Friday May 24 2019
New Zealand Trade Surplus Widens in April
Statistics New Zealand | Stefanie Moya | stefanie.moya@tradingeconomics.com

New Zealand trade surplus widened to NZD 433 million in April 2019 from NZD 200 million in the same month of the previous year and compared to market expectations of a NZD 400 million surplus. Exports jumped 11.7 percent year-on-year while imports rose 7.3 percent. The twelve-month trade balance recorded a NZD 5.5 billion gap compared to a NZD 3.8 billion shortfall a year earlier.

Exports increased 11.7 percent year-on-year to NZD 5.55 billion, after rising 16.7 percent in the previous month, mainly driven by higher sales of logs, wood & wood articles, which jumped 20.3 percent to NZD 0.48 billion. Also, sales went up for milk powder, butter & cheese (10.6 percent to NZD 1.29 billion); and fruit (11.2 percent to NZN 0.61 billion). Meanwhile, sales dropped for electrical machinery & equipment (-17.9 percent to NZN 0.08 billion) and wood pulp & waste paper (-28.6 percent to NZN 0.06 billion). 

By destination, exports climbed to South Korea (33.5 percent), China (29.3 percent), the US (18.3 percent) and Japan (8.5 percent), but fell to Australia (-3.9 percent) and the EU (-1.1 percent). 

Imports went up 7.3 percent to NZD 5.11 billion, after declining 3.5 percent in the prior month. Imports advanced mostly due to higher purchases of aircraft & parts (231.4 percent to NZN 0.19 billion); mechanical machinery & equipment (0.9 percent to NZN 0.69 billion); electrical machinery & equipment imports (22.1 percent to NZD 0.45 billion); textiles (15.4 percent to NZn 0.23 billion); and plastic & plastic articles (17.3 percent to NZN 0.20 billion). In contrast, purchases of vehicles, parts & accessories declined 21.8 percent to NZD 0.71 billion, due to an unusually high level in April 2018 when two additional vehicle carriers were unloaded, after shipment delays. 

By country of origin, imports rose from China (19.2 percent), the EU (18.8 percent), and Australia (17.8 percent), but decreased from Japan (-31.9 percent), South Korea (-13.2 percent) and the US (-6.6 percent).




Wednesday May 08 2019
New Zealand Cuts Rate to Fresh Record Low of 1.5%
RBNZ l Rida Husna | rida@tradingeconomics.com

The Reserve Bank of New Zealand lowered its official cash rate/OCR by 25 bps to a new record low of 1.5 percent at its May 2019 meeting, as widely expected. It was the first rate cut since November 2016, saying it is necessary to support the outlook for employment and inflation consistent with its policy remit amid slower global economic growth. Policymakers added that a lower path for the cash rate over the forecast period was appropriate and reflected the economic projections and the balance of risks.

Statement from the Reserve Bank of New Zealand:

Global economic growth has slowed since mid-2018, easing demand for New Zealand’s goods and services. This lower global growth has prompted foreign central banks to ease their monetary policy stances, supporting growth prospects.

However, there is uncertainty about the global economic outlook. Trade concerns remain, while some other indicators suggest trading-partner growth is stabilising.

Domestic growth slowed from the second half of 2018. Reduced population growth through lower net immigration, and continuing house price softness in some areas, has tempered the growth in household spending. Ongoing low business sentiment, tighter profit margins, and competition for resources has restrained investment.

Employment is near its maximum sustainable level. However, the outlook for employment growth is more subdued and capacity pressure is expected to ease slightly in 2019. Consequently, inflationary pressure is projected to rise only slowly.

Given this employment and inflation outlook, a lower OCR now is most consistent with achieving our objectives and provides a more balanced outlook for interest rates.

Meanwhile, excerpts from the Summary Record of Meeting:

The Committee noted that inflation is currently slightly below the mid-point of the inflation target, and that employment is broadly at the targeted maximum sustainable level. However, the members agreed that given the recent weaker domestic spending, and projected ongoing growth and employment headwinds, there was a need for further monetary stimulus to meet its objectives.

The Committee agreed that the risks to achieving its consumer price inflation and maximum sustainable employment objectives were broadly balanced around the projection. Possible alternative outcomes were noted on the upside and downside.

The Committee noted that additional stimulus from central banks had underpinned growth and reduced the likelihood of a more-pronounced slowdown. With some indicators of global growth improving in recent months, a faster recovery in global growth was possible. However, on balance, the Committee was more concerned about a continued slowdown rather than a faster recovery.

The Committee noted that additional stimulus from central banks had underpinned growth and reduced the likelihood of a more-pronounced slowdown. With some indicators of global growth improving in recent months, a faster recovery in global growth was possible. However, on balance, the Committee was more concerned about a continued slowdown rather than a faster recovery.

