Tuesday November 27 2018
New Zealand Trade Deficit Widens Sharply
Mario | mario@tradingeconomics.com

New Zealand posted a NZD 1295 million trade deficit in October 2018, compared with a NZD 840 million gap in the same month of the previous year and with market expectations of an NZD 850 million shortfall. It was the fifth straight monthly deficit, as imports jumped 14.1 percent year-on-year to an all-time high of NZD 6154 million and exports rose at a softer 6.6 percent to NZD 4859 million.

Exports went up 6.6 percent year-on-year to NZD 4.86 billion in October of 2018, a record high for that month. Among main categories, sales were triggered by fruits (+136.5 percent), mostly due to unusually high kiwifruit exports for an October month; meat and edible offal (+19.8 percent) and mechanical machinery & equipment (+23.1 percent). Petroleum products excluding crude oil exports  surged 234.4 percent to NZD 72 million. In contrast, exports of milk powder, butter & cheese declined 3.3 percent. Among major export partners, sales grew to China (24.3 percent), Korea (33.0 percent), the UK (39.0 percent), the EU (31.7 percent), Japan (19.7), and the US (17.7 percent) . In contrast, shipments fell to Hong Kong (-43.8 percent), Indonesia (-19.8 percent), and Australia (-4.1 percent). 

Imports jumped 14.1 percent to an all-time high of NZD 6.15 billion in October of 2018. Among main categories, imports were mainly driven petroleum and petroleum products (+68.2 percent), namely crude oil and fuels; electrical machinery and equipment (+19.9 percent), led by cellphones; mechanical machinery & equipment (+11.4 percent) textiles (+33.4 percent), and iron & steel (+26.3 percent). In contrast, sales of vehicles, parts and accessories went down 12.4 percent and those of aircrafts & parts fell 70.9 percent. Among top import partners, purchases were mainly driven by China (+41.4 percent), Korea (+47.7), UAE (+42.4 percent), Malaysia (+40.4 percent) and Australia (15.4 percent). In contrast, imports declined from the United States (-26.7 percent) and the European Union (-1.4 percent).




Wednesday November 07 2018
New Zealand Leaves Interest Rate at 1.75%
Mario | mario@tradingeconomics.com

The interest rate in New Zealand was kept unchanged at 1.75 percent on 7 November 2018. The bank underscored that it expects to keep the OCR at this level through 2019 and into 2020, expecting GDP growth to pick up over 2019 and pointing to trade tensions as significant risk for sentiment. Consumer prices increased 1.9 percent year-on-year in the third quarter of 2018 following a 1.5 percent increase in the previous quarter. The print came above consensus expectations (1.7 percent) and was the highest rate in four quarters.

Statement by the Central Bank of New Zealand:

The Official Cash Rate (OCR) remains at 1.75 percent. We expect to keep the OCR at this level through 2019 and into 2020.

There are both upside and downside risks to our growth and inflation projections. As always, the timing and direction of any future OCR move remains data dependent.

The pick-up in GDP growth in the June quarter was partly due to temporary factors, and business surveys continue to suggest growth will be soft in the near term. Employment is around its maximum sustainable level. However, core consumer price inflation remains below our 2 percent target mid-point, necessitating continued supportive monetary policy.

GDP growth is expected to pick up over 2019. Monetary stimulus and population growth underpin household spending and business investment. Government spending on infrastructure and housing also supports domestic demand. The level of the New Zealand dollar exchange rate will support export earnings.

As capacity pressures build, core consumer price inflation is expected to rise to around the mid-point of our target range at 2 percent.

Downside risks to the growth outlook remain. Weak business sentiment could weigh on growth for longer. Trade tensions remain in some major economies, raising the risk that trade barriers increase and undermine global growth.

Upside risks to the inflation outlook also exist. Higher fuel prices are boosting near-term headline inflation.  We will look through this volatility as appropriate. Our projection assumes firms have limited pass through of higher costs into generalised consumer prices, and that longer-term inflation expectations remain anchored at our target.

We will keep the OCR at an expansionary level for a considerable period to contribute to maximising sustainable employment, and maintaining low and stable inflation.





Wednesday November 07 2018
New Zealand Unemployment Rate Drops to Near 10-Year Low
Statistics New Zealand | Joana Ferreira | joana.ferreira@tradingeconomics.com

New Zealand's unemployment rate declined to 3.9 percent in the third quarter of 2018 from a downwardly revised 4.4 percent in the previous period and well below market expectations of 4.5 percent. It was the lowest jobless rate since the second quarter of 2008.

