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New Zealand Q4 2024 retail sales (ex inflation) were stronger than forecast, rising 0.9%q/q, against a 0.5% market expectation. The Q3 dip of 0.1%q/q, was also revised higher to flat. 

• This was the firmest q/q print since the end of 2021.  Stats NZ noted: "Ten of the 15 retail industries had higher retail sales volumes in the December 2024 quarter, compared with the September 2024 quarter, after adjusting for price and seasonal effects."
• "The biggest contributors to the rise in retail activity in the December 2024 quarter were: electrical and electronic goods retailing – up 5.1 percent, department stores – up 4.2 percent, accommodation – up 7.6 percent, food and beverage services – up 2.3 percent."
• This hints at some return of discretionary spending, with most of these categories negative in parts of 2024. This shows the impact of RBNZ easing beginning to benefit parts of consumer spending.
• The chart below shows the level of retail sales volumes. We are still comfortably sub 2021 cycle highs. In y/y terms, Dec retail sales volumes were close to flat. 

Fig 1: NZ Retail Sales Volumes - Level 

Source: MNI - Market News/Bloomberg 

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In local morning trade, NZGBs are 2-4bps richer, with the 2/10 curve flatter, after US tsys finished last week with solid gains. 

• US tsys finished near session bests Friday, with second-half support spurred by risk-off sentiment as wires recirculated report of a new Covid strain out of China with "pandemic potential" (SCMP)
• Early Friday support for US tsys was triggered by weaker than expected data: flash S&P PMIs w/ composite at 50.4 (cons 53.2) after 52.7 in Jan, services (49.7 vs cons 53.0, after 52.9); and existing home sales were softer than expected in January at 4.08m (cons 4.13m) after an upward revised 4.29m (initial 4.24m). UofM data showed a worrying rise in long-term inflation expectations alongside a deterioration in consumer sentiment.
• NZ Retail sales ex. inflation rose 0.9% q/q (estimate +0.5% with a range of 0% to +0.8%) in Q4 versus a revised 0% in Q3. Core sales excluding fuel outlets and car yards rose 1.4% q/q versus a 0.6% contraction in Q3.
• Swap rates are flat to 4bps lower, with the 2s10s curve flatter.
• RBNZ dated OIS pricing is little changed. 27 bps of easing is priced for April, with a cumulative 59bps by November 2025.