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. 




Thursday May 11 2017
New Zealand Holds Key Rate At 1.75% For 5th Straight Meeting
Mario | mario@tradingeconomics.com

The Reserve Bank of New Zealand kept its official cash rate unchanged at record low of 1.75 percent on May 10th, 2017, as widely expected. The central bank left the monetary rate unchanged for the fifth straight meeting. Policymakers underscored that GDP growth in the second half of last year was softer than expected. However, the monetary policy stance is still neutral, as consumer prices increased by 2.2 percent year-on-year in the first quarter of 2017, explained by a transitory upswing in petrol and food prices. 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 over recent months. However, major challenges remain with on-going surplus capacity and extensive political uncertainty.

Stronger global demand has helped to raise commodity prices over the past year, which has led to some increase in headline inflation across New Zealand’s trading partners. However, the level of core inflation has generally remained low. Monetary policy is expected to remain stimulatory in the advanced economies, but less so going forward.

The trade-weighted exchange rate has fallen by around 5 percent since February, partly in response to global developments and reduced interest rate differentials. This is encouraging and, if sustained, will help to rebalance the growth outlook towards the tradables sector.

GDP growth in the second half of 2016 was weaker than expected. Nevertheless, the growth outlook remains positive, supported by on-going accommodative monetary policy, strong population growth, and high levels of household spending and construction activity.

House price inflation has moderated further, especially in Auckland. The slowing 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 continuing 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 over the year ahead. 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.

Developments since the February Monetary Policy Statement on balance are considered to be neutral for the stance of monetary policy.

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




Tuesday May 02 2017
New Zealand Jobless Rate Falls To 4.9%
Mario | mario@tradingeconomics.com

New Zealand's unemployment rate decreased to 4.9 percent in the first quarter of 2017 from 5.2 percent in the previous period, below market expectations of 5.2 percent. It was the lowest unemployment rate in six months and the second lowest in more than 8 years, as the number of unemployed fell by 4.4 percent on quarter while employment went up 1.2 percent.

The number of unemployed persons fell by 4.4 percent or by 6,000 people to 132,000. Employment went up by 1.2 percent or by 29,000 to 2.54 million people. This followed a 0.8 percent increase in employment in the December 2016 quarter.

The labour force participation rate edged up 10 bps over the last quarter to reach an all-time high of 70.6 percent. The number of people participating in the labour force, at 2.649 million, increased by 1.2 percent (up 29,000 people), with men contributing more than women to the increase. The unemployment rate for men fell from 4.8 percent to 4.2 percent, making it the lowest rate since the December 2008 quarter.

Annual wage inflation, as measured by the labour cost index, edged down to 1.5 percent in the first quarter of 2017, slightly below 1.6 percent in the previous period and also below expectations of 1.7 percent. Private sector wages rose by 1.5 percent (vs +1.6 percent in the previous quarter) while public sector wages went up by 1.7 percent (vs +1.8 percent).




Thursday April 27 2017
New Zealand Books First Trade Surplus In 9 Months
Mario | mario@tradingeconomics.com

New Zealand posted a trade surplus of NZD 332 million in March of 2017 compared to a NZD 188.9 million surplus in the same month of the previous year. It was the first trade surplus for any month since June of 2016, but was below expectations of a NZD 370 million surplus. Exports advanced to NZD 4.646 billion (or 10.6 percent year-on-year from -5.5 percent in February) while imports climbed to NZD 4.315 billion (or 7.6 percent from +4.0 percent). The annual trade deficit for the year ended March 2017 was NZD 3.7 billion, compared with a NZD 3.8 billion shortfall in the year ended February 2017.

The 10.6 percent rise in exports was mainly triggered by a 29.0 percent surge in exports of milk powder, butter & cheese. Ships, boats & floating structures recovered by 266.2 percent in March after plunging 98.8 percent in the previous month. Logs, wood & wood articles rebounded 10.1 percent following a 1.7 percent decline in February. Exports to China surged by 43.5 percent after increasing by 6.3 percent in February. Shipments to Japan rebounded 18.8 percent after a 5.7 percent fall. Exports to Korea jumped 6.2 percent, while shipments fell to the United States (by 7.5 percent) and to Australia (by 2.4 percent).

Meanwhile, imports climbed by 7.6 percent to NZD 4.315 billion, led mainly by a 28.1 percent increase in vehicles, parts & accessories (from +20.3 percent in February), and a 16.4 percent rise in mechanical machinery & equipment. Contrastingly, petroleum & products declined by 6.2 percent after surging 52.6 percent in the preceding month. Imports increased from Japan (28.8 percent from +6.3 percent), China (13.7 percent from -10.2 percent), the United States (11.1 percent from +2.5 percent), and Australia (3.9 percent from +9.2 percent).


Wednesday April 19 2017
New Zealand Inflation Rate At Over 5-Year High Of 2.2%
Statistics New Zealand | Joana Ferreira | joana.ferreira@tradingeconomics.com

New Zealand’s consumer prices increased by 2.2 percent year-on-year in the first quarter of 2017, up from a 1.3 percent gain in the previous period and above market expectations of 2 percent. It was the highest inflation rate since the third quarter of 2011, as prices for food and transport rose.