The number of unemployed people decreased by 13 thousand to 109 thousand, mainly reflecting 11 thousand fewer unemployed youth (15–24-year-olds), and employment rose by 29 thousand to 2.66 million. The employment rate rose to 68.3 percent in the September quarter (vs 67.8 percent in Q2), the highest recorded rate since the series began in 1986. The labor force participation rate increased to 71.1 percent in the third quarter from 70.9 percent in the previous period.

For women, the unemployment rate fell to 4 percent, down from 4.6 percent last quarter. For men, the unemployment rate declined to 3.9 percent, down from 4.2 percent.

The underutilisation rate dropped to 11.3 percent from 12 percent last quarter.

Annual wage inflation, as measured by the labor cost index, eased to 1.8 percent in the third quarter of 2018 from 1.9 percent in the previous period, as private sector wage growth slowed to 1.9 percent from 2.1 percent. Meanwhile, public sector wages rose 1.5 percent in the September quarter, slightly faster than a 1.4 percent increase in the previous three-month period. On a quarterly basis, wages increased by 0.5 percent, the same pace as in the previous quarter.




Thursday October 25 2018
New Zealand Post Largest Trade Deficit on Record
Mario | mario@tradingeconomics.com

New Zealand posted a NZD 1560 million trade deficit in September 2018, compared with a NZD 1165 million gap in the same month of the previous year and with market expectations of a NZD 1365 million shortfall. It was the widest monthly trade deficit on record, as imports hit an all-time high on soaring petroleum products purchases affected by higher oil prices. Meantime, stronger fruits exports partly offset a 4.1 percent drop in milk, butter & cheese sales.

Imports jumped 18.8 percent year-on-year to a record high of NZD 5.89 billion from NZD 4.96 billion in the same month a year earlier. Among main categories, imports were mainly driven by petroleum and petroleum products (+86.6 percent), namely crude oil and fuels; electrical machinery and equipment (+16.1 percent); aircrafts & parts (+448.9 percent) and fertilizers (+83.7 percent). In contrast, mechanical machinery and equipment purchases declined 2.9 percent. Among top import partners, purchases were mainly driven by China (13.7 percent), Australia (10 percent), the US (71.7 percent), and Japan (7.5 percent). Meanwhile, imports declined from Korea (-9.6 percent), the EU (-0.6 percent), namely France (-16.4 percent) and the UK (-8.2 percent).

Exports went up 14.1 percent year-on-year to NZD 4.33 billion from NZD 3.79 billion in the same month of the previous year. Among main categories, sales were triggered by fruits (+117.8 percent), mostly kiwifruit; meat and edible offal (+19.8 percent) and logs, wood & wood articles (+19.1 percent). Oil exports (+30.0 percent); iron & steel (+49.9 percent) and wood pulp & paper (+20.0 percent) also increased well above average. In contrast, milk, butter & cheese declined 4.1 percent. Among major export partners, sales grew to China (8.4 percent), Australia (14.7 percent), the US (8.5 percent), Japan (25.6 percent), Korea (54.1 percent), the UK (29.8 percent) and Singapore (109.7 percent). In contrast, shipments went down mostly to Malaysia (-5.5 percent) and the UAE (-8.4 percent).



Tuesday October 16 2018
New Zealand Inflation Jumps to 1.9% on Higher Oil Prices
Statistics New Zealand | Mario | mario@tradingeconomics.com

Consumer prices in New Zealand increased 1.9 percent year-on-year in the third quarter of 2018 following a 1.5 percent increase in the previous quarter. The print came above consensus expectations (1.7 percent) and was the highest rate in four quarters.

Higher inflation was mainly explained by a 19 percent jump in petrol prices, which also nudged transport prices higher (+5.6 percent vs 2.0 percent in Q2). Also, cost rebounded for recreation & culture (0.4 percent vs -0.6 percent). Meantime, housing and household utilities increased 3.1 percent (the same pace as in Q2) with rises in construction (4.1 percent), rentals (2.3 percent) and local authority rates (5.1 percent). On the other hand, prices slowed for food (0.2 percent vs 0.7 percent), mainly driven by cost of grocery food (0.1 percent vs 0.9 percent), non-alcoholic beverages (2.4 percent vs 3.5 percent); meat, poultry and fish (-0.2 percent vs 0.5 percent) and fruits and vegetables (-5.1 percent vs -5.6 percent).

Meantime, albeit at a slower pace compared to the second quarter’s 5.6 percent increase, alcoholic beverages & tobacco increased 4.7 percent, with cigarettes & tobacco climbing 10.6 percent (vs 10.7 percent), mainly triggered by an increase in excise duties for tobacco and tobacco products.

