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.




Wednesday February 01 2017
New Zealand Jobless Rate Rises To 5.2% In Q4
Statistics New Zealand | Luísa Carvalho | luisa.carvalho@tradingeconomics.com

New Zealand's unemployment rate increased to 5.2 percent in the fourth quarter of 2016 from 4.9 percent in the previous period, worse than market expectations of 4.8 percent. It was the highest jobless rate since the March quarter of 2016, as a large number of people entered the labour force and employment increased less than unemployment.

The number of unemployed persons rose by 7.6 percent or by 10,000 people to 139,000. Over the quarter 3,000 more men and 7,000 more women were unemployed. As a result, the unemployment rate for men increased to 4.8 percent (up 0.1 percentage points) and for women, to 5.7 percent (up 0.5 percentage points).

Employment went up by 0.8 percent or by 19,000 to 2.51 million people. This followed a 1.3 percent increase in employment in the September 2016 quarter. Full-time employment rose 1.6 percent, with an extra 32,000 people being employed full-time. In contrast, part-time employment fell 2.2 percent, down 12,000 people.

The retail trade, accommodation, and food services industry was the largest contributor to employment growth over the latest quarter. This was followed closely by the construction and the professional services industries.

The labour force participation rate increased 0.4 percentage points over the latest quarter, to reach an all-time high of 70.5 percent. The number of people participating in the labour force, at 2.649 million, increased by 1.1 percent (up 29,000 people), with both men and women contributing to this.

Annual wage inflation, as measured by the labour cost index, was 1.6 percent in the December 2016 quarter. Annual wage inflation has been 1.5 to 1.6 percent for the last seven quarters.




Sunday January 29 2017
New Zealand Trade Gap Narrows in December
Statistics New Zealand | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

New Zealand trade deficit declined 1.3 percent year-on-year to NZD 41 million in December of 2016. For the year ended December 2016, the annual trade deficit was NZD 3.2 billion, lower than a NZD 3.5 billion gap a year earlier.

Exports declined 0.9 percent year-on-year to NZD 4.4 billion. Meat and edible offal led the fall, down 16 percent, while milk powder, butter, and cheese rose 8 percent. For the year ended December 2016, sales went down 1.1 percent to NZD 48 billion, the second anual fall, led by milk powder, butter, and cheese (-2.9 percent) and meat and edible offal (-13 percent). In contrast, exports rose for logs, wood, and wood articles (17 percent) and fruits (19 percent). Shipments decreased to Australia (-0.9 percent), the US (-8 percent), the EU (-4 percent) and South Korea (-4.6 percent) but increased to China (9.1 percent) and Japan (0.8 percent).

Imports declined 0.9 percent to NZD 4.4 billion, as intermediate goods fell 2.5 percent and oil and gas were down 39 percent. Meanwhile, capital goods and consumption goods slightly rose 0.9 percent and 0.2 percent, respectively. For the year ended December 2016, purchases declined 1.7 percent to NZD 52.5 billion. Imports increased from Australia (4.3 percent), Japan (6.6 percent) and China (0.4 percent) but declined from the US (-5.7 percent) and the EU (-0.3 percent).




Wednesday January 25 2017
New Zealand Inflation Rate Highest Since 2014
Statistics New Zealand | Deborah Neves | deborah.neves@tradingeconomics.com

Consumer prices in New Zealand jumped 1.3 percent year-on-year in the fourth quarter of 2016, compared to an upwardly revised 0.4 percent rise in the previous period and above market expectations of 1.2 percent. It was the highest level since the third quarter of 2014 mainly due to higher prices of newly built houses, excluding land and rentals for housing.

Housing-related prices continued to be the main upward contributor, influenced by purchase of newly built houses, excluding land (up 6.5 percent, the largest increase since Q3 of 2005); with Auckland up 8.2 percent; rentals for housing (up 2.0 percent, the lowest since Q1 of 2014); with Auckland up 3.2 percent, and Canterbury down 0.8 percent; real estate services (up 12 percent); local authority rates (up 3.2 percent); electricity (up 2.3 percent) and property maintenance services (up 3.4 percent).

The annual increases for housing-related prices were partly offset by lower transport group prices, influenced by other private transport services (down 13 percent), caused by lower vehicle relicensing fees; international air transport (down 5.7 percent). In addition, fruit also declined (down 6.3 percent in the year to December 2016).

Tradables decreased 0.1 percent in the year to December 2016. Lower prices for international air fares, fruit, and package holidays made the main downward contributions. The NZ dollar remains at a historically high level against the trade weighted index.

Non-tradables increased 2.4 percent in the latest year. Prices for the purchase of new housing, excluding land, made the most significant upwards contribution, followed by cigarettes and tobacco, and housing rentals. The increases were partly offset by decreases for other private transport services.  

On a quarterly basis, consumer prices also rose 0.4 percent, from an upwardly revised 0.3 percent gain in the previous quarter. 




