NZ November Retail Sales Up; Economy Recovering
http://www.fxfxfx.com 2010-01-21 09:06:07New Zealand retail sales rose more than expected in November, adding weight to the view the economy is recovering, but analysts remain divided on how soon the Reserve Bank will move to hike the Official Cash Rate.
Statistics New Zealand said Thursday that seasonally adjusted retail sales in November rose 0.8% from October. October's figure was revised to a rise of 0.1%.
The November result was stronger than the 0.5% increase forecast in a Dow Jones Newswires poll of 12 economists.
Core retail sales, which exclude motor-vehicle sales, were up 0.8%, compared with October's revised 0.5% increase. Economists had expected a 0.3% increase.
"Today's retail sales data was stronger than expectations, and suggest that consumers may be starting to come out of their shell," said ANZ senior markets economist Khoon Goh.
He added the data indicated stronger consumer confidence was finally starting to translate through into actual spending.
Retail sales slowed considerably as the economy fell into recession in 2008 with the household sector hammered by rising petrol and food prices. A sharp downturn in the housing market also dented consumption.
The Reserve Bank of New Zealand has pledged to keep the Official Cash Rate at a record-low 2.50% until midyear in order to support the economic recovery. Some economists are expecting the central bank to hike the cash rate as early as March while others are tipping June.
Goh said he didn't see Thursday's data as having much impact on monetary policy. ANZ Bank is expecting the first rate hike in June.
UBS senior economist Robin Clements, however, is expecting the central bank to start withdrawing monetary stimulus in March, saying "an emergency OCR was required for the 'emergency,' there is no longer an emergency, so we no longer need an emergency OCR."
Clements said the data showed solid recovery in growth and there is no reason it won't evolve into sustainable growth, with the investment and employment prospects that typically follow.
Statistics New Zealand said the total retail sales trend has been rising since February 2009 and has increased 2.5% since then, following a 13-month period of decline.
The New Zealand dollar rose after the data, trading at US$0.7222 around 0100 GMT from US$0.7196 prior to the report.
Thursday's data showed retail sales were bolstered by automotive fuel and liquor retailing. The agency added that sales from antiques, used goods, flowers, garden supplies, watches and jewelry had also increased.
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