Lockdown retail slump was not as bad as feared

As expected, retail spending nosedived in the September quarter as lockdown forced closed shops to shut and consumers to stay home.

Retail sales volumes fell 8.1 per cent (quarter on quarter) on a seasonally adjusted basis, although the slump was not as severe as the 10 per cent fall most economists had expected.

With price effects included, the seasonally adjusted total sales values fell 7 per cent (or $2 billion) compared with the 4.2 per cent ($1.1 billion) rise in the June 2021 quarter, StatsNZ said.

Auckland – which suffered the hardest and longest lockdown restrictions – saw the biggest fall.

The Auckland region dominated the national fall with a record decrease of 15 per cent ($1.5 billion) in the September quarter, compared with the 6.2 per cent ($618 million) rise in the June quarter, StatsNZ said.

The region accounts for 35 per cent of all national sales, but it significantly contributed 78 per cent to the large fall in total sales values during the quarter.

Still, anecdotal expectations that retailers and consumers would adapt more quickly to the restrictions this year appear to have proved correct.

“The fall was not as sharp as feared and highlights New Zealand’s economic resilience,” said ASB senior economist Mark Smith.

“[This] suggests overall GDP may have also fared better than expected. We expect a strong Q4 lift in retail activity.”

But further out, remaining restrictions, stock shortages, higher mortgage interest rates, the cooling housing market and higher consumer prices should act to temper the magnitude of the rebound, he warned.

By retail category, hospitality took the biggest hit.

Food and beverage services had the largest fall, down 19 per cent, compared with the 5.2 per cent increase in the June 2021 quarter.

Motor vehicles and parts, department stores, and hardware and building supplies also contributed to the significant sales volume fall, StatsNZ said.

Supermarket and grocery sales had the largest rise in sales, up 7.5 per cent after the modest increase of 0.5 per cent in the June 2021 quarter.

ANZ senior economist Miles Workman warned against reading too much into the data at this point.

“There won’t be a lot of signal to be had in these data until we see the strength of the rebound in Q4 and beyond,” he said.

“It’s a stronger-than-expected starting point, sure, but it’s still a nasty out turn in an absolute sense.”

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