Thursday September 21 2017
New Zealand Economy Boosted by Services in Q2
Mario | mario@tradingeconomics.com

The New Zealand economy advanced 0.8 percent on quarter in the second quarter of 2017, gaining steam after an upwardly revised 0.6 percent expansion in the previous and matching expectations. The expansion was boosted by services and manufacturing while construction and mining contracted.

Services were the bright spot behind faster quarterly growth in 2Q, as all service industries combined expanded 1.0 percent after growing 0.5 percent in the first quarter. Three service categories improved markedly in the second quarter, with retail trade and accommodation expanding 2.8 percent (vs 2.0 percent in Q1); transport, postal & warehousing 3.5 percent (vs -1.6 percent); and professional scientific, technical, admin & support 1.1 percent (vs no change in Q1).

Manufacturing also gained steam, climbing 1.8 percent after a 1.2 percent rise in the March quarter. In contrast, utilities advanced only 0.3 percent after a 2.1 percent rebound in the first quarter. Meanwhile, construction contracted less (-1.1 percent vs -2.1 in Q1). 

Finally, mining plunged 5.2 percent (vs a 1.6 percent contraction in 2Q) and agriculture, forestry & mining activity remaining unchanged after expanding 2.8 percent in the previous three months.

Year-on-year, the economy expanded 2.5 percent, matching both the Q1 rate and market expectations.




Wednesday August 23 2017
New Zealand Balance of Trade Swings To Surplus In July
Mario | mario@tradingeconomics.com

New Zealand balance of trade swung to a NZD 85 million surplus in July of 2017 compared to a NZD 351 million deficit in the same month of the previous year and expectations of a NZD 200 million gap. It was the fifth straight monthly surplus after 8 consecutive deficits, and leaves the year-to-date trade surplus at NZD 937 million (vs NZD 1016 million in the first seven months of last year). Exports advanced to NZD 4633 million or 16.8 percent year-on-year from a 10.7 percent jump in June, booking their fastest expansion in more than 2 years. Meanwhile, imports went up to NZD 4548 million or 5.4 percent compared to a downwardly revised 7.6 percent climb. The annual trade deficit for the year ended July of 2017 narrowed to NZD 3.21 billion, from NZD 3.65 billion in June of 2017.

Exports from New Zealand advanced 16.8 percent year-on-year in July, nudged by milk powder, butter & cheese exports’ 50.7 percent surge (vs 44.9 percent in the previous month). Fruit exports advanced 15.3 percent. In contrast, crude oil shipments declined by 27.6 percent. Exports to China increased at a faster pace of 51.4 percent compared to 25.6 percent in the previous month. Exports to Korea also expanded at a strong pace of 36.1 percent (vs 20.1 percent in June). More modest expansion was observed in exports to the European Union (+23.8 percent), Japan (+18.7percent), and the United States (+6.4 percent). Contrastingly, exports to Australia edged down 0.2 percent in June.

Meanwhile, imports to New Zealand climbed 5.4 percent year-on-year to NZD 4548 million in July of 2017. Purchases of vehicles, parts & accessories jumped 25.1 percent after surging 36.4 percent in the previous month. Petroleum & products increased by 9.9 percent after expanding 2.0 percent in June. By country of origin, imports from Japan climbed 24.1 percent after jumping 35.2 percent in June. In contrast, imports from the United States contracted a sharp 31.5 percent in July. 




Wednesday August 09 2017
New Zealand Holds Interest Rate Steady At 1.75%
Mario | mario@tradingeconomics.com

The Reserve Bank of New Zealand kept its official cash rate unchanged at record low of 1.75 percent on August 9th of 2017, as widely expected. The central bank last moved the key rate in November of 2016. Policymakers underscored that major challenges remain with persistent surplus capacity and extensive political uncertainty. They also mentioned soft GDP growth in the last quarter was lower than expected, although it is expected to improve going forward. The central bank also stated that monetary policy will remain accommodative for a considerable period, as numerous uncertainties remain and policy may need to adjust accordingly. 

Statement by Reserve Bank Governor Graeme Wheeler:

The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 1.75 percent.

Global economic growth has become more broad-based in recent quarters.  However, inflation and wage outcomes remain subdued across the advanced economies, and challenges remain with on-going surplus capacity.  Bond yields are low, credit spreads have narrowed and equity prices are at record levels.  Monetary policy is expected to remain stimulatory in the advanced economies, but less so going forward.

