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Economy in Brief

Retail Demand Holds Up in Several Countries, Especially for Durable Goods
by Carol Stone January 20, 2006

Consumers in several countries are maintaining a rather firm spending pace, judged by new data on Total and purchases of goods. In fact, in Holland, the last few months have seen a smart rebound from a weak performance in 2003 and 2004. At the same time, some spending in France and New Zealand has tapered down recently.

In the Netherlands, weakness plagued Total through the middle of 2005. A usual vacation-related drop in August did not materialize this year, though. So by November, the latest figures reported just this morning by the Central Bureau of Statistics show sales volume up 5.1% from a year earlier. The so-called headline portion excludes pharmacies and repair services; this subset was up 5.2%.

A good gain was also apparent in the UK. In December, the ONS reported today, December sales rose 0.5% from November, putting the month 4.8% ahead of a year earlier, the best 12-month performance since November 2004. As seen in the second chart here, household goods are a contributing factor, although other store groups enjoyed sales expansions since about mid-2005.

In New Zealand, Total have been flat overall for the past three months ending November, but prior to that time, they trended higher pretty consistently at about 0.5%/month from the middle of 2004.The very latest pattern reflected a wide swing in demand for motor vehicles, which was strong in August and November, but fell steeply in between.In the months when car sales were up, other spending paused. This is a change for New Zealand retailers; these auto and non-auto sales have generally moved together, not in opposition.

Finally in France, sales have also slowed in recent months. And as in New Zealand, this reflects a reallocation of purchases.The measure we have is purchases of manufactured goods, and it does not represent all of Total. What we see is a firm advance in durable goods, led by automobiles.As people have made those big-ticket purchases, they have pulled back on electronics, which had previously been growing. Purchases of “other manufactured goods” and “textiles and leather” have been erratic but largely flat for the last three years.

We are somewhat surprised by the increases that are evident in all these countries since 2003. Anecdotal evidence has suggested that consumers have been restrained perhaps by poor labor market conditions or rising energy costs, but in these particular countries, hard data indicate that people have still been able to expand their purchases, with durable goods in particular being in good demand.

Retail Sales Latest Level Dec 2005 Nov 2005 Oct 2005 Year Ago 2005 2004 2003
  Total   (2000=100) 101 -- 5.1** 1.2**  --  -- -0.6 -2.2
  Headline* 101 -- 5.2** 1.3**  --  -- -0.6 -2.1
  Manufactured Goods (Bil.2000.Euros) 19.7 -1.0 0.7 0.1 1.4 2.5 3.3 1.9
  Durable Goods (Bil.2000.Euros) 7.5 1.2 0.4 0.2 6.9 7.0 8.4 2.0
  Other Manufactured Goods (Bil.2000.Euros) 8.5 -1.5 -0.6 1.1 -0.5 0.4 0.5 1.8
  Total  (2000=100) 129.0 0.5 0.9 0.4 4.8 1.9 6.0 3.2
New Zealand:                
  Total (Bil.NZ$) 5.0 -- 0.9 -0.3 5.6  -- 7.9 5.3
  Ex Auto Items (Bil.NZ$) 3.6 -- -0.1 1.0 6.1  -- 7.4 5.6
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