Wednesday December 21 2016
New Zealand GDP Growth Up To 1.1% In Q3
Statistics New Zealand | Joana Taborda | joana.taborda@tradingeconomics.com

The New Zealand economy advanced 1.1 percent on quarter in the third quarter of 2016, higher than a downwardly revised 0.7 percent expansion in the previous period and beating market expectations of 0.9 percent. It is the highest growth rate in three quarters. The expansion was broad-based, with thirteen of the sixteen industries rising, while the main weakness came from agriculture.

Business services increased 2.0 percent (0.4 percent in Q2), due to scientific, architectural and engineering services. Transport was up 3.7 percent (0.2 percent in Q2), due to increases in road, air, and transport support services. Manufacturing rose 1.2 percent (1.6 percent in Q2), due to food, beverage, and tobacco manufacturing; and transport equipment, machinery and equipment manufacturing. Construction expanded 2.1 percent (2.6 percent in Q2), due to increases in all of the construction sub-industries. In contrast, agriculture declined 0.1 percent (+1.4 percent in Q2), utilities shrank 0.2 percent (-0.4 percent in Q2) and informattion media and telecommunications decreased 1.1 percent (-0.5 percent in Q2).

Year-on-year, the economy expanded 3.5 percent, following a downwardly revised 3.4 percent growth in the pprevious period.




Tuesday December 20 2016
New Zealand Trade Gap Narrows in November
Statistics New Zealand | Joana Taborda | joana.taborda@tradingeconomics.com

New Zealand trade deficit decreased 11.3 percent year-on-year to NZD 705 million in November of 2016, as imports fell faster than exports. It compares with market expectations of a NZD 500 million gap. For the year ended November 2016, the annual trade deficit was NZD 3.2 billion.

Exports declined 5.4 percent year-on-year to NZD 3855 million. Meat and edible offal led the fall, down NZD 158 million (-31 percent). In contrast, milk powder, butter, and cheese rose NZD 31 million (2.6 percent); logs, wood, and wood articles went up NZD 34 million (12 percent) and fruit increased NZD 16 million (27 percent). Exports to the EU fell NZD 116 million (-32 percent), and to the USA by NZD111 million (-23 percent). Other top export destinations (China, Australia, and Japan) showed little change.
 
Imports declined 6.4 percent to NZD 4560 million: capital goods led the fall, down NZD 326 million (-26 percent); intermediate goods declined NZD 53 million (-2.9 percent) and consumption goods fell NZD 34 million (-2.6 percent). In contrast, crude oil was up NZD 52 million (29 percent) in value. Of top import partners, the USA fell NZD 351 million (-46 percent), led by aircraft and parts. Other top import destinations (China, Australia, and Japan) rose in value.   


Thursday November 24 2016
New Zealand Trade Deficit Narrows 6.4% YoY in October
Statistics New Zealand | Mojdeh Kazemi | mojdeh@tradingeconomics.com

New Zealand posted a trade gap of NZD 846 million in October of 2016, compared to a NZD 904 million deficit a year earlier and better than market expectations of NZD 950 million shortfall. It was the smallest gap recorded since July when the trade balance swung into deficit. Exports went up by 2.2 percent, due to higher sales of dairies. Imports rose by 0.2 percent, led by increase in purchase of capital goods.

Exports rose 2.2 percent year-on-year to NZD 3,897 million, due to higher sales of milk powder, butter, and cheese (+13 percent); logs, wood, and wood articles (+25 percent); fruits (+40 percent), while sales of meat and edible offal fell (-18 percent). Outbound shipments increased to China (+7.9 percent) and Japan (+12 percent), while export went down to Australia (-6.5 percent); the US (-3.2 percent) and the EU (-9.7 percent).

Imports went up slightly by 0.2 percent year-on-year to NZD 4,743 million, led by higher purchase of capital goods (+27 percent). In contrast, imports decreased for intermediate goods (-11 percent); consumer goods (-5.3 percent) and crude oil (-17 percent). Within the top import partners purchases rose to the EU (+1.4 percent); the US (+45 percent) and Japan (+16 percent), while imports fell to China (-10 percent) and Australia (-8.5 percent). 


Thursday November 10 2016
New Zealand Cuts Key Rate to 1.75%
RBNZ | Mojdeh Kazemi | mojdeh@tradingeconomics.com

The Reserve Bank of New Zealand lowered its official cash rate by 25 basis points to a fresh record low of 1.75 percent in November of 2016. The decision was widely expected by markets. Policymakers said the New Zealand dollar is high and inflation remains below the midpoint target of 2 percent.

Statement by Reserve Bank Governor Graeme Wheeler:


Significant surplus capacity exists across the global economy despite improved economic indicators in some countries. Global inflation remains weak even though commodity prices have come off their lows. Political uncertainty remains heightened and market volatility is elevated.

