Latest data confirms further gloom for those dependent on the spending patterns of New Zealanders and visitors.

After many years of credit-fuelled expansion, retail spending for the year to February 2009 slumped to be 0.6 percent below that of the previous year.

The last time this measure was in negative territory was April 1998. Reinforcing the gloom is the result for total retail sales excluding the volatile petrol and motor vehicle sales categories. Sales in the non-motor vehicle categories for the February 2009 year did manage to record a positive 1.2 percent increase. However, this is the lowest this figure has been since the series began in 1995.

While the past year has undoubtedly been grim for retailers, sales figures for the latest months indicate that 2009 has started badly.

February sales revenue was down 6.9 percent on February last year, with sales slumps in the furniture & floor coverings (down 15.1 percent) and hardware retailing (down 13.9 percent) categories dominating the recorded declines. Additionally, a 5.1 percent decline in the large department store category indicates that months of negative news feeding growing uncertainty about job security has led to a widespread closing of wallets by New Zealand households.

Noticeably, the retail slump has now spread to most regions of the country.

Late last year the data was showing that the retail recession was concentrated in Auckland. And this was consistent with the drying up in house price growth and the consequent negative impact on Aucklanders propensity to spend. However, sales for the three months to February were between 3 percent and 5 percent below year-earlier levels in Waikato, Wellington, Other North Island and non-Canterbury South Island. Only the Canterbury region recorded positive growth (up 4.1 percent) in retail sales for the three months to February.

And respite from this rather bleak picture is not going to come from the tourism sector either.

The number of international visitors in the three months to February was down 3.3 percent on year-earlier levels. The total for the year to February of 2.4 million was some 2.4 percent below the previous February year, indicating that the tourism industry has also experienced a tough year.

It appears that the high NZ$ exchange rate of previous years had finally begun to bite early last year, and then the impact from the global financial crisis added to the industry’s woes.

Including domestic tourists, total guest nights for the three months to February were 4.6 percent down on a year earlier. While the international tourist dependent areas of Rotorua and Queenstown have been most hit by the downturn, the picture reveals declines across almost all other areas.

 - reprinted from the BERL Monthly Monitor April 2009.