Our take on the latest Retail trade survey (Mon 25 Aug 2025)
Core retail sales volumes up 0.5% in June (seas. adj.)
Eight of 13 core industries saw quarterly rises (seas. adj.)
Spending growth across country, led by the south
The key numbers...
- Core retail sales volumes, which exclude motor vehicle and fuel retailing, continue to edge higher, with June 2025 spending up 0.5% from March 2025 (seasonally adjusted). This rise follows a gain of 0.8% in the March 2025 quarter (revised down from 1.5%). On an annual basis, June 2025 quarter spending was up 2.3%pa from a weak June 2024.
- The spending recovery remains broad-based, with eight of 13 core industries seeing a lift in quarterly seasonally adjusted spending volumes. Notably, 11 of 13 industries saw an increase in either or both of the March and June quarters. Two core industries continue to soften – food and beverage services (down 0.3%) and hardware, building and garden suppliers (down 0.5%).
- There remains a strong north-south differential in spending growth, with core spending values up 5.3%pa in the South Island, compared to 2.0%pa growth in the North Island. All South Island regions recorded growth in spending values, led by Otago (13.3%pa). Most regions in the North recorded some growth, although there were declines in Gisborne (-5.7%) and Manawatū-Whanganui (-0.2%pa).
South Island spending recovery outpaces North
Core retail sales, annual % change
...and our reaction
- Spending volumes are firmly on a path to improvement, albeit slowly. Once population growth is taken into account, spending remains below recent high-tide marks. Core retail spending on a real per capita basis was down 0.2% from 2019 (pre-pandemic) levels, and it was 2.8% below its 2021 peak.
- The importance of a strong housing market – and related household confidence – bears out in retail spending. House values have been trending down or sideways since 2022, and spending volumes in hardware, building and garden supplies in the June 2025 quarter were 21% below June 2022.
- The stronger South Island recovery reflects the results of our Quarterly Economic Monitor, released last week, showing that southern economies have been buoyed by higher primary sector returns and, to a lesser extent, the ongoing tourism recovery. Weakness in construction, professional services, and public administration disproportionately affect the north, but it’s encouraging to note that spending values are growing in the north too, albeit more slowly.
- A more fundamental improvement in retail spending hinges on the labour market, which remains at a weak point, with unemployment rising further in the June 2025 quarter. Job adverts continue to track sideways, so there’s no imminent sign of improvement in employment. Substantial improvements in employment are unlikely until 2026. Low mortgage interest rates – still heading lower – will give households more spending capacity, but it’s unlikely to flow through into the tills while the labour market remains weak.
Latest updates
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Mon 23 Feb 2026
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