The recent period of rising domestic inflation was discussed. The Committee noted that the near-term outlook was more subdued due to lower capacity pressure. It was also noted that cost pressures remain elevated, and that there is a risk firms may pass these costs on as higher consumer prices by more than assumed. However, it was agreed that inflation expectations remain well anchored at the mid-point of the target range.

The Committee also noted the relatively subdued private sector wage growth, despite businesses suggesting that the inability to find labour is a significant constraint on their growth. The Committee noted the limited pass-through of the nominal wage growth to consumer price inflation.





Wednesday May 01 2019
New Zealand Jobless Rate Falls to 4.2% in Q1
Statistics New Zealand | Stefanie Moya | stefanie.moya@tradingeconomics.com

New Zealand's unemployment rate fell to 4.2 percent in the first quarter of 2019 from 4.3 percent in the previous period, matching market expectations and close to its 10-year low. The jobless rate dropped to a 10-year low of 4.0 percent in the quarter ending in September 2018.

The number of unemployed people decreased by 4 thousand to 116 thousand, reflecting 4 thousand fewer unemployed youth (15–24-year-olds), and employment went down by 4 thousand to 2.66 million. The employment rate decreased to 67.5 percent in the first quarter of 2019 (vs 67.8 percent in Q4), the lowest rate since the second quarter of 2017. The labour force participation rate declined to 70.4 percent in the March quarter from 70.9 percent in the prior period.

For women, the unemployment rate went up to 4.4 percent, up from 4.2 percent in the previous quarter while for men dropped to 3.9 percent from 4.4 percent.

The underutilisation rate declined to 11.3 percent from 12.1 percent in the last quarter of 2018.

Annual wage inflation, as measured by the labor cost index, increased to 2.0 percent in the first quarter of 2019 from 1.9 percent in the priod period, but below market forecasts of 2.1 percent, as the public sector wages advanced 1.9 percent, higher than a 1.7 percent gain in the previous quarter. Meanwhile, private sector wages rose 2.0 percent, the same pace as in the fourth quarter of 2018. On a quarterly basis, wages increased by 0.4 percent, slowing from a 0.5 percent rise in the previous period and lower than market consensus of 0.5 percent. 




Friday April 26 2019
New Zealand Posts Second-Largest Trade Surplus on Record
Mario | mario@tradingeconomics.com

New Zealand posted a trade surplus of NZD 922 million surplus in March 2019, the second-highest in the series, compared to a NZD 151 million deficit in the same month of the previous year and market expectations of a NZD 131 million surplus.

Exports surged 19 percent year-on-year to a record NZD 5.70 billion, after rising 6 percent in the previous month, mostly boosted by sales of milk powder, butter & cheese, which jumped 22 percent to NZD 1.4 billion. Also, sales of meat and edible offal climbed 29 percent to a record NZD 902 million and exports of fruit surged 42 percent to NZD 214 million. On the other hand, exports of electrical machinery and equipment decreased 15 percent to NZD 100 million and sales of crude oil plummeted 93 percent to NZD 2 million.

By destination, exports went up to China (52 percent), the US (17 percent), Australia (7.7 percent), the EU (7.4 percent), and Japan (4.7 percent).

Imports declined 3.5 percent year-on-year to NZD 4.77 billion, after increasing 12.2 percent in the prior month. Imports were mainly dragged by a 20 percent fall to NZD 516 million in purchases of petroleum and products, with petrol & diesel falling 35 percent. Also, purchases of vehicles, parts & accessories dropped 10.7 percent to NZD 717 million. In contrast, electrical machinery and equipment imports were up NZD 44 million (or 12 percent) to NZD 406 million.

By country of origin, purchases were mainly dragged by a 17.0 percent decline from the United States and a 3.0 percent fall from the EU.


Wednesday April 17 2019
New Zealand Q1 Inflation Rate Eases to 1.5%
Statistics New Zealand | Stefanie Moya | stefanie.moya@tradingeconomics.com

The annual inflation rate in New Zealand fell to 1.5 percent in the first quarter of 2019 from 1.9 percent in the previous period and below market expectations of 1.7 percent. The slowdown was mainly driven by a fall in cost of transport, communication and household contents and services.

Year-on-year, prices slowed for housing & utilities (3.0 percent compared to 3.1 percent in Q4 2018), of which rentals for housing (2.4 percent),  construction (3.6 percent), and local authority rates (5.1 percent); recreation & culture (0.8 percent compared to 2.1 percent); and miscellaneous goods & services (2.5 percent compared to 2.9 percent). Additionally, prices dropped for transport (-0.1 percent compared to 3.5 percent); and household contents and services (-0.8 percent compared to 0.6 percent). Also, cost of communication continued to fall (-3.7 percent, the same as in Q4), namely telecommunication equipment (-23 percent).

