WELLINGTON, Dec 12 (Reuters) - New Zealand retail sales
posted their biggest monthly fall in more than four years in
October, backing views the country's recession has deepened and
the central bank will keep cutting interest rates.
Seasonally adjusted sales fell a greater than expected 1.3 percent on the previous month, due largely to a slump in car sales. However, core sales, which strip out vehicle related sales, rose 0.8 percent, Statistics NZ reported on Friday.
A Reuters poll had a median forecast of no change to overall sales with core sales rising 0.8 percent.
'The data shows that the New Zealand economy is in deep recession and the Reserve Bank of New Zealand has a lot more work to do,' said Su-lin Ong, senior economist at RBC Capital Markets.
The New Zealand dollar was firmer after the data at about $0.5518/23. The yield on the March 90-day bank bill contract rose 1 basis point to 4.44 percent.
The New Zealand economy has been in recession since the beginning of the year. The Reserve Bank last week slashed its cash rate by a record 150 basis points to 5 percent, to help lift the economy and cushion the impact of global market turmoil.
Ten of 17 analysts in a Reuters poll expect a further 50 basis points cut in the central bank's Jan 29 rate review.
Statistics NZ said the fall in sales values was driven by a 14.5 percent decline in vehicle sales, the biggest one month fall since March 1997. Vehicle sales were at their lowest level in seven years.
The value of petrol and grocery and supermarket sales also fell, contributing to the overall decline.
However, there were rises in appliance sales, accommodation, clothing and soft goods sales, which boosted the core sales rise.
Over the past month several retailers, including The Warehouse and Briscoe Group, have reported sales through October were lower than a year ago. They have also said that the trading environment towards the peak Christmas season was tough.
Consumer spending has slowed sharply this year as the economy has contracted and house prices have fallen. However, since the central bank started cutting rates retail lending rates have fallen and cuts in personal taxation have come into effect.
Last week, Reserve Bank Governor Alan Bollard said the economy was emerging from a shallow recession into shallow growth, which would not pick up until the end of next year.
However, many analysts believe the recession will continue into the middle of next year.
(Reporting by Gyles Beckford) Keywords: NEWZEALAND ECONOMY/RETAIL (gyles.beckford@reuters.com ; +64 4 471 4231; Reuters Messaging: gyles.beckford.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Seasonally adjusted sales fell a greater than expected 1.3 percent on the previous month, due largely to a slump in car sales. However, core sales, which strip out vehicle related sales, rose 0.8 percent, Statistics NZ reported on Friday.
A Reuters poll had a median forecast of no change to overall sales with core sales rising 0.8 percent.
'The data shows that the New Zealand economy is in deep recession and the Reserve Bank of New Zealand has a lot more work to do,' said Su-lin Ong, senior economist at RBC Capital Markets.
The New Zealand dollar was firmer after the data at about $0.5518/23. The yield on the March 90-day bank bill contract rose 1 basis point to 4.44 percent.
The New Zealand economy has been in recession since the beginning of the year. The Reserve Bank last week slashed its cash rate by a record 150 basis points to 5 percent, to help lift the economy and cushion the impact of global market turmoil.
Ten of 17 analysts in a Reuters poll expect a further 50 basis points cut in the central bank's Jan 29 rate review.
Statistics NZ said the fall in sales values was driven by a 14.5 percent decline in vehicle sales, the biggest one month fall since March 1997. Vehicle sales were at their lowest level in seven years.
The value of petrol and grocery and supermarket sales also fell, contributing to the overall decline.
However, there were rises in appliance sales, accommodation, clothing and soft goods sales, which boosted the core sales rise.
Over the past month several retailers, including The Warehouse and Briscoe Group, have reported sales through October were lower than a year ago. They have also said that the trading environment towards the peak Christmas season was tough.
Consumer spending has slowed sharply this year as the economy has contracted and house prices have fallen. However, since the central bank started cutting rates retail lending rates have fallen and cuts in personal taxation have come into effect.
Last week, Reserve Bank Governor Alan Bollard said the economy was emerging from a shallow recession into shallow growth, which would not pick up until the end of next year.
However, many analysts believe the recession will continue into the middle of next year.
(Reporting by Gyles Beckford) Keywords: NEWZEALAND ECONOMY/RETAIL (gyles.beckford@reuters.com ; +64 4 471 4231; Reuters Messaging: gyles.beckford.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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