Kiwi retail sales chug along slowly as economy bites
- 22 May, 2018 05:00
New Zealand retail sales volumes rose in the first quarter at the slowest rate for more than five years, pointing to slower economic growth in the year ahead.
Retail sales volumes rose three per cent on an annual basis, a stark slowdown from the previous quarter's 5.4 per cent jump and the weakest growth since the July - September 2012.
The New Zealand dollar fell from $0.6925 to as low as $0.6902 after the sales figures were published.
Sales were up just 0.1 per cent on a quarterly basis, much weaker than the roughly one per cent rise expected by economists.
"This signals downside risk to our Q1 gross domestic product forecast and chimes with other signs that the economy is slowing," said Satish Ranchhod, senior economist at Westpac Bank.
Clothing and footwear led the losses, falling 5.1 per cent, while motor vehicles fell 1.1 per cent.
The result pointed to some speed-bumps in the economy, which has been the envy of the developed world in recent years, but is starting to face headwinds as housing market growth and immigration slow.
The government has inherited robust economic growth thanks to record immigration levels and robust dairy prices creating growth of around three per cent a year, though it slowed a touch to 2.9 per cent at the end of 2017.
“We expect that household spending growth will remain modest over the coming year as the housing market cools in response to government policy changes," Ranchhod said.
The new Labour-led government took the helm in October and vowed to fix the country's housing crisis with plans to widen taxes on property investment and ban most foreigners from buying homes in New Zealand.
However, increased government investment announced in the annual budget on Thursday could offset weaker consumption spending, with the Treasury forecasting GDP growth reaching 3.8 per cent in 2019.
First quarter GDP data is due on 21 June.
(Reporting by Charlotte Greenfield in Wellington; Additional reporting by Swati Pandey in Sydney; Editing by Eric Meijer)