Contributors Fundamental Analysis NZ First Impressions: Retail Trade, March Quarter 2024

NZ First Impressions: Retail Trade, March Quarter 2024

Retail spending was much stronger than expected in the March quarter. However, the longer-term trend in spending remains weak.

March quarter real retail sales (volumes): +0.5% (Prev: -1.8%)

  • Westpac f/c: -0.5%, Market: -0.3%

March quarter nominal sales level: +0.7% (Prev: -1.4%)

 Annual changes (March 2024 vs March 2023)

  • Nominal sales: 0.6%
  • Volume of goods sold: -2.4%

Retail spending rose 0.5% in the March quarter. That was well above our own and market expectations for a fall in spending in the early part of the year.

However, rather than pointing to a resurgence in spending appetites, March’s rise in spending looks more like a bounce after the very large decline in the previous quarter. The broader trend in spending remains down.

What drove spending in the March quarter?

Growth in spending over the March quarter was underpinned by a rise in spending on groceries (+0.6%), hospitality spending (+2.6%), recreational goods (+4.7%) and apparel (+2.4%). Most of those are areas that recorded sharp declines last quarter.

On the downside, recent months have seen continued softness in hardware/building supplies (-2.8%) and spending in department stores (-1.2%).

What does this tell us about the strength of spending?

Much of the strength in today’s result was a bounce after earlier weakness. The longer-term trend in spending remains weak. Compared to this time last year, spending levels are still down 2.4%. That’s despite population growth of around 2.7%.

Much of that weakness has been due to continued pressures on living costs. Nominal spending levels have been tracking sideways, with households getting less in their shopping trollies.

Overall, we continue to expect softness in spending over the coming months. That’s consistent with recent retail card spending reports and feedback from retailers (many of whom have reported missing sales targets in recent months).

Implications for GDP growth

Today’s result was higher than expected. We’re currently forecasting a modest 0.1% rise in March quarter GDP. We’ll review that number over the coming weeks as more data comes to hand.



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