Welcome to the April 10 2008 editions of the BNZ Weekly and Offshore Overviews.
Over the past week in New Zealand we have seen more bad sentiment readings for the business sector and some shocking data on the Auckland housing market. In spite of this the NZD has risen over one cent against the greenback partly on the back of a soaring Aussie dollar supported by a massive lift in coal prices, plus high readings for inflation measures in the NZIER’s quarterly survey.
In spite of worsening economic conditions in New Zealand, in particular in the housing market, scope for easier monetary policy remains low and we currently expect no easing before December.
Overseas in the United States job numbers have fallen for three months in a row and as yet there is no sign of the decline in the housing market ending. That means the current mild feeling that perhaps the Federal Reserve has things under control could be misplaced. In the United Kingdom the manufacturing sector improved unexpectedly in February but house prices fell 2.5% in March and consumer confidence continues to decline. Another easing of monetary policy is imminent.
In China and Japan data releases have been few and far between this week. Suffice to say in both economies growth risks continue to lie on the downside, though with Chinese growth prospects far superior than Japan’s.
In Europe indicators remain mixed to positive with Germany helping to underpin growth perhaps near 1.5% this year. And in Australia the labour market remains strong but business confidence has fallen to a seven year low and weakness is apparent in housing and retailing.