respectively.
- The total value of stock increased 2.3% (seasonally adjusted) in the March quarter. The pandemic and associated supply chain issues have meant retailers are trying to hold more stock, pushing the total value of stock up 12% from a year ago.
Seasonally adjusted retail sales
$m (Sept 2010 prices)
...and our reaction
- The March quarter saw a slowdown in retail spending as the Omicron outbreak ripped through New Zealand. However, the extent of this slowdown was modest given that we estimated over 300,000 people were isolating at home during the peak in the first half of March.
- Interest rates are rising, which will weigh on retail spending later in the year, while high fuel prices will also undermine spending on other goods and services.
- The Reserve Bank was increasing interest rates before and during the March quarter, and the Bank has hiked rates more aggressively since then. However, only the 12% of lending on floating mortgage rates will really be feeling the squeeze on their wallets already. With another 34% of fixed lending due for renewal within the next year, spending will start slowing more intensely in coming quarters.
- One positive aspect of the outlook for retailers is the full reopening of borders by the end of July, which will provide relief for accommodation and food services and other tourism related retailing.
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