Auckland city business and economy report 2007

Executive summary | Relative economic performance | Economic structure | Affordable housing | Population | Labour market | Retail trade and tourism | Building and property | Inflation, interest rates and the exchange rate | Potential economic impacts of climate change | Economic outlook

Retail trade and tourism

House price inflation has been a major driver of consumer spending over the past year. The significant increases in households' equity, along with job security in a strong labour market, supported consumer confidence.

Retail spending in Auckland city grew moderately during the past year. Retail sales across New Zealand grew by 4.7 per cent and across the region by 3.4 per cent in the year to March 2007.

By comparison, Auckland city's sales grew by 4 per cent. This is substantially lower than the annual average rate of 6.5 per cent for the period March 2000 to March 2007.

The increased fuel prices contributed to the lower levels of retail spending in the first half of 2006 as more of the household budget went on buying petrol. The decline in fuel prices late in 2006 reversed this shift in spending.

Retail spending has accelerated in early 2007, but increased mortgage costs from higher interest rates could slow discretionary spending over the rest of 2007. This is particularly the case for the 40 per cent of mortgages (by value) that are either on floating rates, or fixed rates and are due within the next 12 months.

Retail sales Annual percentage change

Source: Statistics New Zealand

International visitor arrivals through Auckland International Airport (AIA) showed a marginal increase of 3 per cent to 1,695,564 people, over the year to March 2007. AIA retained its approximate 70 per cent share of all international arrivals to New Zealand.

Published June 2007