The trade-weighted exchange rate has increased since the May Statement, partly in response to a weaker US dollar. A lower New Zealand dollar is needed to increase tradables inflation and help deliver more balanced growth.

GDP in the March quarter was lower than expected, adding to the softening in growth observed at the end of 2016.  Growth is expected to improve going forward, supported by accommodative monetary policy, strong population growth, an elevated terms of trade, and the fiscal stimulus outlined in Budget 2017.

House price inflation continues to moderate due to loan-to-value ratio restrictions, affordability constraints, and a tightening in credit conditions.  This moderation is expected to persist, although there remains a risk of resurgence in prices given continued strong population growth and resource constraints in the construction sector.

Annual CPI inflation eased in the June quarter, but remains within the target range.  Headline inflation is likely to decline in coming quarters as the effects of higher fuel and food prices dissipate.  The outlook for tradables inflation remains weak.  Non-tradables inflation remains moderate but is expected to increase gradually as capacity pressure increases, bringing headline inflation to the midpoint of the target range over the medium term.  Longer-term inflation expectations remain well anchored at around 2 percent.

Monetary policy will remain accommodative for a considerable period.  Numerous uncertainties remain and policy may need to adjust accordingly.




Wednesday August 02 2017
New Zealand Jobless Rate Edges Down To 4.8% In Q2
Mario | mario@tradingeconomics.com

New Zealand's unemployment rate edged down to 4.8 percent in the second quarter of 2017 from 4.9 percent in the previous period, matching market expectations. It was the lowest jobless rate since the last quarter of 2008, as the number of unemployed fell by 2.2 percent on quarter while employment went down 0.2 percent. The labor force participation rate decreased to a one-year low of 70.0 percent.

The number of unemployed persons fell by 2.2 percent or by 3,000 people to 128,000. Employment went down by 0.2 percent to 2.535 million people. The employment rate dropped to 66.7 percent (vs 67.1 percent in the March of 2017 quarter).

The unemployment rate for women fell to 4.9 percent, with 10,000 fewer women unemployed, the lowest since March of 2009. Contrastingly, the male jobless rate rose to 4.7 percent (+7,000 men unemployed).

Annual wage inflation, as measured by the labor cost index, edged up to 1.7 percent in the second quarter of 2017, slightly above 1.6 percent in the previous period. Private sector wages rose by 1.6 percent (vs +1.5 percent in the previous quarter) and public sector wages went up by 1.9 percent (vs +1.7 percent). On a quarterly basis, wages increased by 0.4 percent, matching the previous period rise.




Wednesday July 26 2017
New Zealand Trade Surplus Widens In June
Mario | mario@tradingeconomics.com

New Zealand trade surplus widened to NZD 242 million in June of 2017 compared to NZD 107 million in the same month of the previous year and expectations of a NZD 100 million surplus. It was the fourth straight monthly surplus after 8 consecutive deficits, and leaves the year-to-date trade surplus at NZD 841 million (vs NZD 1367 million in the first six months of last year). Exports rose the most in nearly two years, led by sales of milk powder, butter and cheese while imports went up at a slower pace.

Exports advanced 10.7 percent year-on-year to NZD 4697 million, following a downwardly revised 7.9 percent rise in May, booking their fastest expansion pace since July of 2015. Milk powder, butter, and cheese exports surged 44.9 percent in June (vs 41.8 percent in the previous month). Exports to China increased at a faster pace of 25.6 percent compared to 16.8 percent in the previous month. Exports to Korea also expanded at a strong pace of 20.1 percent (vs 10 percent in May). More modest expansion was observed in exports to the United States (+6.4 percent), Japan (+1.6 percent), the European Union (+1.3 percent), and Australia (+0.9 percent).

Imports climbed 7.7 percent to NZD 4455 million, compared to a downwardly revised 14.9 percent jump in May. The softer expansion pace was mainly explained by petroleum & products, which only increased by 2.0 percent after surging 70.7 percent in the previous month. Meanwhile, purchases of vehicles, parts & accessories jumped 36.4 percent to NZD 821 million. Yet, car imports reached a record high of NZD 505 million, 2566 more new cars than a year earlier. By country of origin, imports from Japan surged 35.2 percent in June (vs 14.8 percent in the previous month) and purchases from the European Union advanced 20.2 percent (vs -0.2 percent in May). 