On the other hand, prices went up further for the food group (1.3 percent compared to 0.6 percent); and alcoholic beverages & tobacco (4.2 percent compared to 3.8 percent), mostly cigarettes and tobacco (7.7 percent). In addition, cost of clothing & footwear declined less (-0.6 percent compared to -1.0 percent) and prices of education rebounded (1.7 percent compared to -5.5 percent). 

On a quarterly basis, consumer prices increased 0.1 percent, unchanged from the previous period and below market forecasts of 0.3 percent. 




Wednesday March 27 2019
New Zealand Leaves Monetary Policy Unchanged
RBNZ | Mario | mario@tradingeconomics.com

The Reserve Bank of New Zealand left its official cash rate/OCR unchanged at a record low of 1.75 percent at its March 2019 meeting, as widely expected. Policymakers said that given the weaker global economic outlook, in particular amongst some key trading partners including Australia, Europe, and China, and reduced momentum in domestic spending, the more likely direction of the next OCR move is down. Policymakers also mentioned that as capacity pressures build, consumer price inflation is expected to increase to around the mid-point of the 2 percent target range.

Statement from the Reserve Bank of New Zealand:

The Official Cash Rate (OCR) remains at 1.75 percent. Given the weaker global economic outlook and reduced momentum in domestic spending, the more likely direction of our next OCR move is down.

Employment is near its maximum sustainable level. However, core consumer price inflation remains below our 2 percent target mid-point, necessitating continued supportive monetary policy.

The global economic outlook has continued to weaken, in particular amongst some of our key trading partners including Australia, Europe, and China. This weaker outlook has prompted central banks to ease their expected monetary policy stances, placing upward pressure on the New Zealand dollar.

Domestic growth slowed in 2018, with softness in the housing market and weak business investment contributing.

We expect ongoing low interest rates, and increased government spending and investment, to support economic growth over 2019. Low interest rates, and continued employment growth, should support household spending and business investment. Government spending on infrastructure, housing, and transfer payments also supports domestic demand.

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

The balance of risks to this outlook has shifted to the downside. The risk of a more pronounced global downturn has increased and low business sentiment continues to weigh on domestic spending. On the upside, inflation could rise faster if firms pass on cost increases to prices to a greater extent.

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.


Tuesday March 26 2019
New Zealand Trade Surplus Narrows in February
Statistics New Zealand | Mario | mario@tradingeconomics.com

New Zealand trade surplus narrowed to NZD 12 million in February 2019 from NZD 188 million in the same month of the previous year and compared to market expectations of a NZD 109 million deficit. Imports rose 12.9 percent year-on-year and exports increased at a softer 8.3 percent. The twelve-month trade balance recorded a NZD 6.62 billion gap (vs a NZD 3.06 billion shortfall a year earlier).

Exports from New Zealand advanced 8.3 percent year-on-year to NZD 4.82 billion in February 2019, after rising 1.3 percent in January. Exports were mostly boosted by higher sales of milk powder, butter & cheese category, which jumped 24.3 percent to NZD 1346 million. Also, sales of logs and wood climbed 19.8 percent to NZD 472 million. On the other hand, exports of mechanical machinery and equipment decreased 6.3 percent to NZD 126 million and sales of crude oil dropped 70.8 percent to NZD 20 million. By destination, exports went up to China (32.5 percent), the EU (7.4 percent) and Australia (2.1 percent), but fell  to South Korea (-18.0 percent), the US (-3.4 percent), and Japan (-2.5 percent).

Imports rose 12.9 percent year-on-year to NZD 4.80 billion in February, after increasing 6.9 percent in the prior month. Imports were mainly driven by higher purchases of vehicles, partes & accessories (+26.6 percent to NZD 634 million); petroleum & products (+14.1 percent to NZD 514 million); and aircraft & parts (+521.1 percent to NZD 145 million). In contrast, imports dropped for fertilizers (-56.1 percent to NZD 21 million) and food residues, wastes and fodder (-29.5 percent to NZD 84 million). By country of origin, purchases increased from China (9.3 percent), Japan (100.6 percent); the EU (30.0 percent), the US (19.3 percent), and Australia (2.2 percent). Meanwhile, imports declined from Singapore (-31.4 percent), the United Arab Emirates (-17.7 percent),  and Thailand (-11.9 percent).


