Early winter boosts sales

Fairfax Media

KEEPING WARM: The early and frigid start to winter sent Kiwis scurrying off in search of warm clothing, new figures out today show.

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The early and frigid start to winter sent Kiwis scurrying off in search of warm clothing, new figures out today show.

Statistics New Zealand said today that in May, clothing and softgood retailers experienced a whopping 12.6 percent ($25 million) increase in sales. It was the largest recorded monthy increase in sales for the clothing sector.

Some parts of the country experienced record low temperatures in May, while the national average temperature was some 1.6 degrees celsius colder than the long term average for the month.

The dash to get warm clothing helped core retailing sales experience their biggest increase for over years in May.

SNZ said today that excluding vehicle-related industries, retail sales surged by 1.6 percent, or $65 million in the month.

However, the figures are being greeted with caution by economists because later data on electronic card transactions for June - which was released on Friday - showed that there had been a sharp reversal in retail spending last month after encouraging figures in the previous three months.

SNZ said that including automotive figures, total retail sales in May were up 0.8 percent, which was the biggest rise since November 2007. Vehicle-related sales dropped by 1.8 percent during the month.

Retail sales generally have been extremely sluggish since 2007. During that time the figures have generally been boosted by strong sales from supermarket and grocery stores - often because of increased prices.

In May supermarket and grocery stores again enjoyed strong business, with sales up by $27 million, or 2.2 percent to be the biggest contributor to the overall rise in sales, ahead of Clothing and softgoods.

Thirteen of the 20 retail industry sectors had increased sales in May. But of these, only four sectors had sales rises in excess of $5 million.

Goldman Sachs JBWere New Zealand strategist Bernard Doyle said said core retail sales had their strongest year-on-year growth rate (3.4 percent) since January 2008 - the beginning of the recession.

"The rebound in headline sales growth is consistent with our view that suggests consumer spending activity is past the worst. However electronic receipts data suggests June was a tough month - consistent with a pull-pack in core retail sales growth back to around 3 percent, year-on-year," he said.

"We suspect the tourism exposed sectors of retail, which were weak in May, will be even weaker in June as declining visitor arrivals and swine flu make their presence felt."

ASB economist Jane Turner said the May cold snap had clearly "sent shoppers indoors to the mall and boosted clothing sales over May".

But she also said that the electric card transaction data for June suggested that the strength over May was likely to be a one off.

"This pattern would be consistent with bad weather bringing forward winter related purchases. There were some tentative sign of housing related spending picking up, although this is from a low base and the pick up in housing demand has been relatively modest to date. Looking through the clothing one-off and housing related spending, the retail trade survey suggests that underlying consumer demand remains reasonably subdued," she said.

- © Fairfax NZ News