Retail sales growth dives in December, up just +0.9% year-on-year

Business

Surprising analysts, December retail sales end 2018 on a very weak note, even after removing the impact of falling petrol prices

16th Jan 19, 11:43am by David Chaston

The wind has gone out of retail sales growth.

Statistics NZ December data for electronic card transactions reports just +0.9% growth compared with December 2017, and far below the +4.6% average growth rate for each of the preceding twelve months.

One factor is the sudden dive in petrol prices which slumped -11% compared with the same month a year ago in December after rising an average of +12% in each of the July to October months.

But that masks weakness in other core retail sectors.

For example, the December growth in the sales of 'durables' was only +0.4% in December after averaging +4.2% in the rest of 2018. The December "growth" in apparel evaporated entirely, declining -4.4% in December compared to the rest of 2018 at -0.9%.

The 'consumables' sector grew +3.2% year-on-year in December, sharply down from the +4.4% in the rest of 2018. The same for hospitality which was up only +5% whereas the rest of 2018 was showing a +6.5% rise.

The value running through electronic cards for services and non-retail industries showed a similar falloff in December.

It caps a weak December quarter in an unexpected way - no analyst was expecting such a sharp drop in December.

Electronic transactions

Select chart tabs

Source: Statistics NZ

We welcome your comments below. If you are not already registered, please register to comment

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.

29 Comments

by Yvil | 16th Jan 19, 11:50am 1547592627

It's a drop in growth, meaning that retail sales were still higher than 12 months before but they didn't increase as fast as expected.

by Anonymusse | 16th Jan 19, 12:07pm 1547593656

if you consider population growth of about 1.5% a year, then you have an actual decline.

The economy has actually started a decline period, will be much more clear around June/August, with more than a quarter of Growth below expectations and under population growth,
Economy grew near to 0 in 2018 and will be way below that in 2019.

by Davo36 | 16th Jan 19, 5:19pm 1547612363

We keep importing people with no money and no prospects.

by Canton | 17th Jan 19, 11:11am 1547676663

If the economy slows, hopefully this will slow the hoards of young third world men from flooding in??

by bw | 16th Jan 19, 11:51am 1547592690

(From Oz H/T MB) "Last week it was Crabtree & Evelyn. Today, menswear retailer Ed Harry has been placed into voluntary administration, placing the fate of 87 stores and nearly 500 staff in doubt. The news follows the closure of a string of Australian retailers recent times, including Marcs, Pumpkin Patch, Payless Shoes and Roger David, while department store Myer has also struggled."

by Anonymusse | 16th Jan 19, 12:09pm 1547593754

Aussie is heading into their first recession in 3 decades, brace yourselves

by JimboJones | 16th Jan 19, 3:13pm 1547604802

Or maybe people are buying stuff online

by Voiceofreason | 16th Jan 19, 11:57am 1547593058

Wealth effect from the housing bubble starting to go slightly into reverse, despite the mainstream media narrative that still says everything is fine. The analysts who are surprised aren't worth listening to from here on.

by Anonymusse | 16th Jan 19, 12:08pm 1547593698

lots of Premium SUVs for Sale!

by NorthernLights | 16th Jan 19, 1:34pm 1547598899

Lexus most reliable I’ve discovered
No more RangeRovers ever

by Masher | 16th Jan 19, 1:53pm 1547600015

You clearly don't have an instagram account...

by Masher | 16th Jan 19, 12:31pm 1547595080

The Bali Villa industry will take a hammering!

by Yvil | 16th Jan 19, 5:45pm 1547613949

Why?

by keenaucklandobserver | 16th Jan 19, 3:13pm 1547604820

Get a car, holiday, boat or all now!

by Anonymusse | 16th Jan 19, 3:23pm 1547605385

or wait for wee while right?

by Cowpat | 16th Jan 19, 12:20pm 1547594420

Economists forecast only a 0.4 fall. additionally November was revised down . Its a big miss, another big miss.
Implications for GDP 4Q, , banks will lower their forecasts, and next weeks CPI will confirm the initial fall in petrol prices, REINZ will confirm faltering home sales. . The Reserve Bank will cut this year, only question is whether RBA strikes first.

by RickStrauss | 16th Jan 19, 2:17pm 1547601434

Question is whether that will actually increase credit availability. Homes are simply not affordable, including deposit size. The RBNZ has already moved more quickly than everyone expected, suggesting things aren't looking good.

by MortgageBelt | 16th Jan 19, 12:24pm 1547594665

So we may see the OCR and mortgage interest rates drop in response?

by Anonymusse | 16th Jan 19, 12:28pm 1547594917

Mortgage rates are 100% in line with OCR, even if OCR Drops by 0.25% Mortgage rates can stay the same, or drop by 0.05% or increase 0.05%

by Anonymusse | 16th Jan 19, 1:48pm 1547599684

I Meant "Not 100% in line"

by Nzdan | 16th Jan 19, 12:54pm 1547596497

What happens to deposit rates? Maybe the OCR could drop to 0.25%, and mortgages could be 1% with savings rates being 2%......

by K.W. | 16th Jan 19, 2:03pm 1547600595

Banks will be quick to drop deposit rates, but won't pass on the full drop in mortgage interest rates, as they have to raise their margins and profits in order to fund their capital increases.

by bilbo | 16th Jan 19, 12:46pm 1547595962

The retail shops aren't exactly trying hard to get me to spend. Fake 60% off sales, complicated bundles, club cards, after pay, lay buy. I don't want any of this bulls#t. I want to walk in find the item I want in stock and buy it, lo-and-behold with my own money, at a decent price. Online is almost always the way to go unless the item is bulky.

NZ shops are consistently targeting chumps rather than competing on price. This is why Kathmandu and Macpac failed in the UK - not enough chumps.
With the squeeze on house prices and credit growth the shops (and their landlords) won't have enough chumps to keep this up forever.

by Canton | 17th Jan 19, 11:15am 1547676921

Totally agree. Have to wonder what kind of margins these stores are operating with when me, a single person not a corporate buyer can sources cheaper on-line! Lol.. fall in retail sales is sign we're waking up.

by PocketAces | 16th Jan 19, 1:58pm 1547600294

Retail sales down, yahoo, maybe that means the amount of landfill goes down as well

by Pragmatist | 16th Jan 19, 5:32pm 1547613148

Nope, less time shopping = more time siting on couch in front of Netflix.. Bags of chips, boxes of beer/coke.

by Wrong John | 16th Jan 19, 2:52pm 1547603560

Or I may get a car park outside my cafe tomorrow.

by bilbo | 16th Jan 19, 3:19pm 1547605152

Don't spend too much. Maybe just go for a sausage roll and a free water. We all have to do our bit to keep this GDP shrinkage going. Less plastic junk, more competitive prices, more car parks what's not to like!

by Halfway To Paradise | 17th Jan 19, 9:20am 1547670002

I think people underestimate the effect on-line shopping and technology has on keeping inflation down, not to mention the acceptance by people of poorer quality cheaper goods.