Thursday December 19 2019
New Zealand Trade Deficit Narrows in November
Statistics New Zealand | Mario | mario@tradingeconomics.com

The trade gap in New Zealand narrowed to NZD 753 million in November of 2019 from NZD 1004 million in the same month of the previous year and compared to market expectations of a NZD 875 million deficit. Exports rose 7.6 percent year-on-year to NZD 5228 million and imports climbed 2 percent to NZD 5981 million. The twelve-month trade shortfall decreased to NZD 4816 million from NZD 5556 million a year earlier.

Exports surged 7.6 percent over a year earlier to NZD 5,228 million in November 2019, after rising 3.7 percent in October, mainly by driven by higher sales of milk powder, butter, and cheese (23.7 percent to NZD 1817 million). Also, sales of meat & edible offal jumped 15.7 percent to NZD 636 million. In contrast, sales of fruit plunged 23.7 percent to NZD 66 million.

Among main trade partners, exports rose to China (35.6 percent), while declined to the US (-6.3 percent), Australia (-5.2 percent) and Japan (-3.0 percent).

Imports rebounded 2 percent from a year ago to NZD 5,981 million after declining 1.4 percent in October, boosted by purchases of mechanical machinery & equipment (12.7 percent to NZD 879 million); vehicles, parts & accessories (10 percent to NZD 709 million) and oil & related products (5 percent to NZD 604 million). In contrast, acquisitions fell mostly for electrical machinery & equipment (-0.7 percent to NZD 558 million); textiles & textiles articles (-4.3 percent to NZD 239 million) and plastic & plastic articles (-7.8 percent to NZD 224 million).

By destination, imports increased mainly from China (1.9 percent), the US (18 percent), Japan (14.8 percent) and Germany (5.3 percent). In contrast, purchases from Australia decreased 6.1 percent.





Wednesday November 27 2019
New Zealand Trade Deficit Narrows in October
Statistics New Zealand | Mario | mario@tradingeconomics.com

The trade gap in New Zealand narrowed to NZD 1013 million in October of 2019 from NZD 1305 million in the same month of the previous year and compared to market expectations of a NZD 1621 million deficit. Exports rose 4.3 percent year-on-year to NZD 5035 million and imports declined 1.4 percent to NZD 6048 million. The twelve-month trade shortfall decreased to NZD 5037 million from NZD 5774 million a year earlier.

Exports went up 4.3 percent over a year earlier to NZD 5035 million, after a 2.6 percent rise in the previous month, driven by higher sales of milk powder, butter, and cheese (+19.7 percent to NZD 1471), in particular milk powder (+32 percent). Also, sales of meat & edible offal jumped 29.4 percent to NZD 580 million, namely lamb (+27 percent) and beef (+39 percent). In contrast, sales of fruit plunged 23.1 percent to NZD 156 million, led by green kiwifruit (-38 percent).

Among main trade partners, exports rose to China (22.8 percent), and the US (4.2 percent); but dropped to the EU (-20.6 percent).

Imports fell 1.4 percent year-on-year to NZD 5774 million, following a 2.6 percent decline in the previous month, mainly due to lower purchases of vehicles, parts & accessories (-9.4 percent to NZD 656 million) and pharmaceutical products (-13.5 percent to NZD 124 million). In contrast, purchases of mechanical machinery and equipment jumped 9.7 percent to NZD 947 million and those of electrical machinery and equipment 6.9 percent to NZD 581 million.

By destination, imports declined from Japan (-16.4 percent), and China (-6.8 percent); while increased from the US (10.6 percent), Australia (3.3 percent) and the EU (1 percent).


Wednesday November 13 2019
New Zealand Holds Rates, Leaves Room for Further Easing
RBNZ l Rida Husna | rida@tradingeconomics.com

The Reserve Bank of New Zealand unexpectedly kept its official cash rate/OCR unchanged at a record low of 1 percent on November 13th 2019, surprising markets that expected a 25 bps rate cut. Policymakers said that economic developments do not warrant a change to the already stimulatory monetary setting at this time and that they will continue to monitor the evolution of the economy and remain prepared to act as required. The Committee added that interest rates will need to remain at low levels for a prolonged period to ensure inflation reaches the mid-point of the target range and employment remains around its maximum sustainable level.

