Car sales lead in subdued January retail spending

Following a disappointing early summer for retailers, January showed a nationwide spending pickup but with consumer confidence still relatively subdued.

The increase in sales was led by spending on fuel and vehicles, with a recovery in the car buying sector, previously hit by the recession. February retail spending could also prove soft, commentators say.

The Statistics New Zealand retail trade survey released yesterday showed seasonally adjusted total retail sales rose 0.8 per cent or $42 million in January from the previous month. This followed a 0.4 per cent fall in December.

Leading the increase were automotive fuel retailing, up 2.8 per cent or $15m, and motor vehicle retailing, up 2 per cent or $12m.

Core retail sales, which exclude the four vehicle-related industries, rose by a lesser degree, 0.3 per cent or $12m from the previous month, following a 2.0 per cent fall in December.

ASB economist Jane Turner said that while total January retail sales were higher than market expectations, core spending was softer. Of note was a downward revision to the already weak result in December. The January pickup was somewhat disappointing, suggesting a sluggish recovery.

Seasonally adjusted sales were up in the North Island – 1.5 per cent – and flat in the South Island – down just 0.2 per cent. The only region with a sales decrease was Canterbury, down 0.9 per cent, with seasonally adjusted sales in Wellington up 2.1 per cent and in Auckland up 1.1 per cent.

Recreation goods retailing sales were up 4.8 per cent or $9m, following a 4.9 per cent fall in December; while accommodation sales were up 3 per cent or $6m. The biggest decreases in sales in January were in the cafes and restaurants sector (down 0.8 per cent or $3m), hardware (2.8 per cent or $3m lower) and other retailing (down 2 per cent or $5m).

Smiths City chief executive Rick Hellings said the nationwide furnishings and appliance store had seen January trading affected by the less than brilliant weather within an already slow retail recovery. "Christchurch has been a little softer than other areas but very marginal ... I think it was more because it was particularly strong last year rather than any real weakness this year to be honest," Mr Hellings said.

Ballantynes managing director Richard Ballantyne said sales at the department store had picked up in January from the same month a year earlier though retail spending was volatile, reflecting consumer wariness. "We've had a very satisfactory January ... but we understand February has got softer," he said.

- © Fairfax NZ News