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TRANSCRIPT
8 October 2018
ANZ Research
New Zealand Weekly Focus
This is not personal advice.
It does not consider your
objectives or circumstances.
Please refer to the
Important Notice.
Contents
Economic Overview 2
Data Event Calendar 8
Local Data Watch 10
Key Forecasts 11
Important Notice 13
NZ Economics Team
Sharon Zollner
Chief Economist
Telephone: +64 9 357 4094
Phil Borkin
Senior Macro Strategist
Telephone: +64 9 357 4065
Natalie Denne
Desktop Publisher
Telephone: +64 4 802 2217
Liz Kendall
Senior Economist
Telephone: +64 4 382 1995
Kyle Uerata
Economist
Telephone: +64 4 802 2357
Miles Workman
Economist
Telephone: +64 4 382 1951
Contact
Follow us on Twitter @sharon_zollner
@ANZ_Research (global)
Under the pump
Economic overview
Rising oil prices, a lower NZD and higher fuel taxes have conspired to see petrol
prices at the pump increase to as much as $2.50/litre in some locations. This will
contribute to CPI inflation, which we expect will increase above the RBNZ’s 2%
target midpoint early next year before moderating. The inflationary impact of petrol
price increases tends to be transitory, and the RBNZ will look through it. However,
growth impacts matter too. Higher petrol prices will boost costs for already
downbeat businesses, and it will also squeeze the discretionary purchasing power of
households. Households lack savings buffers to absorb unexpected events – be that
something as dramatic as job loss or as everyday as petrol price movements. Given
businesses are already downbeat, a spooked consumer to boot could make quite a
dent in the economic outlook. Therefore higher petrol prices are unlikely to make
the RBNZ any more eager to hike the OCR.
Chart of the week
The impact of higher petrol prices is expected to be significant but transitory.
Petrol price and tradable inflation forecasts
Source: Statistics NZ, ANZ Research
The ANZ heatmap
Variable View Comment Risks around our view
GDP 2.8% y/y
for 2019 Q1
The economy has lost steam. We see growth of around 2½-3%
over the next few years (at, or a bit below, trend).
Unemployment
rate
4.4% for
2019 Q1
Unemployment is expected to move broadly sideways.
Underlying wage pressures are subdued.
OCR 1.75% in
March 2019
We are no longer predicting rate hikes. In terms of risks, a cut now
looks more likely than a hike.
CPI 2.2% y/y
for 2019 Q1
We expect core inflation will lift, but only gradually, and the medium-term outlook is not
assured.
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Annual %
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Petrol inflation (LHS) Tradable inflation (RHS)
Negative
Neutral
Positive
Negative
Neutral
Positive
Down
Neutral
Up
Negative
Neutral
Positive
Economic overview
ANZ New Zealand Weekly Focus | 8 October 2018 2
Higher petrol prices
are creating a
squeeze.
Petrol prices have
increased to as much
as $2.50/litre.
Summary
Rising oil prices, a lower NZD and higher fuel taxes have conspired to see petrol prices
at the pump increase to as much as $2.50/litre in some locations. This will contribute to
CPI inflation, which we expect will increase above the RBNZ’s 2% target midpoint early
next year before moderating. The inflationary impact of petrol price increases tends to
be transitory, and the RBNZ will look through it. However, growth impacts matter too.
Higher petrol prices will boost costs for already downbeat businesses, and it will also
squeeze the discretionary purchasing power of households. Households lack savings
buffers to absorb unexpected events – be that something as dramatic as job loss or as
everyday as petrol price movements. Given businesses are already downbeat, a
spooked consumer to boot could make quite a dent in the economic outlook. Therefore
higher petrol prices are unlikely to make the RBNZ any more eager to hike the OCR.
Electronic Card Transactions and REINZ housing market data out this week will provide
a useful gauge on the household sector. Food prices, the ANZ Truckometer, the ANZ
Monthly Inflation Gauge and Government Financial Statements for the year ended June
are also out this week.
Forthcoming events
ANZ Truckometer – September (Tuesday 9 October, 10:00am).
ANZ Monthly Inflation Gauge – September (Tuesday 9 October, 1:00pm).
Electronic Card Transactions – September (Wednesday 10 October, 10:45am).
Spending growth has stabilised after recent softness; we are anticipating moderate
growth in coming months.
