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UPDATE 2-NZ retail sales inch up in Q3, but weak spots emerge
November 23, 2017 / 1:10 AM / 24 days ago

UPDATE 2-NZ retail sales inch up in Q3, but weak spots emerge

    * Seasonally adjusted retail sales rise 0.2 pct Q/Q
    * Eases off 1.8 pct jump in previous quarter
    * Spending slow-down likely as housing market weakens -
analysts

 (Re-casts, adds analyst comment)
    By Charlotte Greenfield
    WELLINGTON, Nov 23 (Reuters) - New Zealand's retail sales
growth slowed sharply in the third quarter amid signs that a
slowing housing market has dented consumer confidence, pointing
to slower spending in the year ahead.
    The slow-down was heightened by one-off factors, including
an inconclusive election and a recoil from an earlier sports
tourism boom, but households also held off on purchases of major
items.
    Sales volumes rose a seasonally adjusted 0.2 percent in the
three months to the end of September, according to data from
Statistics New Zealand, compared with a 1.8 jump in the previous
quarter.
    The soft result would likely reinforce the central bank's
resolve to keep the official cash rate at a record low of 1.75
percent, said Mark Smith, economist at ASB.
    The New Zealand dollar          initially bounced to $0.6889
from around $0.6876 before the release, but gave up its gains as
investors digested weak spots in the data.
    The small rise in retail sales was underpinned by electronic
goods, which grew 5.1 percent.
    Growth was dragged down by a 3.1 percent drop in food and
beverages spending, which retraced from a bumper second quarter
when a series of high-profile international sporting events saw
a flood of tourists splurging on hospitality.
    However, spending also dropped for big ticket items, such as
cars and major household items, suggesting consumers were
curbing spending as house price values eased.  
    "While today's figures had a clear unwind element to them
after key tourist events boosted spending in Q2, there were some
softer pockets too, especially spending on big-ticket items,"
said Philip Borkin, senior economist at ANZ Bank.
    "History has taught us that that is what you'd expect at a
time of a weak housing market," he added.
    Sales of motor vehicles fell 0.8 percent, while funiture
sales dropped 2.6 percent.
    New Zealand house price growth has cooled dramatically since
the start of the year, even falling in previously red hot
Auckland thanks to central bank mortgage lending restrictions.
            
    On an annual basis retail sales were 4.1 percent higher,
drawing back from 5.4 percent growth the previous quarter.
    "We expect annual retail spending growth to continue to
moderate over the remainder of the year given the sluggish
housing market and easing consumer confidence," said ASB's Smith
in a research note. ASB projected annual sales growth of 3.5
percent by the end of 2017.
    

 (Reporting by Charlotte Greenfield; Editing by Richard Pullin)
  

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