The OCR has been lowered few times from 1.75 percent to its current level this year after being on hold for over  two years.

Reserve Bank of New Zealand policy statement:

Economic growth continued to slow in mid-2019 reflecting weak business investment and soft household spending. We expect economic growth to remain subdued over the remainder of the calendar year. We will continue to monitor economic developments and remain prepared to act as required.

Trading-partner growth has also slowed. Growth in global trade and manufacturing is weak and uncertainty remains high, dampening global business investment. However, New Zealand’s export commodity prices have been robust, underpinning a positive terms of trade. The lower New Zealand dollar exchange rate this year is also providing a useful additional offset to the weaker global economic environment.

Domestic economic activity is expected to increase during 2020 supported by low interest rates, higher wage growth, and increased government spending and investment. The low level of the OCR has flowed through to lower lending rates more generally, which support spending and investment. Rising capacity pressures are projected to promote a pick-up in business investment.

Interest rates will need to remain at low levels for a prolonged period to ensure inflation reaches the mid-point of our target range and employment remains around its maximum sustainable level. We are committed to achieving our inflation and employment objectives. We will add further monetary stimulus if needed.

Excerpts from the Summary Record of Meeting:

The Committee agreed that accommodative monetary policy remains necessary to continue to meet their inflation and employment objectives.

The members noted that employment remains close to its maximum sustainable level while consumer price inflation remains below the 2 percent target mid-point but within the 1 to 3 percent target range.

The Committee noted the slowdown in domestic GDP growth. They also noted that business surveys suggest weak growth has continued over the second half of 2019. The members discussed the slowdown in potential output growth, which may explain the economy remaining near capacity over this time. Weaker demand was expected to reduce capacity pressure in the near term, and ease some of the recent labour market tightness.

The members anticipated a lift in economic growth during 2020 from the easing of monetary policy that has taken place since early 2019 and from stronger fiscal stimulus.

The Committee noted the signs that recent monetary stimulus was flowing through the economy and supporting the medium-term growth projections. The members noted that the reduction in retail lending rates over the past year would support the outlook for consumption and broad investment. The Committee noted the lower exchange rate this year as another channel supporting the economy.

The Committee agreed that it was necessary for monetary policy to remain stimulatory for some time to meet its employment and inflation objectives. In terms of least regrets, the Committee discussed the relative benefits of inflation ending up in the upper half of the target range relative to being persistently below 2 percent.





Wednesday November 06 2019
New Zealand Jobless Rate Rebounds in Q3
Statistics New Zealand | Mario | mario@tradingeconomics.com

New Zealand's unemployment rate rebounded to 4.2 percent in the third quarter of 2019 from an 11-year low of 3.9 percent in the previous period, above market expectations of 4.1 percent.

The number of unemployed people increased by 6 thousand to 115 thousand, reflecting 4 thousand more unemployed women and 2 thousand more unemployed men. For men, the unemployment rate went up to 3.8 percent from an over 11-year low of 3.6 percent in the prior period. For women, the unemployment rate rose to 4.6 percent from 4.3 percent in the second quarter of the year. 

There were 6 thousand more employed people in the third quarter, up to 2.64 million, driven by a rise in the number of employed men (+6,000) and women (+1,000). The employment rate for men remained steady at 72.2 percent, while for women fell slightly to 62.9 percent (vs 63 percent in Q3).

The labour force participation rate was at 70.4 percent in the September quarter, higher than 7.3 percent in the previous period and market expectations.

The underutilisation rate declined to 10.4 percent from 11.0 percent in Q2. It was the lowest rate since the second quarter of 2008.

Annual wage inflation, as measured by the labor cost index, increased to 2.4 percent in the third quarter of 2019 from 2.1 percent in the prior period. Public sector wages advanced 3.0 percent, the highest rate since the second quarter of 2009, and following a 2.2 percent gain in the previous quarter. Meanwhile, private sector wages rose 2.3 percent, up from 2.2 percent in the previous quarter. On a quarterly basis, wages increased by 0.8 percent, up from a 0.7 percent rise in the previous period.




