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ASB Quickview: July Retail Sales

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Fuseworks Media
Fuseworks Media
ASB Quickview: July Retail Sales

Key results Total: -0.4% mom, 3.1% yoy Ex-auto: -0.1% mom, 2.1% yoy

Comment Today's result pointed to a slowing in the recovery in retail spending, following the strong result in the June month. Many of the categories that recorded strong growth in June reversed out part of the gains in July, including spending on recreational goods, department stores and liquor.

The declines in spending in the tourist-related categories such as accommodation and bars and clubs (down 2.4% and 6.1%, respectively) was surprising given the increase in visitor arrivals in the July month.

The recovery in vehicle sales looks to be slowing, with sales values falling 2.4% in July following some strong results in the previous months. There has been some slowing in vehicle registrations in recent months, which brings into question the sustainability of the recovery in vehicle sales following the sharp declines seen over the recession. Nonetheless, there is potential for vehicle sales to improve in the coming months as households bring forward purchases of major items in anticipation of the GST increase at the beginning of October. Implications The small decline in retail spending in July is slightly disappointing, particularly given the declines in spending on discretionary items. However, the result does follow a substantial increase in June and given the monthly volatility in this data overall the result points to a recovery in retail spending taking place. This is illustrated by the fact that the sales trend for both total and core monthly retail sales values are now at the highest levels since the series began in May 1995.

Nonetheless, the recovery appears to be taking longer to take traction than the RBNZ initially thought, and today's result reinforces our expectations that the RBNZ will leave the OCR on hold until the start of next year.

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