In addition, prices for communications declined sharply in the third quarter, falling 5.4 percent after a 4.9 percent drop in the previous quarter, with telecommunication equipment prices plunging 16.6 percent (vs -8.8 percent) and telecommunication services falling 3.2 percent (vs -4.1 percent).

On a quarterly basis, consumer prices rose 0.9 percent in the third quarter of 2018, way up from from a 0.4 percent increase recorded in the previous period and also above market expectations of 0.7 percent.




Wednesday September 26 2018
New Zealand Holds Interest Rate at 1.75%
Mario | mario@tradingeconomics.com

The Reserve Bank of New Zealand left its official cash rate unchanged at record low of 1.75 percent on 26 September 2018, saying that economic projections were little changed since the last meeting, as while GDP growth in the second quarter was stronger than anticipated, downside risks to the growth outlook remain. Also, policymakers underscored that rates will remain at this level through 2019 and into 2020 and that the next move could be up or down. The central bank last moved the key rate in November of 2016.

Statement by Reserve Bank Governor Adrian Orr:

The Official Cash Rate (OCR) remains at 1.75 percent.

We expect to keep the OCR at this level through 2019 and into 2020. The direction of our next OCR move could be up or down.

Employment is around its sustainable level and consumer price inflation remains below the 2 percent mid-point of our target, necessitating continued supportive monetary policy. Our outlook for the OCR assumes the pace of growth will pick up over the coming year, assisting inflation to return to the target mid-point.

Our projection for the New Zealand economy, as detailed in the August Monetary Policy Statement, is little changed. While GDP growth in the June quarter was stronger than we had anticipated, downside risks to the growth outlook remain.

Robust global economic growth and a lower New Zealand dollar exchange rate is expected to support demand for our exports. Global inflationary pressure is expected to rise, but remain modest. Trade tensions remain in some major economies, increasing the risk that ongoing increases in trade barriers could undermine global growth. Domestically, ongoing spending and investment, by both households and government, is expected to support growth.

There are welcome early signs of core inflation rising towards the mid-point of the target. Higher fuel prices are likely to boost inflation in the near term, but we will look through this volatility as appropriate. Consumer price inflation is expected to gradually rise to our 2 percent annual target as capacity pressures bite.

We will keep the OCR at an expansionary level for a considerable period to contribute to maximising sustainable employment, and maintaining low and stable inflation.


Wednesday September 26 2018
New Zealand Trade Deficit Hits Record High
Mario | mario@tradingeconomics.com

New Zealand posted a NZD 1484 million trade deficit in August 2018, compared with a NZD 1174 million gap in the same month of the previous year and with market expectations of a NZD 930 million shortfall. It was the widest monthly trade deficit on record, as imports jumped 13.9 percent year-on-year to NZD 5541 million and exports rose 9.9 percent to NZD 4054 million.

Exports went up 9.9 percent year-on-year to NZD 4.05 billion in August from NZD 3.69 billion in the same month a year earlier, below market expectations of NZD 4.4 billion. Among main categories, sales increased driven by meat and edible offal (+42.7 percent) and logs, wood & wood articles (+18.3 percent). Oil exports (+77.6 percent), iron & steel (+22.1 percent) and wood pulp & paper (20.8 percent) also increased well above average. Among major export partners, sales to Japan (+28.0 percent), Korea (+26.6 percent), and China grew strongly (+20.4 percent). Also, exports to the United States (13.8 percent) and the European Union (+11.8 percent) rose. In contrast, sales to Australia declined 7.4 percent.

Meantime, imports jumped 13.9 percent year-on-year to NZD 5.54 billion from NZD 4.86 billion, above market consensus of NZD 5.5 billion. Among main categories, imports were mainly driven by oil (+49.5 percent). In addition, inorganic chemicals (+100.3 percent), food residues (+83.3 percent) and aircraft & parts (+37.6 percent) also expanded above average. Among top import partners, purchases were mainly driven by Japan (+34.5 percent), Korea (+27.8 percent), and the United States (+17.3 percent). Notably, imports from United Arab Emirates soared 166.1 percent to NZD 262 million. 


Thursday September 20 2018
New Zealand GDP Growth Jumps to 1.0% QoQ
Statistics New Zealand | Mario | mario@tradingeconomics.com

The New Zealand economy advanced 1.0 percent on quarter in the second quarter of 2018, above 0.5 percent in the previous quarter and market expectations of 0.7 percent. It was the largest quarterly rise in two years, as 15 of the 16 industries expanded.

