Setting to 1 Infometrics Ltd - Retail Sector

Recent releases

Retail
Migration 21/08/2008
Jul 08 | annual (net): 5.201
Electronic transactions 21/08/2008
Jul 08 | a.p.c. 3.1%
Credit cards 21/08/2008
Jul 08 | billings in NZ a.p.c. 4.9%
Retail sales 15/08/2008
Jun 08 | excl. auto a.p.c: 1.0%
Employment 7/08/2008
Jun qtr 08 | unemployment rate: 3.9%
Labour market 4/08/2008
Jun qtr 08 | LCI a.p.c: 5.5%
Borrowing / lending 31/07/2008
Jun qtr 08 | housing debt a.p.c: 8.5%
Monetary policy 24/07/2008
Jul qtr 08 | OCR: 8.00% (prev. 8.25%)
CPI - inflation 15/07/2008
Jun qtr 08 | a.p.c: 4.0%

Reports
Retail Report, June 2008
(3/07/2008)
Retail Report, May 2008
(30/05/2008)
Retail Report, April 2008
(30/04/2008)
Retail Report, March 2008
(28/03/2008)
Retail Report, February 2008
(29/02/2008)
Retail Report, January 2008
(7/02/2008)

Retail SectorRetail Report, July 2008 1/08/2008
Overall economic conditions have now deteriorated enough to push the Reserve Bank to act, by cutting the official cash rate to 8% in July.  With retail petrol prices reaching $2.18, food prices climbing, house prices slipping, and consumer confidence down in the dumps, the case for a rate cut seems relatively convincing – except for the fact that inflation is expected to cross 5%pa in September.
MigrationAsian arrivals boost net migration 21/08/2008
Jul 08 | annual (net): 5.201
Net migration strengthened in July as the result of another significant increase in long-term arrivals. Over the year to July there was a net inflow of 5,201 people – the largest inflow since December. Overall there have been 1,600 more arrivals over the last three months than we had allowed for in our July forecasts.
Electronic transactionsElectronic card usage recovers 21/08/2008
Jul 08 | a.p.c. 3.1%
Core (non-automotive) electronic retail spending rose 1.2% in July, recovering from a massive 1.5% decline in June. The weak June result stemmed from a significant seasonally adjusted decline in the use of electronic cards for purchases, as actual core retail sales increased (up 0.2%). As a result, it is likely that the July figure indicates a rebound in card usage, rather than an increase in retail sales.

July 08 forecasts

Retail
PDF |Tables
Economic Outlook
The Home Front
Population and Tourism
Total Retail Forecasts
Store-Type Forecasts
Regional Retail Outlook

There is no depression in New Zealand | Economic OutlookPDF
New Zealanders are in denial if they believe that the current recession is purely the result of bad luck.  A stretched household sector, bloated government, and runaway inflation are the underlying economic ills.  In 2008/09 it is spiking oil prices, drought, a stagnant housing market and the credit crunch that will lower economic growth to a paltry 0.6%pa.  But our forecast for economic growth only averages 2.3%pa over the next five years, which is equivalent to our estimate for potential growth by 2013.  That result is due to the ignored deterioration in economic fundamentals.
The Home Front
The decline in consumer spending over the March quarter was significantly stronger than we anticipated in our last set of forecasts, with real consumption contracting by 0.4%.  Rising fuel, food, and utilities prices and falling house prices (lowering household wealth) have battered the household sector, while last summer’s drought has limited the income boost associated with New Zealand’s recent terms of trade increase.  Over the next two years falling real house prices, combined with further uncompensated price increases will see real consumption activity remain muted.  However, over the medium term, the fundamentals of a higher terms of trade, lower taxes, and an economy short of labour will see private consumption activity recover – aided by the economic stimulus that will come from hosting the 2011 Rugby World Cup.
Population and Tourism
Since the start of 2007 the net inflow of new retail customers has softened, with net migration falling and net tourist numbers in decline.  These net inflows are expected to deteriorate further over the next two years as a slowdown in both New Zealand and world economic activity impacts on migrant outflows and tourist inflows.  Over the medium term net migration will continue to decline.  On the tourism front, the Rugby World Cup will be the dominant factor – driving tourist inflows up by as much as 10% in 2011.
Total Retail Forecasts
Although the value of retail sales has remained largely in line with our forecasts, the volume of retail goods purchased has declined at a rapid rate, reflecting large increases in food and fuel prices. The surge in retail prices over the March quarter will persist, driving down sales volumes further.  Overall, the 1.3% decline in volumes over the 2008 year will be the worst result since March 1992.  However, the negative shocks to domestic economic activity are expected to ease towards the end of 2008, helping retail sales growth to return to more “normal” levels.
Store-Type Forecasts
All the evidence points to a drastic slowdown in retail activity over the first half of 2008 as rising prices and falling property values take their toll on consumer sentiment.  With high fuel prices and new emission regulations coming into play over 2008, we expect the automotive retail subsectors to suffer the most heavily – specifically motor vehicle retailing.  Other durable goods will also struggle, with appliance and furniture retailing flat-lining.  Beyond 2010, durable good sales will recover.  Over the medium-term, the largest increases in the value of retail sales are likely to occur in industries involved in food retailing.
Regional Retail Outlook
The outlook for non-automotive retail sales appears to be bleak in most regions over 2008/09.  Rising fuel, utility, and food prices have combined with drought and slumping property values to strike the domestic economy simultaneously.  Following a nationwide slump, a pick-up in consumer confidence is expected to drive a nationwide recovery in retail sales, with everywhere except Northland experiencing growth of 3% or more over the year to March 2010.  As we move closer to the Rugby World Cup, retail growth in Auckland is expected to pull above from the rest of the country, given the region’s position as a gateway to New Zealand.

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