Mirroring the effects of a cold start to winter in May, which boosted clothing sales at the time, the warmer-than-usual August similarly may have boosted spending in the first of the spring sales.
While the increase in overall sales at 1.1%, up on economists' expectations of a 0.5% rise, reflects rising consumer confidence, the Reserve Bank will be closely monitoring the extent of the return of increased household spending.
ASB economist Jane Turner said the sales pick-up was "reasonably broad-based", with about two-thirds of the sectors registering increases during the month, according to the Statistics New Zealand monthly retail trade survey released yesterday.
"Clothing sales led the surge, up 6.5%, with the unseasonably warm weather in August potentially helping early spring clothing sales," Ms Turner said.
Lindsay Campbell, owner and manager of Alex Campbell Menswear in South Dunedin, said the 82-year-old business, in its third generation of ownership, had "bucked the trend" of waning retailers' profits during the recession.
It had a record financial turnover in 2007-08 to March and the first six months of trading this year was better again; albeit with the percentage of gross profit down and April having been a "disaster" start to the new financial year.
August trading was better than the national average of 6.5% cited yesterday, he said.
The key to staying ahead, at a time when two competitors had closed, was keeping stock levels low, which had needed addressing in some areas of the shop; maintaining turnover and balancing margins.
"We've done some aggressive marketing, smartened up the shop; and experienced staff really have to pass on skills. We've had to work hard at it; just try harder," Mr Campbell said.
He was neutral on reports of the effects of weather assisting early season sales.
Ms Turner said Australian tourist spending at skifields may have boosted the data, and while the present cooler weather could dampen clothing sales, she expected a "slow recovery in consumer demand" during the next 12 months.
She said housing-related sectors, such as hardware and furniture, also enjoyed strong spending growth, with the housing turnaround likely to be stimulating spending on home-related goods.
"[However] the Reserve Bank is wary of a housing-led and unsustainable recovery," she said.
August's retail data revealed "tentative evidence of housing-related spending improving", which the Reserve Bank may watch closely over the next few months.
"Last week's early hike [of interest rates] by the Reserve Bank of Australia serves as a reminder that New Zealand's Reserve Bank will not want to keep the [interest driving] official cash rate at emergency settings for too long if the housing market recovery gains momentum", she said.
New Zealand's cash rate, the highest in the developed world at the height of the housing boom at 8.5%, was then slashed to the present record low of 2.5% when recession struck.
Last week Reserve Bank Governor Alan Bollard highlighted the strength of the New Zealand dollar was overshadowing economic recovery.
However, he reiterated households had borrowed heavily against their home equity and had been "consuming beyond their incomes".
Ms Turner noted the recovery in the housing market and consumer spending remained "fairly muted".
She did not expect the Reserve Bank to increase the cash rate until June next year.
• RETAILING FOR AUGUST
> Nationally: up 1.1%, or $60 million.
> South Island: (outside cities) up 2.8%.
> North Island: (outside cities) up 3.3%.
> Clothing/softgoods: up 6.5%, or $14 million.
> Fuel retailing: up 1.9%, or $10 million.
> Hardware: up 7.2%, or $9 million.
> Vehicle sales: down 1.4%, or $7 million.
> Supermarket/grocery: down 0.2%, or $3 million.
Source: Statistics NZ