Food Price Index – September (Thursday 11 October, 10:45am). Based on the
usual seasonal variation, a small monthly fall is expected.
REINZ Housing Market Statistics – September (10-14 October). After ticking up
over the past two months, house price pressures are likely to remain contained or even
moderate.
What’s the view?
Over the second half of 2018 to date, oil prices have risen, the NZD has fallen and fuel
taxes have increased. These factors have conspired to see petrol prices at the pump
increase to as much as $2.50/litre in some locations. If they were to remain at this
level for the rest of the December quarter (and the NZD or oil prices are not showing
any signs of flattening off at this point), we estimate that that would amount to an 8%
increase in prices since June.
Figure 1. Dubai oil prices and the NZD/USD exchange rate
Source: Bloomberg
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NZD/USD (LHS) Oil prices (USD, RHS) Oil prices (NZD, RHS)
Economic overview
ANZ New Zealand Weekly Focus | 8 October 2018 3
Petrol prices impact
consumers and
businesses directly…
…and have flow-on
effects to other
prices.
We expect petrol
price inflation will
dissipate.
The RBNZ will look
through higher petrol
prices…
…so long as inflation
expectations behave
themselves (which
they should)…
…since they focus on
the persistent trend
in inflation.
Petrol prices impact consumers and businesses directly. Petrol comprises a little less
than 5% of the basket used to construct the Consumer Price Index (CPI), meaning an
8% increase in petrol prices directly boosts CPI inflation by almost 0.4%pts spread over
Q3 and Q4. Transport is also an important input cost for many businesses. This means
there are flow-on effects to other prices. Based on our modelling, we estimate indirect
flow-on effects to be about a third the size of direct effects on CPI, with a small lag.1
However, neither these direct or indirect effects tend to be persistent; history suggests
there is no discernible impact on inflation after around a year.
Petrol price inflation will contribute to higher tradable inflation within the CPI. Our
central forecast is based on an assumption that oil prices are past their peak and will
decline from here, while we see the NZD/USD declining to 0.62 by the end of the year.
On these assumptions, petrol price inflation will moderate from 17% y/y in Q3 2018 to
just 1% by September 2019. However, oil prices and exchange rates are often quite
volatile and therefore difficult to predict, with petrol prices well-known for providing
inflation surprises.
Figure 2. Petrol price and tradable inflation forecasts
Source: Statistics NZ, ANZ Research
As mentioned, movements in petrol prices and tradable inflation tend to be quite
transitory and this is the sort of inflation that the RBNZ “looks through”. Consistent with
this, at the September OCR review, the RBNZ said “higher fuel prices are likely to boost
inflation in the near term, but we will look through this volatility as appropriate”.
The “as appropriate” caveat translates as: “as long as inflation expectations don’t start
to wander higher, because these do matter.” Could higher petrol prices lead to an
increase in medium-term inflation expectations? It’s possible; our analysis finds that
short-term inflation expectations are indeed affected by transitory movements in
inflation, including petrol prices specifically, but long-term expectations tend to be little
affected.2
The RBNZ focuses on the persistent trend in inflation. While CPI inflation is expected to
increase to 2.2% in Q1 – above the midpoint of the RBNZ’s 1-3% inflation target – this
is not expected to last.3 Over the medium term, we expect it will be difficult to maintain
inflation near the 2% midpoint given that we expect the economy will struggle to grow
above trend.
1 This is based on an unrestricted VAR that includes quarterly changes in petrol prices, CPI, GDP, investment, consumption, and
employment, and one-year and two-year inflation expectations. 2 We estimate that higher petrol prices could lead to 0.2%pt higher two-year-ahead inflation expectations, but that this effect
dissipates. 3 This outlook will be firmed up this week when we get the final partials for our Q3 CPI estimate.
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Annual %
change
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change
Petrol inflation (LHS) Tradable inflation (RHS)
Economic overview
ANZ New Zealand Weekly Focus | 8 October 2018 4
Higher petrol prices
could dampen
activity…
…because they
reduce purchasing
power.
Higher petrol prices
are adding to profit
squeeze…
...and the cost of
necessities for
households…
…with some people
affected more than
others.
