- Jane Turner, ASB senior economist
Consumer spending in New Zealand rebounded strongly in the third quarter, powered by robust sales of cars and auto parts. Retail sales volumes rose 1.6% on a quarterly basis in the July-September period, the Statistics New Zealand reported, beating market consensus for a 1.4% gain and compared with a lacklustre 0.1% rise in the June quarter. The value of retail sales rose 1.4% in the measured period, following a 0.3% increase in the second quarter. Motor vehicle and parts retailing reported the largest volume gain in the third quarter, advancing 5.0%. Meanwhile, core retails sales, which strip out the fuel and auto industries, climbed at a pace of 1.0% last quarter. Out of 15 retail industries monitored, 10 reported higher sales volumes. Electrical and electronic goods was another sector that showed a robust performance in the three months ended September 30, rising 6.6%.
The sharp increase in spending came after the Reserve Bank of New Zealand cut interest rates three times between June and September in an attempt to boost demand. The official cash rate was lowered from 3.5% to 2.75% over the three months, but was remained on hold since then as confidence strengthened again. The market is currently pricing in a 40% chance of another 25 basis point rate cut at the RBNZ's December 10 meeting.
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