Wednesday October 23 2019
New Zealand Trade Gap Narrows in September
Statistics New Zealand | Mario | mario@tradingeconomics.com

The trade gap in New Zealand narrowed to NZD 1242 million in September of 2019 from NZD 1580 million in the same month of the previous year, as exports rose 5.1 percent to NZD 4469 million and imports declined 2.1 percent to NZD 5710 million. The twelve-month trade shortfall decreased to NZD 5,213 million from NZD 5309 million a year earlier.

Exports went up 5.1 percent over a year earlier to NZD 4469 million, after a 2.6 percent rise in the previous month, boosted by higher sales of crude oil (64 percent to NZD 122 million); preparations of milk, cereals, flour and starch (35.4 percent to NZD 205 million); milk powder, butter & cheese (27.6 percent to NZD 920 million); and meat & edible offal (27.3 percent to NZD 458 million). In contrast, sales of fruit declined 19.1 percent to NZD 277 million; and those of logs, wood, and wood articles fell 13.8 percent to NZD 395 million. 

By destination, exports went up to China (23.3 percent) and the US (6.3 percent), but fell to South Korea (-19.2 percent), Japan (-14.9 percent), Australia (-4.8 percent) and the EU (-2.1 percent). 

Imports fell 2.1 percent to NZD 5710 million, following a 3.0 percent gain in August, mainly due to lower purchases of petroleum & products (-33.9 percent to NZD 492 million) and aircraft and parts (-47.7 percent to NZD 170 million). On the other hand, sales advanced for mechanical machinery and equipment (18.4 percent to NZD 843 million); textiles (10.9 percent to NZD 262 million); and vehicles (7.5 percent to NZD 810 million).

Among major trading partners, imports rose from Japan (18.1 percent), China (5 percent) and the EU (15 percent), while declined from the US (-25.8 percent) and Australia (-6.5 percent). 


Wednesday October 16 2019
New Zealand Annual Inflation Rate Slows to 1.5% in Q3
Statistics New Zealand | Mario | mario@tradingeconomics.com

The annual inflation rate in New Zealand decreased to 1.5 percent in the third quarter of 2019 from 1.7 percent in the previous period but above market expectations of a 1.4 percent gain. The slowdown was mainly due to a fall in cost of transport.

Year-on-year, prices slowed for household contents and services (0.9 percent vs 1.7 percent in Q2); recreation and culture (1.6 percent vs 1.8 percent); health (1.2 percent vs 1.7 percent); and miscellaneous goods and services (2.3 percent vs 2.6 percent). Also, cost of transport fell 1.5 percent, after rising 0.3 percent in the second quarter of the year; and prices of clothing and footwear declined further (-0.8 percent vs -0.3 percent).

On the other hand, cost advanced at a faster pace for food (1.8 percent vs 1.1 percent), driven by meat, poultry, and fish (+6.4 percent); housing and household utilities (3.0 percent from 2.8 percent), boosted by rents (+2.9 percent), property rates and related services (+ 5 percent), and home ownership (+2.8 percent); alcoholic beverages and tobacco (3.9 percent vs 3.5 percent), led by cigarettes and tobacco (+7.7 percent); and education (2.3 percent vs 1.6 percent). Additionally, prices of communication fell dropped less (-2.4 percent vs -3 percent). 

On a quarterly basis, consumer prices rose 0.7 percent, after a 0.6 percent gain in the previous quarter and higher than forecasts of 0.6 percent.




Wednesday September 25 2019
New Zealand Holds Rates at 1%, Signals More Easing If Needed
RBNZ l Rida Husna | rida@tradingeconomics.com

The Reserve Bank of New Zealand left its official cash rate/OCR unchanged at a record low of 1 percent at its September 2019 meeting, as widely expected. The move follows a 25 bps cut in the previous meeting. Policymakers said there remains scope for more fiscal and monetary stimulus, if necessary, to support the economy and maintain inflation and employment objectives.

Reserve Bank of New Zealand policy statement:

The Official Cash Rate (OCR) remains at 1.0 percent. The Monetary Policy Committee agreed that new information since the August Monetary Policy Statement did not warrant a significant change to the monetary policy outlook.

Employment is around its maximum sustainable level, and inflation remains within our target range but below the 2 percent mid-point.

Global trade and other political tensions remain elevated and continue to subdue the global growth outlook, dampening demand for New Zealand’s goods and services. Business confidence remains low in New Zealand, partly reflecting policy uncertainty and low profitability in some sectors, and is impacting investment decisions.