Wednesday February 27 2019
New Zealand Trade Deficit Widens in January
Statistics New Zealand | Mario | mario@tradingeconomics.com

New Zealand trade deficit widened to NZD 914 million in January 2019 from NZD 662 million in the same month of the previous year and compared to market expectations of a NZD 300 million shortfall. Imports rose 7.7 percent year-on-year and exports increased at a softer 3.0 percent.

Imports rose 7.7 percent year-on-year to NZD 5.32 billion in January 2019, after increasing 8.0 percent in the prior month. Imports were mainly driven by higher purchases of petroleum & products, up 12.5 percent to NZD 725 million, namely crude oil (11 percent) and diesel (27 percent). Also, purchases went up for textiles (+12.2 percent to NZD 258 million) and mechanical machinery (+11.4 percent to NZD 765 million). In contrast, imports of electrical machinery dropped 7.1 percent to NZD 360 million and purchases of ships, boats, and floating structures declined 70.6 percent to NZD 26 million. By country of origin, purchases increased from China (14.0 percent); Japan (19.5 percent); the EU (12 percent); and the US (9.6 percent). Meanwhile, imports dropped from Australia (-1.9 percent) and South Korea (-19.4 percent).

Exports advanced 3.0 percent year-on-year to NZD 4.40 billion, after declining 3.9 percent in December. Exports were mostly boosted by higher sales of milk powder, butter & cheese category, which jumped 12.3 percent to NZD 1525 million, with milk fats and milk powder rising 18 percent and 16 percent, respectively. Also, sales of logs and wood climbed 13.2 percent to NZD 315 million. On the other hand, exports of meat and edible offal decreased 9.6 percent to NZD 619 million, mainly lamb (-9.1 percent) and beef (-10 percent). By destination, exports went up to China (9.7 percent) and the US (4.0 percent) while fell  to Australia (-13.1 percent); the EU (-12.3 percent); and Japan (-2.8 percent).

The twelve-month trade balance recorded a NZD 6.36 billion gap (vs a NZD 3.29 billion deficit a year earlier).


Wednesday February 13 2019
New Zealand Holds Rates at Record Low of 1.75%
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 1.75 percent on 13th February 2019, as widely expected. Policymakers said that low interest rate support domestic economic growth and inflation, and highlighted that the tailwind from a slowing global economy may reduce demand for New Zealand's exports. The Committee noted that the inflation rate is near the 2 percent target rate, mostly due to cost of petrol and to keep inflation close to target, the economy needs continued support from monetary policy. Policymakers added that rates will remain at this level through 2019 and 2020 and that the direction of the next move could be up or down.

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 2020. The direction of our next OCR move could be up or down.

Employment is near its maximum sustainable level. However, core consumer price inflation remains below our 2 percent target mid-point, necessitating continued supportive monetary policy.

Trading-partner growth is expected to further moderate in 2019 and global commodity prices have already softened, reducing the tailwind that New Zealand economic activity has benefited from. The risk of a sharper downturn in trading-partner growth has also heightened over recent months.

Despite the weaker global impetus, we expect low interest rates and government spending to support a pick-up in New Zealand’s GDP growth over 2019. Low interest rates, and continued employment growth, should support household spending and business investment. Government spending on infrastructure and housing also supports domestic demand.

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

There are upside and downside risks to this outlook. A more pronounced global downturn could weigh on domestic demand, but inflation could rise faster if firms pass on cost increases to prices to a greater extent.

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.



Thursday February 07 2019
New Zealand Jobless Rate Rises to 4.3% in Q4
Statistics New Zealand | Stefanie Moya | stefanie.moya@tradingeconomics.com

New Zealand's unemployment rate rose to 4.3 percent in the last quarter of 2018 from an upwardly revised 4.0 percent in the previous period and above market expectations of a 4.1 percent.

The number of unemployed people increased by 8 thousand to 120 thousand, reflecting 12 thousand more unemployed youth (15–24-year-olds), while employmnent went up by 2 thousand to 2.66 million. The employment rate fell to 67.8 percent in the fourth quarter of 2018 (from 68.2 percent in Q3). The labour force participation rate declined to 70.9 percent in the December quarter from 71 percent in the prior period.

For women, the unemployment rate rose to 4.2 percent, up from 4.0 percent in the previous quarter and for men advanced to 4.4 percent from 3.9 percent.

The underutilisation rate went up to 12.1 percent from 11.4 percent last quarter.

Annual wage inflation, as measured by the labor cost index, edged up to 1.9 percent in the fourth quarter of 2018 from 1.8 percent in the previous period and compared to market expectations of 2.0 percent, as private sector wage growth climbed to 2.0 percent from 1.9 percent. Meanwhile, public sector wages rose 1.7 percent in the December quarter, faster than a 1.5 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 two quarters.