Welcome to the July 3 2008 editions of the BNZ Weekly Overview and Offshore Overview.
This week we are running our monthly survey of Weekly Overview readers. If time permits please click on the url below and let us know whether you think the economy will get better or worse over the coming year. And if you have a minute let us know how things are looking in your industry at the moment specifying what the industry is. Many thanks to those who have contributed in the past.
Lots of pieces of data relevant to the New Zealand economy's performance have been released in the past week. We have learnt the economy shrank 0.3% over the March quarter and we think a similar decline will end up being reported for the June quarter. The annual rate of growth in lending to the household and business sectors is slowing down but speeding up for farming.
There is weakness in the number of consents being issued for dwellings as well as a pullback for non-residential buildings in May. Businesses have indicated further worsening in their plans to undertake capital expenditure and hire people even though their views on the economy have become slightly less pessimistic.
Employees have become less confident about their job security while car registrations continue to decline and there was even some small weakness in tractor registrations in June. Monthly data from Barfoot and Thompson show dwelling sales in June were down 44% from a year earlier though there was about a 13% seasonally adjusted improvement from May. This could indicate some bottoming out in the decline of the housing market but activity is at extremely low levels with prices still inching downward.
Overseas the news has been largely bad with big falls in sharemarkets accompanying rises in oil prices, gold prices, and general concern about the state of the world economy. Some numbers for the United Kingdom are extremely bad while in Japan business sentiment is at a five-year low but the fall from the March quarter was not as much as had been feared.
Wholesale interest rates in New Zealand have done very little over the past week while the Kiwi dollar has risen slightly against a generally weaker greenback. We also rose slightly against an Australian currency depressed marginally by some dovish monetary policy comments from the Reserve Bank of Australia on Tuesday.
Tonight the all important United States monthly employment numbers will be released and they are likely to set the scene for the financial markets over the coming week. Locally the NZIER’s quarterly survey will be released next week which will provide useful information on inflationary pressures and resource availability.