Tuesday July 18 2017
New Zealand Inflation Rate Slows To 1.7% In Q2
Statistics New Zealand | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in New Zealand increased 1.7 percent year-on-year in the second quarter of 2017, below market expectations of 1.9 percent and down from 2.2 percent in the previous period which was the highest in five years. The inflation rate eased for the first time in six quarters mainly due to a softer increase in prices of housing, utilities and transport and a steeper decline in cost of communication.

Prices rose at a slower pace for housing and utilities (3.1 percent from 3.3 percent in Q1), with purchase of new housing up 6.4 percent (6.7 percent in Q1). Inflation also slowed for transport (1.2 percent from 3.5 percent in Q1); miscellaneous goods and services (1.7 percent from 1.9 percent); alcoholic beverages and tobacco (3.7 percent from 3.9 percent). In addition, communication prices decreased 4.6 percent (-3.1 percent in Q1), with large decreases for telecommunications services and equipment. In contrast, food cost accelerated (2 percent from 1.6 percent). 

On a quartely basis, consumer prices were flat: food prices rose 0.7 percent, influenced by higher prices for vegetables (up 19 percent). Housing and household utilities prices rose 0.8 percent, influenced by purchase of new housing (up 1.8 percent). On the other hand, transport prices fell 1.3 percent, with cheaper domestic airfares (down 15 percent).




Monday June 26 2017
New Zealand Trade Surplus Narrows In May
Mario | mario@tradingeconomics.com

New Zealand trade surplus narrowed to NZD 103 million in May of 2017 compared to NZD 343 million in the same month of the previous year and expectations of a NZD 420 million surplus. It was the third straight monthly surplus after 8 consecutive deficits, and leaves the year-to-date trade surplus at NZD 641 million (vs NZD 1261 million in the first five months of last year). Exports advanced to NZD 4952 million (or 8.7 percent year-on-year from a downwardly revised 8.6 percent in April), while imports jumped to NZD 4849 million (or 15.1 percent compared to a downwardly revised 4.7 percent). The annual trade deficit for the year ended May of 2017 widened to NZD 3.8 billion, from NZD 3.6 billion in April of 2017.

The 8.7 percent year-on-year jump in exports was mainly explained by a 41.8 percent surge in exports of milk powder, butter & cheese (vs 35.4 percent in the previous month). Logs, wood & wood articles climbed only 2.3 percent after advancing 17.7 percent in April. Exports to China increased at a softer pace of 16.8 percent in May after surging 22.5 percent in the previous month. Growth of exports to Korea also softened to 10 percent (vs 15.4 percent). Contrastingly, shipments to Japan grew at a faster rate, increasing by 33.8 percent (versus 12.7 percent). Exports to the United States (+2.4 percent), the European Union (+0.3 percent), and Australia (+0.1 percent) expanded modestly.

Meanwhile, the 15.1 percent year-on-year jump in imports was mainly triggered by a 70.7 percent surge in petroleum & products, following a 21.2 percent increase in the previous month. Imports of vehicles, parts, and accessories also expanded at a faster pace of 22.4 percent (vs 8.1 percent in April). Imports from Australia expanded by 23.6 percent; Japan by 14.8 percent; China by 12.7 percent; and the United States by 4.4 percent. Contrastingly, imports from the European Union edged down by 0.2 percent in May. 


Thursday June 22 2017
New Zealand Keeps Interest Rate Steady At 1.75%
Mario | mario@tradingeconomics.com

The Reserve Bank of New Zealand kept its official cash rate unchanged at record low of 1.75 percent on June 21st, 2017, as widely expected. The central bank left the monetary rate unchanged for the fourth straight meeting. Policymakers underscored that major challenges remain with persistent surplus capacity and extensive political uncertainty. They also mentioned soft GDP growth in the last quarter of 2017 and that house price inflation has moderated further. The central bank also stated that monetary policy will remain accommodative for a considerable period, as numerous uncertainties remain and policy may need to adjust accordingly.

Statement by Reserve Bank Governor Graeme Wheeler:

The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 1.75 percent.

Global economic growth has increased and become more broad-based.  However, major challenges remain with on-going surplus capacity and extensive political uncertainty.

Headline inflation has increased over the past year in several countries, but moderated recently with the fall in energy prices.  Core inflation and long-term bond yields remain low.  Monetary policy is expected to remain stimulatory in the advanced economies, but less so going forward.

