Retail sales figures for the June quarter well outperformed expectations. Most forecasters had pencilled in a contraction in retail sales volumes given the various headwinds that are still being faced by households. However, sales volumes actually lifted a solid 0.5% over the June quarter. It’s the third quarter in which retail sales have increased, following the 1% lift over the December quarter and 0.8% increase over the March quarter. The recovery is in train, with volumes up 2.3% on last year’s levels.
It’s an encouraging improvement and suggests the worst is behind the retail sector. But there’s still a long way to go. Strength is still lacking in some spaces, particularly across durable items. Indeed the lift in sales volume over the June quarter lacked broad based strength. About half of the measured industries still recorded a decline in sales volumes. Spend on electronic goods, up 4.6%, was the stellar perfumer over the quarter. Though we wonder whether some front loading of (discounted) imports ahead of tariffs may have spurred some spend over the quarter. Still, key areas of discretionary spending continue to lack momentum. Sales volumes on clothing & footwear, accommodation, and around the home DIY all recorded sizeable declines. Sales activity was also uneven by region. Sales volumes grew 0.2% in the South Island, helped by a 2.6% increase in Otago. Meanwhile spend in the North Island fell 0.3% over the quarter, with a chunky dip in Gisborne (-3.5%) and Wellington (-1.1%).
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