New Zealand's retail sales fell at their steepest pace in more than four years in May, while the housing market and services sector weakened further, putting pressure on the central bank to cut interest rates soon.
The data highlighted the sharper-than-expected economic downturn, and attention has turned to Tuesday's second-quarter inflation figures.
Analysts said it was a line call whether the Reserve Bank of New Zealand (RBNZ) will start cutting interest rates as early as next week's meeting.
"The CPI (consumer price index) tomorrow could shed some light on the current state of inflation, but the retail data has not been a 'swing factor'," said UBS senior economist Robin Clements.
Retail sales fell a seasonally adjusted 1.2 percent in May, the biggest monthly decline since February 2004, led by lower car and furniture sales, Statistics New Zealand data showed.
The data compared with a Reuters poll forecast of 0.1 percent rise and April's upwardly revised 1.2 percent.
The RBNZ said last month it expected to cut interest rates, currently at a record high of 8.25 percent, later in the year as a slowing economy would help to keep inflation in check.
Money market pricing indicates a 50-50 chance of a rate cut at the central bank's next review on July 24 after last week's poor business confidence survey pointed to the economy contracting for much of the year.
Fourteen of the 17 analysts in a Reuters poll expect the central bank to start cutting interest rates by September.
Second-quarter inflation data is expected to show annual inflation rising to a two-year high of 3.8 percent, driven by soaring food and energy costs.
Further Weakening Seen
The economy shrank for the first time in more than two years in the first quarter on a drought and weaker household spending, and analysts say the economy is likely in a recession --defined as two straight quarters of contraction.
New Zealand was last in recession in 1997-98 after a drought and the Asian financial crisis.
Activity in the services sector fell to a record low in June as businesses were battered by higher costs and weaker consumer spending, a 16-month-old joint survey by Bank of New Zealand and Business NZ showed.
BNZ senior markets economist Craig Ebert said a sharp deterioration in the employment sub index pointed to a weaker job market and easing wage inflation.
"This fits with a number of other measures that warn us the jobs market is about to come off the boil much more obviously than has been the case in the official records," he said.
Government agency Quotable Value (QV) said the slowdown in the housing market quickened in June, with annual house price inflation slowing to just 0.1 percent in the month compared with 2.4 percent in May and 4.9 percent in April.
"With market activity slowing dramatically, consumer confidence knocked by increasing interest rates, fuel and food prices, we expect the trend of falling property values to continue," QV Valuation's Glenda Whitehead said.