New Zealand retail sales volumes rose by the most in six years in the December quarter, helping propel the New Zealand dollar to a 17-month high as confidence grows that the economy is lifting out of a soft patch.
Sales volumes, which strip out price movements, rose a seasonally adjusted 2.1 percent in the three months to Dec 31, well ahead of market expectations for a 1.1 percent rise. The bounce came after a revised 0.2 percent fall in the previous quarter.
The numbers followed an ANZ Bank survey on Thursday which showed consumer confidence at its highest level in 32 months.
Despite the recent upbeat data, the Reserve Bank of New Zealand is seen keeping its cash rate at a record low of 2.5 percent for a while yet.
"Overall, the message is that the New Zealand economy is starting to get traction from lower rates," said Ben Jarman, economist at JPMorgan.
"The new RBNZ governor is of the view that the economy is probably not as weak as it looks and that things can turn quite quickly when housing is very strong. That seems to be playing out," Jarman said, adding he expected a rate hike in the September quarter.
Market pricing implies no chance of a rate move at next month's review, and 25 basis points of rises over the next 12 months.
The New Zealand dollar rose to a 17-month high of $0.8519 from $0.8465 ahead of the data. Interest rate futures; eased with the December contract now implying a cash rate of 3.01 percent, up from 2.95 percent on Thursday.
Volumes were driven by a 7.7 percent lift in fuel sales, the highest in four years, solid rises in department store sales, and strong demand for hardware and building supplies in Christchurch, which was damaged by earthquakes in 2010 and 2011.
Core retail sales volumes, which exclude fuel and motor sales and servicing, rose 1.5 percent.
The value of retail sales rose 1.7 percent in the quarter, with the strongest growth in the dairy region of Waikato and Canterbury, which includes Christchurch.
The quickening pace of the $16 billion rebuild of Christchurch is expected to drive