Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

NBNZ Business Survey (August 2001)

Data Flash (New Zealand)

Key points

General business confidence improved from +17% (net respondents) in July to +23% in August while firms' assessment of the outlook for their own trading prospects improved from +36% to +40%.

Adjusting for seasonal effects, confidence declined marginally from +27 to +25% while trading prospects were unchanged at +41 (the latter the highest level recorded since October 1999). However, the seasonal factors are volatile at this time of year and should be treated with a degree of caution.

As the chart below shows, the current level of the `own trading prospects' indicator remains consistent with economic growth of close to 4% over the next year - compared with the 2.5% to 3% growth forecast by both the RBNZ and us.

The remaining real economic activity indicators captured in the survey were, in general, little changed from July. Manufacturer's export intentions rose from +43% to +51% - the strongest result since last November -likely reflecting improved sentiment regarding the outlook for the Australian economy as well as seasonal factors. The outlook for commercial construction improved somewhat but that for residential construction eased. For the first time in seven months, on balance, respondents expect interest rates to rise over the next six months.

Pricing intentions were little changed from July but year-ahead inflation expectations ticked up 0.1pp to 2.9% - the first rise since last September. In our view these indicators remain at levels that suggest inflation outcomes in the top half of the RBNZ's 0-3% target range over the next 12 months at least.

Comment

The NBNZ survey supports our view that the New Zealand economy continues to weather the global downturn in good shape. We had expected a slightly less optimistic result this month, with concerns about the impact of the drought on electricity generation and pricing also expected to have impacted on confidence.

Following the RBNZ's `hawkish' August Monetary Policy Statement (MPS), the market priced out any chance of further easing in New Zealand - a move that we thought was premature at that time. However, over the past two weeks, the market has re-priced a slightly better than 50% chance of an easing at the 14 November MPS, largely on the back of a marked re-evaluation of interest rate prospects in Australia.

The near-term outlook for domestic demand appears robust and there are upside risks to inflation from an economy already operating at, if not beyond, full capacity. However, the global economy is stalling and, with each passing week, convincing signs of a recovery seem no closer. Moreover, with commodity prices beginning to decline and the NZD now strengthening, the two key factors that have mitigated the transmission of the global slowdown to the local economy are beginning to weaken (albeit modestly so far). This suggests some risk that the economy may not be able to sustain its recent good performance.

We think that probability of an easing in November is greater than the 30% chance we saw as likely in mid-August but, at this stage, still less than a 50/50 proposition. As previously noted, we think that the probability of a move in rates at the October interim review is low given the important domestic data that is due for release between the October and November reviews.

Next week's important US data (the NAPM and Employment Report) and the actions and rhetoric of the RBA will be important in driving market opinion regarding the next move in the New Zealand rates.

Ends


© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Paymark: Lockdown Equals Slowdown For Some

The three days of lockdown for Auckland earlier this month made a clear impression on our retail spending figures. While only Auckland moved into Level 3 lockdown, the impact was felt across the country, albeit at different levels. Looking at the ... More>>

Infrastructure Commission: Te Waihanga Releases Report On Water Infrastructure

The New Zealand Infrastructure Commission, Te Waihanga’s latest discussion document highlights the importance of current reforms in the water sector. Its State of Play discussion document about water infrastructure is one of a series looking at the ... More>>

Sci-Tech: Perseverance Rover Lands On Mars – Expert Reaction

NASA has landed a car-sized rover on the red planet to search for signs of past life. The vehicle has more instruments than the four rovers preceding it, and it’s also carrying gear that could help pave the way for human exploration of Mars. The ... More>>

ALSO:


ASB: Quarterly Economic Forecast Predicts OCR Hike As Early As August 2022

Predictions of interest rate rises have been brought forward 12 months in ASB’s latest Quarterly Economic Forecast. Chief Economist Nick Tuffley now expects the RBNZ to begin raising the OCR from its current level of 0.25% as early as August ... More>>

ACT: Matariki Almost A Half Billion Dollar Tax On Business

“Official advice to the Government says an extra public holiday at Matariki could cost almost $450 million,” ACT Leader David Seymour can reveal. “This is a perfect example of the Prime Minister doing what’s popular versus what’s responsible. ... More>>

Genesis: Assessing 6,000 GWh Of Renewable Generation Options For Development By 2025

Genesis is assessing 6,000 GWh of renewable generation options for development after starting a closed RFP process with 11 partners. Those invited to participate offer a range of technologies as Genesis continues to execute its Future-gen strategy to ... More>>

OECD: Unemployment Rate Stable At 6.9% In December 2020, 1.7 Percentage Points Higher Than In February 2020

The OECD area unemployment rate was stable at 6.9% in December 2020, remaining 1.7 percentage points above the level observed in February 2020, before the COVID-19 pandemic hit the labour market. [1] In December, the unemployment rate was also stable ... More>>

Stats NZ: Unemployment Drops To 4.9 Percent As Employment Picks Up

The seasonally adjusted unemployment rate dropped to 4.9 percent in the December 2020 quarter, from 5.3 percent in the September 2020 quarter, Stats NZ said today. Last quarter’s unemployment rate of 5.3 percent followed the largest increase observed ... More>>