WELLINGTON (Reuters) - New Zealand retail sales jumped in the second quarter, pointing to a rosier outlook for economic activity and pushing the New Zealand dollar to its highest in nearly two weeks.
Retail sales volumes rose a seasonally adjusted 1.1 percent in the second quarter, data from Statistics New Zealand showed on Wednesday, posting annual growth of 3.1 percent.
The New Zealand dollar <NZD=D4> rose around 0.2 percent to $0.6722, its highest since Aug. 9.
The strong showing suggested second-quarter gross domestic product (GDP) would overshoot the Reserve Bank of New Zealand's (RBNZ) forecast of 0.5 percent.
The result reduced the risk of a sharp slowdown that might have pushed the RBNZ into cutting the official cash rate (OCR) from its current record low of 1.75 percent.
"Strong retail volumes are consistent with our 0.9 percent...pick for Q2 GDP...the hurdle to a near-term OCR cut by the RBNZ remains high," said Mark Smith, senior economist at ASB Bank.
That would mark a welcome acceleration from the 0.5 percent pace seen in the first quarter.
RBNZ Governor Adrian Orr flagged earlier this month that downside risks to GDP projections were growing due to weak business confidence. Any further slowdown could tip the balance in favour of an interest rate cut.
The faster pace of retail sales was broad-based but led by hardware and building supplies, which jumped 4.7 percent. Department store spending rose 2.8 percent, while food and beverages climbed 1.7 percent.
Second-quarter GDP data is due on Sept. 20.
(Reporting by Charlotte Greenfield; Editing by Eric Meijer)
