NZ First Impressions: Retail Commerce June Quarter 2022

NZ First Impressions: Retail Commerce June Quarter 2022

Retail spending was a lot softer than anticipated within the June quarter, indicating a draw back threat to our Q2 GDP development forecast and the RBNZ’s projections.

Retail gross sales within the second quarter (volumes): -2.3% (Earlier: -0.9%)

Westpac f/c: +0.3%, Market +1.7%

Second quarter prime retail gross sales (volumes): -1.6% (Earlier: -0.3%)


Retail spending was a lot weaker than anticipated within the June quarter.

The amount of products bought fell by 2.3%. That was decrease than our forecast for a muted 0.3% rise and effectively beneath analysts’ common forecast for a 1.7% rise.

As we speak’s drop follows a 0.9% drop in spending within the March quarter, leaving spending volumes down 3% for the primary half of the 12 months. Spending in the principle classes (excluding automobiles and gasoline) decreased by 2%.

Trying down, households have been decreasing their spending on sturdy items comparable to electronics (down 6% over the previous three months) and furnishings (down 8%). There’s additionally a decline in car gross sales (by 6%). These are the identical classes the place spending soared when Covid-19 hit our shores and measures to guard public well being led to a shift away from spending on companies.

Now that well being restrictions have been lifted and with the opening of borders permitting vacationers to return to the nation, we’ve got seen a rise in spending on hospitality (+3%) and lodging companies (+10%). Nevertheless, these will increase didn’t offset decreased spending in different areas.

Nominal spending ranges have remained steady because the begin of this 12 months. Nevertheless, the buying energy of households was decreased by massive and widespread will increase in shopper costs. As well as, mortgage charges rose in the course of the first half of this 12 months and shopper confidence plummeted.


We now have lengthy forecast a slowdown in family spending, with rising mortgage curiosity prices signaling a major squeeze on family budgets. Nevertheless, that slowdown in spending got here sooner than anticipated.

Importantly, many households have been shielded from the influence of rate of interest rises up to now as a result of excessive degree of mortgage fixing within the New Zealand market. Over the approaching months, debt service prices will rise considerably for a lot of households as they face increased rates of interest. And along with right now’s smooth outcome, that factors to weak spending in the course of the latter a part of the 12 months.

The softer-than-expected retail spending outcome factors to a draw back threat to our forecasts of a 1.0% improve in GDP within the June quarter. Extra importantly, it additionally indicators a major draw back threat to the RBNZ’s forecast of 1.8% development. In its latest coverage assertion, the RBNZ highlighted the power of inflation and the necessity for additional will increase within the OCR. Nevertheless, in our view the RBNZ has given little credence to the indicators of softening demand which have been rising.

As we speak’s outcome additional reinforces our expectation that the OCR will peak at 4% later this 12 months, in distinction to RBNZ projections which highlighted the chance of a better peak.

We are going to verify our GDP forecast as different partial indicators are launched over the approaching weeks.

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