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WRAPUP 1-NZ retail sales fall in July; rates seen on hold
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WRAPUP 1-NZ retail sales fall in July; rates seen on hold
Reuters - Tuesday, September 14
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* Retail sales weaker across the board
* Housing data also soft
* Market expects interest rates to be on hold Thursday
WELLINGTON, Sept 14 - New Zealand retail sales were weaker than expected in July, pointing to a patchy economic recovery and reinforcing views that interest rates will be held steady at the central bank's rate review on Thursday.
Seasonally adjusted retail sales fell 0.4 percent on the previous month, official data showed on Tuesday, compared with expectations for flat sales in a Reuters poll.
That followed data showing a further fall in house sales and subdued prices.
"With the housing data we've just had out as well, which was another flat indicator, that will be another reason for the Reserve Bank to take a breather and see how it pans out from here," said Bank of NZ economist Doug Steel.
The New Zealand dollar <NZD=> drifted nearly a quarter of a cent lower to around $0.7295, while interest rate futures <0#NBB:> were unmoved.
New Zealand's economic activity has been uneven, with consumers cautious and business confidence slipping in recent months amid weak wage growth and rising unemployment.
Domestic consumption makes up nearly two-thirds of the New Zealand economy, which is expected to have grown 0.8 percent in the three months to June 30.
The 7.1 magnitude quake in Christchurch, New Zealand's second biggest city, this month is seen dealing a further blow to activity, and dragging GDP lower in the near term.
The Reserve Bank of New Zealand is expected to hold its cash rate at 3 percent on Thursday after 25 basis point rises at both the June and July rate reviews. See [NZ/POLL]
After the retail data, financial market pricing of a rate rise on Sept. 16 was trimmed to just 4 percent from 8 percent. It stood at 20 percent on Sept 3. <CSRBNZ=CSAU>.
The data showed vehicle, liquor and recreational spending was down and offset rises in supermarket and grocery, cafes and restaurant.
Core retail sales, which exclude vehicle related retailing, fell 0.1 percent, while the value of actual sales rose 2.2 percent on June last year. Both were below market expectations.
A partial indicator of retail activity, electronic card sales fell 0.1 percent in July, after rising 0.4 percent in June and May, pointing to a sluggish sector amid a weak economy.
Earlier on Tuesday, the Real Estate Institute of NZ reported a 2.8 percent fall in house sales in August, while prices were fractionally higher. See [ID:nWEL004158]
New Zealand retailers have given mixed reports in the past week, with discount retailer The Warehouse Group <WHS.NZ> posting a 2.8 percent fall in full-year revenue while rival Briscoe Group <BGR.NZ> reporting a 2.6 percent rise in half-year sales.
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