26 Aug 2011

Economist questions sustainability of pick up in retail sales

6:53 am on 26 August 2011

Retail sales have surged in recent months, but an economist is questioning how sustainable the pickup will be beyond the Rugby World Cup.

Statistics New Zealand says the value of retail sales rose 1.7% in the three months to the end of June.

When fuel and motor vehicles are stripped out, sales were up 1.4%, the biggest quarterly increase since September 2009.

Deutsche Bank chief economist Darren Gibbs says there's been reasonable growth now for two quarters, with a rebound in spending on items like appliances and cars, which were cut back during the recession.

He says goods tend to wear out so TVs, cars and toasters need replacing, so there is an element of catch up, but at this stage there is no broad based strength.

Mr Gibbs says other recently released economic data shows the recovery is patchy and there are worrying signs in many of New Zealand's offshore trading partners.

He says it will be interesting to see how business and consumer sentiment looks after the Rugby World Cup.

Retailers Association chief executive John Albertson says the retail market appears to have turned a corner, but the sector remains fragile.

He says the market is hugely competitive and no one has made any significant gains in the last nine months in terms of price increases.