Year-on-year, cost for food rose 1.6 percent (from 0.6 percent in Q4 2016), boosted by a 4.4 percent gain in prices for fruit and vegetables.

Transport prices went up 3.5 percent (from -1 percent in Q4), with petrol (12 percent) partially offset by falls in other private transport services (vehicle relicensing fees).

Housing-related prices continued to grow, up 3.3 percent in the March 2017 year, the same rise as in the previous period. Prices increased for newly built houses, excluding land (6.7 percent), and for housing rentals (2.3 percent). Newly built houses, excluding land, were up 8 percent in Auckland and 3.6 percent in Christchurch.

Tradable prices increased 1.6 percent (from -0.1 percent in Q4), while prices for non-tradables advanced 2.5 percent (from 2.4 percent in Q4).

Excluding petrol, and cigarettes and tobacco, the CPI showed a 1.5 percent gain.

On a quarterly basis, consumer prices rose 1 percent, following a 0.4 percent increase in the previous period and above market expectations of a 0.8 percent gain. Prices of alcoholic beverages and tobacco rebounded 4 percent following a 0.3 percent decline in the previous quarter. The food group also rebounded 2.2 percent from 1.2 percent fall in December of 2016 quarter. Meanwhile, prices in the transport group grew at a softer pace of 0.8 percent (from 3.7 percent in the previous quarter).




Thursday March 23 2017
New Zealand February Trade Deficit Largest Since 2007
Mario | mario@tradingeconomics.com

New Zealand posted a trade deficit of NZD 18 million in February of 2017 compared to a NZD 366.9 million surplus in the same month of the previous year. It was the biggest trade deficit for any February since 2007 and was well below expectations of a NZD 160 million surplus. The annual trade deficit for the year ended February 2017 was $3.8 billion, the largest since April 2009.

Exports fell 5.5 percent year-on-year to NZD 4.00 billion in February, mainly affected by a 98.8 percent fall in ships, boats & floating structures. The largest component, meat & edible offal rose by 4.4 percent (from +2.7 percent in January). The second largest component, logs, wood & wood articles fell 1.7 percent (from -4.0 percent). Shipments increased to China (6.3 percent from +12.3 percent in January) and Australia (2.1 percent from +12.8 percent in January), but declined to the EU (9.6 percent from -25.9 percent), South Korea (9.0 percent from -34.8 percent), Japan (5.7 percent from -10.6 percent), and the United States (3.0 percent from -6.1 percent).

Meanwhile, imports increased by 4.0 percent to NZD 4.02 billion, led mainly by a 20.3 percent increase in vehicles, parts & accessories (from +28.3 percent in January), and a 32.0 rise in petroleum & products (from +52.6 percent). Imports increased from Japan (6.3 percent from +39.7 percent in January) and the EU (2.9 percent from +0.6 percent). Shipments declined from China (10.2 percent), Australia (9.2 percent), and the United States (2.5 percent). 


Wednesday March 22 2017
New Zealand Holds Interest Rate 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 March 22nd, 2017, as widely expected. The central bank left the monetary rate unchanged for the fourth straight meeting. Policymakers underscored that headline inflation has returned to the target band as past declines in oil prices dropped out of the annual calculation; that quarterly GDP was weaker than expected in the December quarter; and that global inflation has increased. They also reiterated that monetary policy will remain accommodative for a considerable period, as numerous uncertainties remain, particularly in respect of the international outlook, 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.

Macroeconomic indicators in advanced economies have been positive over the past two months.  However, major challenges remain with on-going surplus capacity in the global economy and extensive geo-political uncertainty.

Global headline inflation has increased, partly due to a rise in commodity prices, although oil prices have fallen more recently. Core inflation has been low and stable. Monetary policy is expected to remain stimulatory, but less so going forward, particularly in the US.

The trade-weighted exchange rate has fallen 4 percent since February, partly in response to weaker dairy prices and reduced interest rate differentials. This is an encouraging move, but further depreciation is needed to achieve more balanced growth.

Quarterly GDP was weaker than expected in the December quarter, but some of this is considered to be due to temporary factors. The growth outlook remains positive, supported by on-going accommodative monetary policy, strong population growth, and high levels of household spending and construction activity. Dairy prices have been volatile in recent auctions and uncertainty remains around future outcomes.

House price inflation has moderated, and in part reflects loan-to-value ratio restrictions and tighter lending conditions. It is uncertain whether this moderation will be sustained given the continued imbalance between supply and demand.

Headline inflation has returned to the target band as past declines in oil prices dropped out of the annual calculation. Headline CPI will be variable over the next 12 months due to one-off effects from recent food and import price movements, but is expected to return 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, particularly in respect of the international outlook, and policy may need to adjust accordingly.


