The comment stream

Recent comments

Reader poll

Join the Interest community to be a registered commenter so you can:
- Edit your comments
- Avoid the CAPTCHA
- Vote on comments
Register Here

Already registered? log back in here ..

Forgotten your password? No problem! Click here

The news stream

Core retail sales fall for third month running as consumers snap wallets shut

Posted in News Updated
See video

Seasonally adjusted retail sales rose 0.4% - or by NZ$24 million - in May, Statistics New Zealand said, boosted by car sales. But core retail sales fell 0.2% in the month, much more than economists had expected and extending the core retail sales fall to the fourth month in the last six months.

Spending growth has ground to a halt in tandem with the housing market as bank lending growth to households has slowed to 2.5% in the last two years from almost 10%. The May figures also reveal the first ever fall - in Statistics New Zealand's series - in supermarket and grocery store sales, which fell 0.1%, or by NZ$1 million, compared to May 2009. Supermarket and grocery store sales have previously increased at an average rate of 5.8% versus the same month of the previous year.

(Updates add further detail, comments from economists, supermarket sales fall).

At 0.4%, seasonally adjusted sales growth was slightly below the consensus of economists' expectations for growth of 0.5%. The May rise  follows a 0.3%, or NZ$18 million, decrease in April.

The increase was headed by a 2.3%, or NZ$33 million, lift in vehicle-related sales.

Core retail sales actually fell by 0.2%, or NZ$10 million led by falls in the hospitality industries, - accommodation, and cafes and restaurants. Half of the 20 core retailing industries recorded lower sales and, excluding vehicle related sales, actual May core retail sales were 0.6% lower than in May 2009.

In the vehicle area, motor vehicle retailing rose 7.5%, or NZ$43 million, while automotive fuel retailing slipped 1.9%, or NZ$11 million.

Government Statistician Geoff Bascand said this was only the fourth time a decrease has been recorded in core retail sales, compared with the same month of the previous year, since the series began in 1995. The previous falls occurred in February 2009, March 2008, and February 1997.

"To put this month’s fall in context, the long-term average change for core retailing, compared with the same month of the previous year, is an increase of 4.8%," Bascand said.

Statistics New Zealand noted that the trend for motor vehicle retailing has been on the rise for more than  a year, and is now up 13.1% - NZ$68 million - since a turning point in March 2009. However, the current level of the trend is still 17.1%, or NZ$122 million, down from its historic high in June 2007. See Statistics New Zealand's full commentary here.

In actual terms, total retail sales rose 1.9%, or by NZ$98 million, in May 2010 from May 2009. This was led by motor vehicle retailing, up 16.8% or NZ$88 million, and automotive fuel retailing, up 5.8% or NZ$30 million.

The monthly decrease in core retail sales was led by  a 7.7%, or NZ$14 million, fall in recreational goods retailing, an 11.6%, or NZ$12 million, drop in liquor retailing and a 2.8%, or NZ$9 million slip at cafes and restaurants. The only core retailing industry to record an increase of more than NZ$10 million was accommodation, up 8.3% or NZ$14 million.

ASB economist Christina Leung said the may figures continued to point to a gradual recovery in retail spending. She noted a 3.9% rise in appliance sales suggested households might be starting to bring forward the purchase of big-ticket items ahead of the October 1 GST increase.

JP Morgan Chase Bank economist Helen Kevans noted that in 1986, when GST was introduced, and again in 1989 when it was lifted by 2.5% percentage points, there was a significant “bring-forward” of spending by consumers in the months immediately before the rise in the consumption tax. This was then followed by a fall.

"For retailers, however, this creates the difficult challenge of managing inventory around volatile fluctuations in demand," said Kevans.

"That all said, aside from the temporary strength we expect in consumer spending near term, consumption thereafter will likely be subdued as households undertake a period of consolidation."


We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment in the box on the right or click on the "'Register" link at the bottom of the comments.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.




