BNZ Weekly Overview
The key points of this week's publication include the following.
The main interesting things we have learned over the past week include the following.
- New Zealand's labour market is so tight we have the lowest unemployment rate in the OECD at 3.6%. But with the number of hours worked up just over 4% for the year and output up just under 5% productivity growth has slowed and is low at a time when the Reserve Bank needs it rising to keep inflationary pressures under control.
- Retail spending volumes were weak over the December quarter, rising just 0.7%. But our more up to date debit and credit card data show things recovered in January - perhaps at the expense of margins. The retailing sector is going through some interesting competitive times.
- Consumer confidence has eased a tad since the last monthly survey in December but remains above average and therefore suggestive of reasonable consumer spending strength.
- The swap rates at which we banks borrow to lend fixed have risen to two and half year highs for the popular 2-3 year terms as corporate borrowers scramble to get protection against rising floating rates and the markets build in expectations of monetary policy tightening both here and across the Tasman.
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Tony Alexander Chief Economist Bank of New Zealand