Agriculture jumped to a 4.1 percent growth rate (vs 1.0 percent in Q1), the strongest quarterly growth since Q3 2014 and mainly boosted by dairy production and forestry. Also, construction (+0.6 percent vs -0.9 percent) and utilities (+3.7 percent vs -0.6 percent) rebounded. Growth in electricity generation was the largest in nine years, with wet and cold weather likely to have influenced both production and demand. In addition, services gained steam (1.0 percent vs 0.6 percent), mainly nudged by wholesale trade (+1.7 percent vs +0.3 percent), retail trade & accommodation (+1.5 percent vs +0.3 percent), transport (+1.8 percent vs +0.6 percent), real estate services (+0.9 percent vs +0.4 percent), recreations & arts services (+3.5 percent vs +0.8 percent), and health services (+0.7 percent vs +0.4 percent). 

In contrast, mining plummeted 19.9 percent (-1.4 percent), the largest fall in 29 years after an unplanned shutdown stalled gas production. Also, manufacturing moderated its growth pace to 0.4 percent (vs 0.6 percent), further affected by lower petroleum and chemical product manufacturing following a planned shutdown at Marsden Point refinery.

Year-on-year, GDP expanded 2.8 percent year-on-year in the second quarter of 2018, slightly up from a downwardly revised 2.6 percent growth in the previous period and above market expectations of 2.5 percent. 




Friday August 24 2018
New Zealand Trade Balance Swings to Deficit
Statistics New Zealand | Mario | mario@tradingeconomics.com

New Zealand posted a NZD 143 million trade deficit in July 2018, compared with a NZD 92 million surplus in the same month of the previous year and with market expectations of a NZD 400 million deficit. Exports surged 15.8 percent from the previous year to NZD 5350 million and imports soared 21.3 percent to NZD 5492 million.

Imports soared 21.3 percent year-on-year to NZD 5490 million compared to an upwardly revised 16.2 percent jump in the previous month and the largest since November last year. Purchases rose boosted by oil & products (+83.9 percent); mechanical machinery & equipment (+16.7 percent) and vehicles, parts & accessories (+4.4 percent). In contrast, aircrafts & parts declined 8.5 percent. Among top imports partners, purchases surged from China (+27.7 percent), the EU (+15 percent), Australia (+6.7 percent), the US (+12 percent) and Japan (+17 percent). Notably, imports from the United Arab Emirates surged 621.5 percent to NZD 322 million (vs NZD 45 million).

Meantime, exports jumped 15.8 percent from the previous year to NZD 5350 million compared to a downwardly revised 4.0 percent climb in the previous month. Sales increased driven by milk powder, butter & chesse (+21.3 percent); meat and edible offal (+22.0 percent) and logs, wood & wood articles (+30.5 percent). Among major exports partners, sales gained steam to China (+27.6 percent), the US (+4.1 percent) and the EU (+3.5 percent). Notably, exports to Singapore soared 150.4 percent. In contrast, exports to Australia declined 2.8 percent.



Wednesday August 08 2018
New Zealand Leaves Interest Rate Unchanged at 1.75%
Mario | mario@tradingeconomics.com

The Reserve Bank of New Zealand left its official cash rate unchanged at record low of 1.75 percent on August 8th, saying economic growth has moderated while inflation is likely to increase in the near term due to higher fuel prices and a lower exchange rate. Also, policymakers underscored that rates will remain at this level through 2019 and into 2020. The central bank last moved the key rate in November of 2016.

Statement by Reserve Bank Governor Adrian Orr:

The Official Cash Rate (OCR) remains at 1.75 percent. We expect to keep the OCR at this level through 2019 and into 2020, longer than we projected in our May Statement. The direction of our next OCR move could be up or down.

While recent economic growth has moderated, we expect it to pick up pace over the rest of this year and be maintained through 2019.

Robust global growth and a lower New Zealand dollar exchange rate will support export earnings. At home, capacity and labour constraints promote business investment, supported by low interest rates. Government spending and investment is also set to rise, while residential construction and household spending remain solid.

The labour market has tightened over the past year and employment is roughly around its maximum sustainable level. We expect the unemployment rate to decline modestly from its current level.

There are welcome early signs of core inflation rising. Inflation will increase towards 2 percent over the projection period as capacity pressures bite. This path may be bumpy however, with one-off price changes from global oil prices, a lower exchange rate, and announced petrol excise tax rises expected. We will look through this volatility as appropriate, and only respond to any persistent movements in inflation.

Risks remain to our central forecast. The recent moderation in growth could last longer. Low business confidence can affect employment and investment decisions. Conversely, there is a chance that inflation could increase faster if cost pressures can pass through into higher prices and impact inflation expectations.

We will keep the OCR at an expansionary level for a considerable period to contribute to maximising sustainable employment, and maintaining low and stable inflation.