Welcome to the August 14 2008 editions of the BNZ Weekly Overview and Offshore Overview.
Our monthly confidence survey has shown a recovery in sentiment to its best level since November last year. However pessimism still prevails and short term prospects for the economy are still relatively poor for companies focused on retailing and the housing market. In fact although during the week we learnt that seasonally adjusted dwelling sales grew quite firmly in July after strengthening also in June, dwellings are sitting on the market twice as long as they were a year ago and we still suspect average price declines will intensify before the end of the year.
But the longer term bigger picture remains positive for the New Zealand economy with rising demand offshore for our commodity exports and further depreciation in the Kiwi dollar improving the outlook for exporters.
Offshore there was a positive indicator for the United States housing market but sentiment overall still remains relatively poor with evidence of retail spending declining. Data releases for the likes of Japan, the United Kingdom, and Europe also seem to be getting worse. Across the ditch the Reserve Bank of Australia have reiterated their intention to cut interest rates in the near future in the face of worsening domestic economic conditions.