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Bayleys Research


2ND HALF 07 AUCKLAND RETAIL REPORT

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QUARTERLY RETAIL SPENDING

Retail spending in the second quarter of 2007 eased by 1.4 percent in the Auckland region, which equates to $64 million, according to the June quarterly result of Statistics New Zealand’s (StatsNZ) retail survey. The decrease, while only marginal, comes as a result of pressure from the Reserve Bank of New Zealand (RBNZ) to decrease private expenditure in order to reduce inflationary pressure.

Over the last 12 months, retail spending in the Auckland region grew steadily through the June and September quarters before a peak in the December quarter at $4.9 billion. The normal post-holiday slowdown was evident in the March quarter, during which time retail spending decreased by $452 million. Despite the uncharacteristic drop off over the latest June quarter, we should see retail spending increase slightly through to September before the trademark boost going into the holiday period.

 

 

Over the last four years, annual growth in New Zealand’s retail spending has been increasing at a rate higher than inflation. Auckland exemplifies this increase, with annual growth in retail spending, June to June, between 5 and 12 percent since the June quarter 2003.

However, consumer confidence has taken a knock over the June quarter according to the Westpac McDermott Miller Index. While a proportion of the decline can be attributed to the season, there has been a definite decline in confidence with regard to the near term economic outlook. This is likely to result in a slowdown in consumer spending as people wait out the economic unrest.

A combination of slow income growth, high interest rates and rising fuel prices has led the New Zealand Institute of Economic Research (NZIER) to forecast a marked slowing in private consumption. The NZIER believe private consumption will increase 1.9 percent in the March 2008 year, which is significantly lower than the average growth in consumption of 4.7 percent over the preceding five years.

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