Weak global conditions and low interest rates relative to New Zealand are keeping upward pressure on the New Zealand dollar exchange rate. The exchange rate remains higher than is sustainable for balanced economic growth and, together with low global inflation, continues to generate negative inflation in the tradables sector. A decline in the exchange rate is needed.

Domestic growth is being supported by strong population growth, construction activity, tourism, and accommodative monetary policy. Recent dairy auctions have been positive, but uncertainty remains around future outcomes. High net immigration is supporting growth in labour supply and limiting wage pressure.

House price inflation remains excessive and is posing concerns for financial stability. Although house price inflation has moderated in Auckland, it is uncertain whether this will be sustained given the continuing imbalance between supply and demand.

Headline inflation continues to be held below the target range by ongoing negative tradables inflation. Annual CPI inflation was weak in the September quarter, in part due to lower fuel prices and cuts in ACC levies. Annual inflation is expected to rise from the December quarter, reflecting the policy stimulus to date, the strength of the domestic economy, and reduced drag from tradables inflation.

Monetary policy will continue to be accommodative. Our current projections and assumptions indicate that policy settings, including today’s easing, will see growth strong enough to have inflation settle near the middle of the target range. Numerous uncertainties remain, particularly in respect of the international outlook, and policy may need to adjust accordingly.


Tuesday November 01 2016
New Zealand Jobless Rate Falls to Nearly 8-Year Low in Q3
Statistics New Zealand | Joana Ferreira | joana.ferreira@tradingeconomics.com

New Zealand's unemployment rate fell to 4.9 percent in the third quarter of 2016 from a downwardly revised 5.0 percent in the previous quarter, better than market expectations of 5.1 percent. It was the lowest unemployment rate since the December 2008 quarter, as the number of unemployed declined by 2.2 percent while employment grew by 1.4 percent.

The unemployment rate fell to 4.9 percent in the September 2016 quarter (from a revised 5.0 percent in the previous quarter), Statistics New Zealand said today. This is the lowest unemployment rate since the December 2008 quarter. There were 3,000 fewer people unemployed than in the June 2016 quarter and 10,000 fewer over the year.

“The number of people employed in New Zealand was up 35,000, or 1.4 percent, in the September 2016 quarter,” labour and income statistics manager Mark Gordon said. “This strong growth in employment, coupled with fewer unemployed people, pushed the unemployment rate below 5.0 percent for the first time in nearly eight years.”

The working-age population increased by 24,000 people (0.7 percent) over the quarter, to reach 3,739,000.

“The increase in the number of people employed again exceeded population growth over the latest quarter. This resulted in the employment rate increasing 0.5 percentage points, so currently 66.7 percent of the working-age population is in some form of employment,” Mr Gordon said.

The rental, hiring, and real estate services industry had a significant increase in unadjusted employment over the quarter, with 5,000 more people employed. Significant increases for this industry occurred in the Auckland, Wellington, and Manawatu-Wanganui regions.

Over the quarter the underutilisation rate fell 0.5 percentage points, to 12.2 percent. This reflects 13,000 fewer people being underutilised. Underutilisation is a measure of potential labour supply and unmet needs for work. A fall in the number of female 'available potential jobseekers', (down 8,600) drove the decrease. These are people who are available and want to work, but are not actively seeking work.

Annual wage inflation, as measured by the labour cost index, increased to 1.6 percent. Private sector wage inflation remained at 1.6 percent while for the public sector it increased to 1.7 percent. The increase in the public sector was influenced by collective agreements for nurses, primary teachers, and the police. This had the effect of making wage inflation higher in the public than the private sector for the first time since the June 2010 quarter.


Wednesday October 26 2016
New Zealand Trade Gap Hits Record High in September
Statistics New Zealand | Yekaterina Guchshina | yekaterina@tradingeconomics.com

New Zealand trade deficit widened to NZD 1436 million trade deficit in September of 2016, compared to a NZD 1140 million shortfall a year earlier and above market expectations of NZD 1125 million gap. It was the biggest trade gap since the series started in 1951. Exports dropped by 5.7 percent, led by lower sales of meat and edible offal. Imports rose by 1.8 percent, driven by a growth in purchase of capital goods.

Exports dropped by 5.4 percent year-on-year to NZD 3,467 million, led by lower sales of meat and edible offal (-35 percent) and milk powder, butter, and cheese (-1.2 percent). Outbound shipments declined to Australia (-6.3 percent); the US (-19 percent); Japan (-19 percent); EU (-6.2 percent) while exports to China rose by 13 percent.

Imports rose by 1.8 percent year-on-year to NZD 4,902 million, mostly driven by a growth in purchase of capital goods (6.6 percent). Purchases went up from  the US (34 percent) and Japan (9 percent) while fell from China (-4.7 percent), EU (-9.2 percent) and Australia (-5.8 percent).