New Zealand Retail Sales Remain Weak, Indicating Recession

Retail sales in New Zealand continue to decline, reflecting the country's recessionary state as consumers face the burden of high interest rates. According to Stats NZ, retail sales volume dropped by 1.0% in the second quarter compared to the first. This follows previous decreases of 1.6% in the first quarter and 1.1% in the fourth quarter of last year.

Of the 15 retail industries analyzed, 11 experienced a decline in sales volume in the second quarter compared to the first. The most significant contributors to this decrease were food and beverage services, which saw a 4.4% drop, and hardware, building, and garden supplies, which fell by 4.8%.

New Zealand's economy heavily relies on agriculture, and as the Reserve Bank of New Zealand aggressively raised interest rates over the past two years to combat inflation, the economy has slowed significantly. In the first quarter of this year, economic activity contracted by 0.1%, following a 0.7% contraction in the previous quarter, indicating a technical recession.

The central bank has recently taken a more cautious approach, carefully considering the consequences of its policy decisions. While it suggests that interest rates will remain high for a considerable period, it has refrained from taking immediate action.

However, there is some positive news in the retail sector, with motor vehicle and parts retailing experiencing a 3.7% increase in the second quarter following a 2.1% decline in the first quarter.