New Zealand's August Retail Sales Probably Rose 0.4% (Update1)

By Tracy Withers

Oct. 10 (Bloomberg) -- New Zealand's retail sales probably rose in August, adding to signs that record-high interest rates haven't curbed consumer spending and economic growth.

Sales increased 0.4 percent from July, when they were unchanged, according to the median estimate of 13 economists surveyed by Bloomberg News. Statistics New Zealand releases the report at 10:45 a.m. in Wellington on Oct. 12.

Reserve Bank Governor Alan Bollard kept the benchmark interest rate unchanged at a record 8.25 percent last month, saying four increases between March and July were damping domestic demand. Rising consumer spending suggests there is little scope for Bollard to cut borrowing costs soon.

``Many signs point to continuing consumer confidence,'' said Andrew Dutkiewicz, chief executive officer at appliance retailer Noel Leeming Group in Auckland. ``The labor market is really buoyant, employment is at an all-time high and the high New Zealand dollar has made imported goods cheaper.''

Noel Leeming has increased sales of televisions, computers and video-game players from a year earlier and expects sales to keep rising, Dutkiewicz said in an e-mailed statement.

Prices of items such as flat-screen televisions have fallen 18 percent the past year as New Zealand's dollar has gained 16 percent, cutting the price of imports. The New Zealand dollar bought 76.51 U.S. cents at 10:50 a.m. in Wellington from 76.14 cents in late Asian trading yesterday.

Excluding spending at vehicle dealers, fuel outlets and workshops, retail sales probably rose 0.5 percent in August, according to the median estimate of 12 economists.

Consumer Confidence

Consumer confidence rose for the first time this year in the third quarter after the jobless rate fell to a record low 3.6 percent in the second quarter, according to a report from Westpac Banking Corp. and McDermott Miller Ltd.

Spending on debit, credit and store cards increased the most in six months in August, according to government figures released Sept. 19. The value of transactions rose 1.4 percent from July. Card transactions make up 57 percent of total retail spending, the statistics agency said.

Adding to evidence of underlying strength in the domestic economy, local companies are more optimistic about the outlook for sales and trading in the fourth quarter, the New Zealand Institute of Economic Research Inc. said yesterday.

The economy grew 2.2 percent in the year ended June 30. The Reserve Bank last month forecast economic growth of 3 percent in the year ending Dec. 31.

Eleven of 13 economists surveyed by Bloomberg News say Bollard will leave the official cash rate unchanged until at least June 30. Two forecast a cut in the second quarter and one expects an increase.

Bloomberg Survey

Following is a table of forecasts for the change in retail sales in August after adjusting to remove seasonal variations, and for sales excluding vehicle dealers, fuel outlets and workshops.

August Sales Ex-Auto
==================================================
Median 0.4% 0.5%
High 0.8% 0.7%
Low -0.1% 0.0%
No. of Replies 13 12
==================================================
ANZ Banking Group 0.2% 0.3%
ASB Bank -0.1% 0.0%
Bank of New Zealand 0.5% 0.6%
Barclays 0.4% 0.5%
Citibank 0.3% 0.0%
Deutsche Bank 0.6% 0.6%
First NZ 0.6% 0.6%
Goldman Sachs JBWere 0.1% 0.4%
JPMorgan 0.8% 0.7%
Macquarie 0.4% 0.3%
RBC 0.4% ---
UBS 0.5% 0.5%
Westpac 0.5% 0.5%
==================================================

Last Updated: October 9, 2007 17:56 EDT