Global long-term interest rates remain near historically low levels, consistent with low expected inflation and growth rates into the future. Consequently, New Zealand interest rates can be expected to be low for longer.

The reduction in the OCR this year has reduced retail lending rates for households and businesses, and eased the New Zealand dollar exchange rate.

Low interest rates and increased government spending are expected to support a pick-up in domestic demand over the coming year. Household spending and construction activity are supported by low interest rates, while the incentive for businesses to invest will grow in response to demand pressures.

Excerpts from the Summary Record of Meeting:

The Committee noted that employment remains close to its maximum sustainable level but consumer price inflation remains below the 2 percent target mid-point.

The Committee members discussed the initial impacts of reducing the OCR to 1.0 percent in August. They were pleased to see retail lending interest rates decline, along with a depreciation of the exchange rate.

The Committee noted that, while GDP growth had slowed over the first half of 2019, impetus to domestic demand is expected to increase. Household spending and construction activity are supported by low interest rates, while business investment should lift in response to demand pressures.

The Committee discussed the long and variable lags between monetary policy decisions and outcomes.

Global trade and other geopolitical tensions remain elevated and continue to subdue the global growth outlook, dampening demand for New Zealand’s goods and services.

Business confidence remains low in New Zealand, partly reflecting policy uncertainty and low profitability in some sectors, and is affecting investment decisions.

Fiscal policy is expected to lift domestic demand over the coming year. However, any increase in government spending could be delayed or it could have a smaller impact on domestic demand than assumed.

The Committee agreed that developments since the August Statement had not significantly changed the outlook for monetary policy. They reached a consensus to keep the OCR at 1.0 percent and that, if necessary, there remains scope for more fiscal and monetary stimulus.



Wednesday September 25 2019
New Zealand Trade Gap Narrows Slightly in August
Statistics New Zealand | Mario | mario@tradingeconomics.com

The trade gap in New Zealand narrowed slightly to NZD 1565 million in August of 2019 from NZD 1567 million in the same month of the previous year, as exports rose 3.8 percent to NZD 4126 million and imports advanced at a softer 2.7 percent to NZD 5691 million. The twelve-month trade shortfall widened to NZD 5,484 million from NZD 4,894 million a year earlier.

Exports went up 3.8 percent over a year earlier to NZD 4,126 million, after a 7.1 percent fall in the previous month, boosted by higher sales of crude oil (590.7 percent to NZD 68 million); fruits (18.3 percent to NZD 371 million), namely gold kiwifruit (18 percent to NZD 26 million) and apples (63 percent to NZD 23 million); and milk powder, butter and cheese (6.2 percent to NZD 547 million), in particular milk & cream (70 percent to NZD 35 million) and milk powder (16 percent to NZD 32 million). In contrast, sales of logs, wood & wood articles retreated 13.6 percent to NZD 395 million. 

By destination, exports increased to China (13.4 percent), Australia (6.8 percent), and the US (1.8 percent), but fell to South Korea (-15 percent), Japan (-5.8 percent), and the EU (-5.2 percent). 

Imports advanced 2.7 percent to NZD 5,691 million, following a 2.1 percent gain in July, driven by higher purchases of mechanical machinery and equipment (7 percent to NZD 824 million) and petroleum and products (9.8 percent to NZD 647 million). On the other hand, imports dropped for vehicles, parts and accessories (-8.4 percent to NZD 755 million) and aircraft and parts (-54.4 percent to NZD 40 million). 

Among major trading partners, imports rose from Australia (5.2 percent), China (4.9 percent), and the US (0.8 percent), while dropped from Japan (-17.8 percent), the EU (-0.6 percent) and Thailand (-7.4 percent). 


Monday August 26 2019
New Zealand Trade Deficit Widens in July
Statistics New Zealand | Rafael Gonzalez | rafael.gonzalez@tradingeconomics.com

The trade gap in New Zealand rose to NZD 685 million in July of 2019 from NZD 203 million in the same month of the previous year, as exports declined 5.8 percent to NZD 5,028 million while imports advanced 3.1 percent to NZD 5,713 million. The twelve-month trade shortfall widened to NZD 5,463 million from NZD 4,501 million a year earlier.

