Our take on the latest Retail trade survey (Fri 25 Nov 2022)
Retail sales volumes up 0.4% (seasonally adjusted)
Stock totals down 0.3% (seasonally adjusted)
Largest ever fall in electronic goods spending
The key numbers...
- Retail sales volumes stabilised in the September quarter after two previous quarters of significant declines, edging up 0.4% (seasonally adjusted). This is the smallest quarterly change since June 2019 and indicates spending in the economy is remaining healthy.
- Fuel spending volumes lifted 3.2% as they continue to increase in the wake of the COVID-19 restrictions on movement in the second half of 2021. However, fuel volumes are still below numbers seen even during the Global Financial Crisis, reflecting the dampening effects of high prices on people’s fuel consumption.
- Core retail spending was also up 0.4% (seasonally adjusted). This seemingly stable result was driven by large shifts in the composition of spending. Although department store spending was up 18%, electronic goods retailing fell 25%, the steepest drop on record.
- Retail stock totals were down 0.3% (seasonally adjusted) in the September quarter. Stocks have not declined since supply chain issues early in the pandemic, which caused sustained falls in stock totals in the March, June, and September 2020 quarters.
Underlying spending levelling in September 2022 quarter
Retail sales volumes (seasonally adjusted)
...and our reaction
- Growth in retail sales values has again outstripped growth in sales volumes, as inflation forces Kiwis to spend more for a similar amount of goods.
- The tightness of household budgets is evident. The huge drop in electronic goods sales volumes, as well as more modest declines in hardware and recreational goods, indicates households are spending less on discretionary items and diverting their spending towards necessities such as clothing and food.
- The fall in stocks could be a result of businesses adjusting their inventory downward to avoid being stuck with too much stock on hand in the face of a looming recession. With supply chain uncertainty also starting to reduce as the world emerges from the worst of the pandemic, businesses also have less need to keep a large inventory on hand as protection against delays or difficulties with future shipments.
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