Wednesday March 15 2017
New Zealand GDP Growth Slows More Than Expected in Q4
Statistics New Zealand | Joana Taborda | joana.taborda@tradingeconomics.com

The New Zealand economy advanced 0.4 percent on quarter in the last three months of 2016, slowing from a downwardly revised 0.8 percent growth in the previous period and below market expectations of 0.7 percent. It is the smallest expansion in six quarters, as services slowed and agriculture and manufacturing contracted.

Services was the main driver of GDP growth and rose 0.7 percent (1.1 percent in Q3). Business services went up 1.7 percent (2.6 percent in Q3) due to computer system design and related services and advertising, market research and management services. Retail trade increased 0.6 percent (0.7 percent in Q3); arts, recreation, and other services increased 3.8 percent (2.5 percent in Q3), with repair and maintenance services the largest contributor. In contrast, wholesale (-0.3 percent compared to 1.3 percent in Q3) and transport, postal and warehousing (-0.7 percent compared to 3.7 percent in Q3) contracted.
 
Agriculture was down 0.8 percent (-2.9 percent in Q3), due to falling milk production and manufacturing fell 1.6 percent (1.2 percent in Q3), due to decreased food, beverage, and tobacco production.
 
Annual GDP growth for the year ended December 2016 increased to 3.1 percent from 2.5 percent in 2015.




Tuesday February 28 2017
New Zealand Trade Balance Swings To Deficit in January
Mario | mario@tradingeconomics.com

New Zealand posted a trade gap of NZD 285 million in January of 2017 compared to a NZD 12 million surplus in the same month of the previous year. It was the biggest deficit for any January since 2013 and was well above expectations of a NZD 3 million gap.

Exports edged up 0.3 percent year-on-year to NZD 3.91 billion, led by rebounds for milk powder, butter, and cheese (4.5 percent from -2.9 percent in December), and meat and edible offal (2.7 percent from -13.0 percent). In contrast, exports declined for logs, wood, and wood articles (-4.0 percent from 17.0 percent). Fruits exports increased at a softer pace of 16.8 percent (from 19 percent in the previous month). Shipments increased to Australia (12.8 percent) and China (12.3 percent), but declined to South Korea (-34.8 percent), the EU (-25.9 percent), Japan (-10.6 percent), and the United States (-6.1 percent).

Imports surged 8.0 percent to NZD 4.19 billion in January, led by petroleum and products (+52.6 percent from +5.3 percent); vehicles, parts, and accessories (+28.3 percent from +15.0 percent); and electrical machinery and equipment (+14.8 percent from -2.6 percent). Imports increased from Japan (+39.7 percent), the United States (+13.8 percent), and the European Union (+0.6 percent). Shipments from Korea (-4.9 percent), Australia (-2.2 
percent), and China (-0.5 percent) declined. 


Wednesday February 08 2017
New Zealand Holds Key Rate At 1.75%
RBNZ | Yekaterina Guchshina | yekaterina@tradingeconomics.com

The Reserve Bank of New Zealand kept its official cash rate unchanged at record low of 1.75 percent on February 8th, 2017, as widely expected. Policymakers said financial conditions have firmed with long-term interest rates rising and continued upward pressure on the New Zealand dollar exchange rate. The exchange rate remains higher than is sustainable for balanced growth. Inflation has returned to the target band as past declines in oil prices dropped out of the annual calculation, and is expected to return to the midpoint target of 2 percent gradually, reflecting the strength of the domestic economy.

Statement by Reserve Bank Governor Graeme Wheeler:

The recovery in commodity prices and more positive business and consumer sentiment in advanced economies have improved the global outlook.  However, major challenges remain with on-going surplus capacity in the global economy and rising geo-political uncertainty.

Global headline inflation has increased, partly due to rising commodity prices.  Global long-term interest rates have increased.  Monetary policy is expected to remain stimulatory, but less so going forward, particularly in the US.

New Zealand’s financial conditions have firmed with long-term interest rates rising and continued upward pressure on the New Zealand dollar exchange rate.  The exchange rate remains higher than is sustainable for balanced growth and, together with low global inflation, continues to generate negative inflation in the tradables sector.  A decline in the exchange rate is needed.

Economic growth in New Zealand has increased as expected and is steadily drawing on spare resources.  The outlook remains positive, supported by ongoing accommodative monetary policy, strong population growth, increased household spending and rising construction activity. Dairy prices have recovered in recent months but uncertainty remains around future outcomes.

Recent moderation in house price inflation is welcome, and in part reflects loan-to-value ratio restrictions and higher mortgage rates.  It is uncertain whether this moderation will be sustained given the continued imbalance between supply and demand.

Headline inflation has returned to the target band as past declines in oil prices dropped out of the annual calculation.  Inflation is expected to return to the
midpoint of the target band gradually, reflecting the strength of the domestic economy and despite persistent negative tradables inflation.  Longer-term inflation expectations remain well-anchored at around 2 percent.

Monetary policy will remain accommodative for a considerable period.  Numerous uncertainties remain, particularly in respect of the international outlook, and policy may need to adjust accordingly.