The trade-weighted exchange rate has increased by around 3 percent since May, partly in response to higher export prices.  A lower New Zealand dollar would help rebalance the growth outlook towards the tradables sector.

GDP growth in the March quarter was lower than expected, with weaker export volumes and residential construction partially offset by stronger consumption.  Nevertheless, the growth outlook remains positive, supported by accommodative monetary policy, strong population growth, and high terms of trade.  Recent changes announced in Budget 2017 should support the outlook for growth.

House price inflation has moderated further, especially in Auckland.  The slowdown in house price inflation partly reflects loan-to-value ratio restrictions, and tighter lending conditions. This moderation is projected to continue, although there is a risk of resurgence given the on-going imbalance between supply and demand.

The increase in headline inflation in the March quarter was mainly due to higher tradables inflation, particularly petrol and food prices.  These effects are temporary and may lead to some variability in headline inflation.  Non-tradables and wage inflation remain moderate but are expected to increase gradually.  This will bring future headline inflation to the midpoint of the target band over the medium term. Longer-term inflation expectations remain well-anchored at around 2 percent.

Monetary policy will remain accommodative for a considerable period. Numerous uncertainties remain and policy may need to adjust accordingly.


Wednesday June 14 2017
New Zealand GDP Growth Affected By Construction In Q1
Mario | mario@tradingeconomics.com

The New Zealand economy advanced 0.5 percent on quarter in the first months of 2017, gaining steam after a 0.4 percent expansion in the previous period but still below market expectations of 0.7 percent, as construction surprised negatively falling 2.1 percent on quarter with all building sectors booking a fall.

Agriculture was the main driver of GDP growth and expanded 2.8 percent following a 0.8 percent contraction in the previous quarter.  Mining fell at a softer pace in the first quarter, contracting 1.0 percent after plunging 2.1 percent in the last three months of 2016. Meanwhile, manufacturing rebounded 1.0 percent following a 1.6 percent decline. Utilities also notched a better performance, expanding 2.1 percent following static growth.

Contrastingly, construction dipped 2.1 percent after expanding 1.4 percent in the fourth quarter of last year. All building sectors declined, with non-residential building construction being the key driver. Meanwhile, services expanded at a softer pace of 0.4 percent after growing 0.8 percent in the preceding three months, with transport falling 2.0 percent after a 0.9 percent decline.

Year-on-year growth of 2.5 percent was lower than the 2.7 percent of the previous quarter



Tuesday May 23 2017
New Zealand Trade Surplus Widens In April
Mario | mario@tradingeconomics.com

New Zealand trade surplus widened to NZD 578 million in April of 2017 compared to NZD 350 million in the same month of the previous year and expectations of a NZD 267 million surplus. It was the second straight monthly surplus after 8 consecutive deficits. Exports advanced to NZD 4750 million (or 9.8 percent year-on-year from a downwardly revised 9.6 percent in March), while imports jumped to NZD 4172 million (or 4.9 percent compared to an upwardly revised 7.9 percent). The annual trade deficit for the year ended April 2017 was NZD 3.48 billion, compared with a NZD 3.71 billion gap in the year ended March 2017.

The 9.8 percent year-on-year jump in exports was mainly explained by a 35.4 percent surge in exports of milk powder, butter & cheese (compared to 29.0 percent in the previous month). Logs, wood & wood articles climbed 17.7 percent after advancing 10.1 percent in March. Exports to China increased at a softer pace of 22.5 percent in April after surging 43.5 percent in the previous month. Shipments to Japan also grew at a softer rate, increasing by 12.7 percent (versus 18.8 percent). Contrastingly, exports to Korea advanced at a faster pace of 15.4 percent (compared to 6.2 percent), while shipments fell to the European Union (-7.8 percent), the United States (-5.3 percent), and Australia (-0.6).

Meanwhile, the 4.9 percent year-on-year climb in imports was mainly triggered by a 21.2 percent surge in petroleum & products, following a 6.2 percent contraction in the previous month. Imports of vehicles, parts, and accessories expanded at a softer pace of 8.1 percent (compared to 28.1 percent in March). Imports from Japan rose at a weaker rate of 3.5 percent after surging 28.8 percent in the previous month. Imports from the United States declined 4.5 percent after climbing 11.1 percent in March.