The latest retail sales figures from Statistics New Zealand show retail activity fell 1.2% in the June quarter, extending the sales decline the sector has been experiencing over the past two years.
Stats NZ says 11 of the 15 retail industries it tracks had lower sales volumes in the June quarter compared with the March quarter, and the fall in sales continued the “downward trend” observed in the last eight quarters.
On a yearly basis, the June quarterly volume figures were down a further 3.6% on the comparable figures for the June 2023 quarter.
In that same period, Stats NZ’s national population data estimates the country’s population grew by 1.8% or 93,500. It means more people are spending much less than a year ago.
Stats NZ found card spending fell 0.1%, or $6.3 million during the month of July on a seasonally-adjusted basis, according to the latest data on electronic card transactions last week.
July marked the sixth month in a row that electronic spending throughout the country fell but it is also the smallest decrease in that time as well.
According to Stats NZ, the big contributors to the decline in retail sale volumes during the June 2024 quarter were:
- electrical and electronic goods retailing – down 6%
- motor vehicle and parts retailing – down 2.7%
- food and beverage services – down 1.9%
- clothing, footwear, and personal accessories – down 4.1%
“Retail sales decreased the most in the electrical and electronic goods industry and the motor vehicles and parts industry. By contrast, supermarket sales were up in the June quarter,” Stats NZ’s business financial statistics manager Ricky Ho said.
Supermarket and grocery store sales volumes, meanwhile, were up 2.1% while sales from pharmaceutical and other store-based retailing rose an even higher 3.2%.
On a retail sales value basis, the largest industry movements in the June quarter were:
- motor vehicle and parts retailing – down 4% or $155 million
- supermarket and grocery stores – up 1.5% or $99 million
- accommodation – down 6% or $83 million
- fuel retailing – down 2.3% or $58 million
- pharmaceutical and other store-based retailing – up 2.6% or $52 million
On a yearly basis, the total value of stock held at 30 June was down by 2.1%, or $197 million, to $9.2 billion compared to a year earlier.
Stats NZ said the total volume of retail sales per person fell 1.5% in the June 2024 quarter compared with March and it’s the tenth consecutive quarter to see a fall, after adjusting for seasonal effects and price inflation.
“Retail sales volumes per person have been falling for the last two-and-a-half years. The last time we saw several quarters of consistent falls was between 2007 and 2009, which coincided with the global financial crisis,” Ho said.
ANZ economists Henry Russell and Miles Workman said the 1.2% fall in retail sales volumes was slightly lower than both the 1% fall ANZ had penciled in and the market’s expectation of a fall of 0.9%.
It was still continuing the “downward slide” that retail sales volumes had been experiencing since the start of 2022.
“Overall, the level of retail spending remains very soft, and despite interest rates now heading lower, there are still plenty of headwinds, which should see weakness persist over 2024,” they said.
ASB senior economist Mark Smith said ASB expects challenging conditions for the retail sector to continue for a while yet.
“Cost of living increases are slowing, but the major handbrake on household spending is expected to be deteriorating labour market conditions,” he said.
Westpac senior economist Michael Gordon said retail sales volumes were now down 8.7% from their peak at the end of 2021.
“Retail sales have been restrained by both rising interest rates, which have squeezed the budgets of mortgaged households, and rapidly rising prices that have eaten into consumers’ purchasing power (retail spending in dollar terms is still up 4% compared to 2021),” Gordon said.
“Both of these pressures are now starting to ease, though they are likely to be replaced by concerns about job security and income growth.”
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