FYI I've added that core

FYI I've added that core retail sales fell 0.2% in May, meaning there have been four monthly falls in the last 6 months. Trend core retail sales have been flat since November last year.
This is the face of deleveraging by households, who still have a debt to disposable income ratio nationally of almost 160%, up from 100% a decade ago.
Here's what has been happening with bank lending to households. Lending growth has slumped to 2.5% from almost 10% two years ago.
New Zealand is finally waking up to life without regular large increases in debt. The last 10 years were a mirage of growth and spending fueled by debt.
Guess what happens when the debt stops growing? Spending growth slows to virtually nothing. Retailers are pinched. Small businesses really struggle. The economy stalls. This is all because we are still (largely) a housing market with bits tacked on rather than a sustainable economy.
And I think it will get worse. I think the banks are preparing to slow that 2.5% lending growth even more as they get ready to increase their core funding to 75% from the current 65% and pass on higher funding costs in the wake of the European Financial Crisis (which isn't over yet)
What would retail spending look like with no lending growth?

From what I gathered from

From what I gathered from other Retail Shops (tourism) out in the country side:  Sales just collapsed since about 40 – 50 days.

Oh deary deary me...Humpty is

Oh deary deary me...Humpty is falling out of the tree...we knew he would because he's been a naughty Humpty for several years...after the splat will come the tears. our own business I our own business I have never experienced such a slump in 35 years.

We are in the accommodation

We are in the accommodation business and interestly, despite Govt stats reporting that there have been only minor reductions in incoming tourists, our own business figures suggest a substantial decrease in FIT's requiring accommodation.
Using Google analytics, the decrease in people globally looking for accommodation in NZ is between 25 & 38 %......
So much so that if it were not for repeat customers, we would be closing our doors.
2010 is heading for a very difficult year for small businesses and large one too I guess.

first ever fall - in

first ever fall - in Statistics New Zealand's series - in supermarket and grocery store sales, which fell 0.1%,
It's just 0.1%. Nothing to worry about. Next month it would be positive again.

Well. There goes my

Well. There goes my bargaining power for a pay rise.

Have you noticed:   Hardly

Have you noticed:
Hardly any cars along highways.
Hardly any shoppers with shopping bags.
Hardly any private construction sides.
Hardly any private building construction.
-very quiet !
But everywhere councils are very busy – hmmm!
Something is wrong here !!!

Yes, I was able and willing

Yes, I was able and willing to pay my previous rates. Do councillors/ council staff have a pay freeze where you live ?

and do rates/ taxes,

and do rates/ taxes, insurance go down according to the state of our economy ?

In the current economic

In the current economic climate I fear the worst, will the none productive sector in this country increasingly eating up the productive sector ?

Well, Prime Minister just

Well, Prime Minister just another example of what I previous wrote – no economic strategy !
 In stead of creating good conditions for the most important secondary sectors (production/ manufacturing) you obviously more keen on letting that sector collapsing. Free trade = bringing workforces from China (Asia) into the country. and leave Kiwis on low wages or even worse unemployed – what prospect do we have for the future – the next generation – Ha !

Not in Marlborough anon..I'm

Not in Marlborough anon..I'm told that last month the council processed just one consent and that was a renewal!...the staff are busy as though...checking swimming pools and counting weeds on the a charge there a charge, everywhere another charge!

Cheez Wally – don’t remember

Cheez Wally – don’t remember the guy you called “Purple Witch Hat” and other funny names ?


Is this drop in spending

Is this drop in spending causing supermarkets to deflate their inflated prices then?  I really like that idea seeing as they have been gouging us for so long
Zip up your purses girls ,  sometimes playing hard to get can work wonders. I have certainly deleted all
processed food and extras from my list.    You can easily knock $40 off your check out tally without any hardship.  Some of my poshest friends are enjoying learning to be recessionistas.  
Cafe culture is sooo you at Vinnies for a rumage ...yah?

You're quite right there. 

