Shoppers shy away from spending

Far too many people have failed to heed Alf’s attempts to ignore the gloomsayers and see the bright side of things in the past few months.

The miserable buggers, accordingly, have clutched grimly to their wallets and resisted any urge to indulge in retail therapy.

As a consequence, we learn today, honest and hard-working shop-keepers are on the back foot, economically speaking.

Total sales volumes (seasonally adjusted) slumped a record 2.9 percent in the March quarter, twice as big as the previous largest falls of 1.4 percent in March 1997 and June 2008.

For the sixth successive quarter, the biggest contributor to that collapse in sales volumes was motor vehicle retailing, down 11.4 percent.

In terms of dollars, the value of total retail sales (again seasonally adjusted) fell 1.5 percent ($236 million). This was the fourth consecutive quarterly fall, and the largest since March 1997. Again motor vehicle retailing was the biggest victim.

Statistics New Zealand reports:

Sales volumes in core retailing, which excludes the vehicle-related industries, fell a record 1.2 percent in the March 2009 quarter. This is also double the previous largest falls of 0.6 percent seen in June 2007 and June 2008. Volumes fell in 14 of the 20 core industries, led by appliance retailing, down 5.9 percent, and department stores, down 3.6 percent.

Supermarket and grocery stores, up 1.9 percent, increased the most.

Another set of figures tells us the trends:

The trend in total retail sales volumes has been in decline since the June 2007 quarter, falling 6.7 percent since then, the longest and fastest period of decline since the series began in September 1995. The trend in core retail sales volumes has been flat or in decline since the June 2007 quarter and has fallen 1.9 percent since then.

And then there are the values:

The seasonally adjusted value of total retail sales fell 1.5 percent ($236 million) in the March 2009 quarter. This was the fourth consecutive quarterly fall, and the largest since March 1997 when sales fell 1.6 percent. The biggest contributors to the latest fall were motor vehicle retailing, down 9.2 percent ($156 million) and automotive fuel retailing, down 6.6 percent ($112 million).

But the value of “core retailing” (shaking out the automotive figures) rose 0.3 percent ($41 million) during the quarter and only seven of the 20 core retail industries had sales increases. The biggest came from supermarket and grocery stores, up 3.3 percent ($119 million). The largest offsetting decrease was in appliance retailing, down 6.1 percent ($39 million).

The Bank of NZ’s economists say they had had the gloomiest expectations of the March-quarter retail figures, but “even we were disappointed by this morning’s release.”

On reflection, however, they tell Alf there were clear grounds to expect such a slide. These figures related to a period, after all, prior to both the latest tax cuts and the recent hints that the housing market might (with emphasis on “might”) be stabilising.

Consumer sentiment sagged in February/March and tourist inflows were starting to sag.

The BNZ analysts say in their e-mail to Alf it’s not just businesses and the Government that are concerned about the state of their balance sheets, obviously.

Households are passing up on the toys, sticking to the essentials and clearing debt. Such is not only evident in retail sales, but also in the steady slide in household borrowing for consumption purposes.

Overall, the BNZ concluded, the spending data provided a sharp reminder of just how weak the retail sector has been, all too recently.

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