- Nathan Penny, rural economist at ASB Bank
New Zealand retail spending continued to increase in the second quarter as vehicle sales and values rose at the fastest pace in two years. The Kiwi Dollar strengthened against its U.S. counterpart following the data release, gaining as much as 0.30% to trade at 0.8479. The New Zealand Dollar reached an intraday high of 0.8488 immediately after the retail sales data came in stronger than expected. Statistics New Zealand reported that retail sales volumes surged 1.2% to $18.49 billion in the June quarter from the upwardly revised 0.8% in the first three-month period. Core retail sales, which strip out motor vehicle and fuel sales, also advanced 1.2%, while analysts had expected a 1.1% rise. Just four of the 15 retail industries monitored by Statistics New Zealand did not report a rise in sales over the quarter, with apparel the next biggest negative contributor after fuel retailing. The fresh figures are an upbeat news for the Kiwi after recent negative data, including falling dairy prices and moderating house prices
The key driver behind increase in retail sales is upbeat consumer confidence in the growing economy. The Reserve Bank of New Zealand last month said the economy is expected to expand at an annual average rate of 3.7% this year, from a 2.9% pace in 2013. New Zealand interest rates are seen to resume their upward path next year following a period of stability after the central bank last lifted the cash rate to 3.5% month .
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