You're quite right there.  It's not difficult to still enjoy life while trimming costs.  I can't remember the last time I went out for a coffee as the espresso machine I bought back in 2004 (for $250!) is still serving me and my three cups a day habit well.  I've never seen such sharp specials in the wine department of my local supermarket either.  Why pay $12 a glass for a decent drop at a swanky bar when I can buy the whole bottle for the same price (when it's discounted down from $24!) at said supermarket.  Other tips include "googling" Thai (or whatever your weakness is) recpies to recreate at home as opposed to dropping $30 a pop on takeaways (and the result will be healthier too). 
I went into a Kathmandu store the other day as I wanted some polyprop gear for an upcoming trip, instead of paying $50 for one top (full price) the deal was 3 for $50! 
I love bargains :)

 Wine has to be the best

 Wine has to be the best bargain in NZ at present.  When I arrived in NZ in 1996 Montana varietals were $9.99 per bottle.  Last week I was able to buy the very same wine in New World for $8.99.  A 10% reduction on the 1996 price with no loss in either quantity and quality.  Why don't we put the Montana management in charge of all Local, Regional and Central Government spending!

But I'll bet the value of

But I'll bet the value of their land holdings has gone up, AR !  Forget about product.That's the Kiwi business way to riches?

It's only worth what people

It's only worth what people will pay, and no one pays much for land now. 

This just shows how tough it

This just shows how tough it is in NZ for a lot of people and for the forseeable future it does not look like it will get any better. Two thousand more on the dole today as announced by some department. And they say property prices are going to stay where they are. How can they when we are still suffering as a nation from the worst and longest recession since the depression. And to boot The Fool bought another rental recently. It beggars belief.

Yeah it is getting tougher.

Yeah it is getting tougher. I don't know anyone who is looking at getting into property, as everyone I know understands it is going to remain flat or fall. Most of what people buy at supermarkets, is on special, which shows the NZ market. We tend to only buy something where we beleive we are getting it on discount. Look at all these one day special websites that have recently popped up.

ex agent. Compliments

ex agent. Compliments accepted. I thrive on them. You have to have stickability to survive in property or any business. Obviously you didn't have it that is why you are an ex agent.
All you want to do is knock property and real estate agents and all and sundry.

Maybe The Man and Rich PI

Maybe The Man and Rich PI Troll should be a bit more positive in their own comments and therefore would not attract attention.

The man and troll are

The man and troll are positive, they upset all the grumpies on this site because they like what they do already. Others on here still can't work out what to invest in.

But they know not to take

But they know not to take advice from PI sprookers cos property is in decline and will be so for a decade at least, if not much longer, right anon..yes I thought you would agree.

And what about your gold

And what about your gold Wally? Sold yet?

Haw Haw

Gold? No income. Based on a


No income. Based on a fiction. Biger fool theory when you sell.

Be crazy to own.

Ignorance is bliss right

Ignorance is bliss right you are boy...away you go and begin your higher ed.

I've seen that site...every

I've seen that site...every opinion under the own instincts first.

Thanks the Man/Troll. I agree

Thanks the Man/Troll. I agree with what you say about the grumpies.

This is a good point. Some

This is a good point.

Some people on this site clearly have on-going strategies in place and persist with them.

Others on this site are all over the place, hopping in and out of investments according to fashion.

Who will be successful over the years? I always reckon the long time investor will best the short time trader.

Andy Rogers, there should be

Andy Rogers, there should be plenty more cheap wine where that came from and you might even be able to get a vineyard thrown in too -

A sign of the times... A

A sign of the times...

A friend of mine has just bought his first house, 4 bedrooms, less than 10 years old for less than $390k in Auckland. The place was formerly a rental property. Landlord was made redundant and the rest is history.

A family member works as a dental assistant. Over the past 3 weeks she says the number of patients has slowed to a trickle. She's now been made redundant.

Is the tide turning down again? From what I'm hearing, yes.

Interesting. First time ever

Interesting. First time ever I decided to get ' a quote' from the dentist the other day, rather than just having the work done and paying at reception.. quote = $1200 ! But it came with a little note "20% discount for payment on the day".

Read it and weap PI's.

Read it and weap PI's.