Exports fell 5.8 percent year-on-year to NZD 5,028 million, after a downwardly revised 1.5 percent gain in the previous month, dragged down by lower sales of milk powder, butter and cheese (-16.1 percent); meat and edible offal (-6.6 percent) and logs, wood and wood articles (-18.7 percent).

By destination, exports went down to the US (-8.8 percent), Korea (-12.6 percent) and the UK (-11.2 percent). In contrast, shipments increased to China (2.4 percent), Australia (0.8 percent) and Japan (6.8 percent). 

Imports went up 3.1 percent year-on-year to NZD 5,713 million, after falling an upwardly revised 10.2 percent in the prior month, due to higher purchases of mechanical machinery and equipment (10.8 percent). On the other hand, imports dropped for vehicles, parts and accessories (-4.0 percent) and petroleum and products (-10.7 percent). 

Among major trading partners, imports went up from Australia (12.7 percent), the US (5.7 percent) and Germany (34.8 percent). Meanwhile, purchases dropped from China (-1.8 percent), Japan (-2.5 percent) and the United Arab Emirates (-27.6 percent). 


Wednesday August 07 2019
RBNZ Cuts Rate to Fresh Record Low
RBNZ | Rida Husna | rida@tradingeconomics.com

The Reserve Bank of New Zealand lowered its official cash rate by 50bps to a fresh record low of 1 percent at its August 2019 meeting, while markets had forecast a smaller 25bps cut. This was the first rate cut since May, aiming to support inflation amid weakening global economic activity and ongoing trade tensions. Policymakers signaled further rate cuts could be possible.

Reserve Bank of New Zealand policy statement:

The Official Cash Rate (OCR) is reduced to 1.0 percent. The Monetary Policy Committee agreed that a lower OCR is necessary to continue to meet its employment and inflation objectives.

Employment is around its maximum sustainable level, while inflation remains within our target range but below the 2 percent mid-point. Recent data recording improved employment and wage growth is welcome.

GDP growth has slowed over the past year and growth headwinds are rising. In the absence of additional monetary stimulus, employment and inflation would likely ease relative to our targets.

Global economic activity continues to weaken, easing demand for New Zealand’s goods and services. Heightened uncertainty and declining international trade have contributed to lower trading-partner growth. Central banks are easing monetary policy to support their economies. Global long-term interest rates have declined to historically low levels, consistent with low expected inflation and growth rates into the future.

In New Zealand, low interest rates and increased government spending will support a pick-up in demand over the coming year. Business investment is expected to rise given low interest rates and some ongoing capacity constraints. Increased construction activity also contributes to the pick-up in demand.

Our actions today demonstrate our ongoing commitment to ensure inflation increases to the mid-point of the target range, and employment remains around its maximum sustainable level.
Excerpts from the Summary Record of Meeting:

The Committee agreed that weak global economic conditions could see imported inflation remain low if global growth slows further or if commodity prices decline. The members discussed the range of appropriate policy responses should imported inflation persist at low levels.

The Committee welcomed the recent employment and wage data but noted that private sector wage growth was subdued despite businesses having difficulty finding labour. The members discussed that the recent slowdown in growth could dampen wage inflation by more than assumed. Some noted that if cost pressures remain elevated, firms may pass on costs to consumer prices by more than assumed, while others viewed the wage pass through as a natural consequence of a tight labour market and policy stimulus.

The members discussed the recent slower domestic GDP growth and the impact of slowing global demand on New Zealand through the trade, financial and confidence channels. The members noted that heightened global uncertainty was reducing investment and suppressing trading-partner growth. This highlighted the risk of a larger or more prolonged slowdown in global economic growth.

The Committee noted that additional stimulus from central banks had underpinned growth and reduced the likelihood of a more-pronounced slowdown. However, some thought that even with support from monetary stimulus, considerable economic and policy uncertainty could see global growth continue to decline. Other members noted that the easing in global financial conditions since the beginning of the year, or a shift in political environment, could lead to a pick-up in global growth over the next year.

The Committee acknowledged the importance of additional spending from households, businesses, and the government, to meet their inflation and employment targets. They also agreed that additional monetary stimulus was needed. The members discussed several important uncertainties.