Retailers say they're optimistic about the future but they're not acting as if they are.
A New Zealand Institute of Economic Research (NZIER) survey of about 900 businesses found a net 45% expect higher sales during the next six months, up from the 10% in June. However, retailers are holding little inventory and making few orders overseas.
The survey also found among businesses overall, a net 11% experienced higher activity in the September quarter, up from the 5% whose businesses grew in the June quarter. The firms are expecting this quarter will be better too.
But NZIER principal economist Shamubeel Eaqub said retailers did not want to act until they actually experienced the expected improvement.
"Retailers have been quite subdued so retail spending is growing at a moderate pace but they're not holding much inventory and they're not ordering much stuff from overseas," Mr Eaqub said.
"Part of that, I think, is businesses are being very cautious because of their experience over the last five years, where households have been slow to spend and open up their wallets. Retailers want to see that spending coming through in reality before they load themselves with excess inventory."
There was currently little inflation in the economy but some future indictors showed it was starting to pick up, he said. That was because capacity constraints were starting to bite and labour was starting to get a little bit harder to find.
The combination would start to slowly drive inflation up over the course of the next two to three years but from a low level right now, Mr Eaqub said.
Wages were not rising despite staff being harder to find, and that was "partly a regional story", he said.
"A lot of the difficulty in finding labour was in Canterbury and we have seen wages rise there but outside of Canterbury, things are more subdued."
However, wages would pick up as the economic recovery got under way and hiring increased.