The RBNZ has acknowledged that it is concerned about downside risks to activity and is
prepared to act by cutting the OCR to stimulate the economy if necessary. And in that
context, higher petrol prices add to the risk that activity is weaker than the RBNZ
expect, and therefore are unlikely to make the RBNZ any more eager to hike the OCR,
unless long-term inflation expectations start to move upward.
Figure 3. CPI inflation forecasts
Source: Statistics NZ, ANZ Research
Higher petrol prices directly squeeze activity by reducing discretionary purchasing
power for households, while boosting costs and squeezing profitability for firms. We
estimate that an increase in petrol prices of the size seen so far has a small dampening
impact on GDP for about two years, with a peak impact of perhaps 0.1-0.2%pts on GDP
growth after a year – with roughly a 0.1%pt impact on consumption growth and a
0.4%pt impact on investment growth (excluding residential buildings). These effects
are very uncertain, but would tend to be larger the longer petrol price inflation persists.
A large-scale example of the dampening impacts of higher fuel prices was seen in the
1970s; rampant oil inflation added to New Zealand’s poor economic performance over
that time contributing to the experience of “stagflation” – low growth and high inflation.
Although the New Zealand economy has evolved significantly since then, fossil fuels
remain enormously important to the functioning of firms and households.
It’s important to note that we do not expect the petrol price inflation we have seen so
far will significantly dent activity, but it does add to the squeeze already being
experienced by households and businesses. Firms are reporting financial pressures;
credit is more difficult to obtain, costs are increasing, margins are squeezed, and they
appear wary about increasing prices given uncertainty about demand. Our expectation
is that business investment growth will be weak through the second half of this year in
response. It is possible that higher petrol prices will further dissuade investment at the
margin.
For households, the cost of necessities has been on the rise recently, and higher fuel
prices add to this. Energy costs have been increasing at a steady rate of 3% y/y; rents
have increased 6% y/y (for new bonds lodged). And for those people who own their
own home, insurance costs have increased 18% y/y. Food price inflation has been weak
of late, but food prices are nonetheless at pretty high levels – the downside to strong
commodity export prices.
When the costs of necessities rise, this tends to affect lower-income households
disproportionately, as they tend to spend a greater proportion of their income on
necessities. Moreover, these households may not have been experiencing income gains.
While aggregate incomes have generally been increasing in real terms, not all
households will have been experiencing these gains. For some, wage growth has been
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Annual %
change
Tradable inflation Non-tradable inflation Headline inflation
Economic overview
ANZ New Zealand Weekly Focus | 8 October 2018 5
Households lack
buffers to absorb
unexpected shocks.
Per capita
consumption is
expected to be
subdued…
…but households
could rein in their
spending more than
we anticipate.
weak. Indeed, it is possible that cost increases for necessities are currently mitigating
purchasing-power gains for those who benefit from minimum wage increases and the
Government’s Families Package.
While households have experienced real income gains, consumption growth has
outpaced these in recent years. As a result, the household saving ratio has fallen and is
currently at low levels. This lack of saving means that many households do not have
cash-flow buffers to absorb higher costs; some households will be feeling the pinch
painfully. More generally, low (negative) rates of saving mean households in aggregate
are vulnerable to unexpected events like softening income growth or cost escalation.
Despite an apparent squeeze, consumer sentiment is sitting at about average levels.
However, consumption growth has been moderating. Population growth has supported
total spending, but per capita consumption growth has been modest. This has occurred
on the back of softer income and house price growth.
We are forecasting consumption to grow a bit below average over the next few years,
with the elevated terms of trade, fiscal spending and continued population growth
providing support. Nonetheless, on a per capita basis, consumption growth is expected
to remain fairly subdued. Importantly, this forecast assumes that the cost squeeze does
not continue for long – oil prices and the NZD broadly flatten out, and petrol prices do
the same, allowing incomes to catch up.
With incomes expected to grow at a moderate pace, and households feeling a little
warier, due to lifts in the cost of living and a softer housing market, a small increase in
the saving ratio is expected. Nonetheless, how households respond to current economic
conditions is uncertain and will be an important determinant of the outlook. It is
possible that households pull their heads in more than we anticipate. This is an
important risk that we are watching closely, and that retailers may be losing sleep over.
Figure 4. Household saving rate
Source: Statistics NZ, ANZ Research
Figure 5. Consumption growth forecasts
Source: Statistics NZ, ANZ Research
A growth wobble is a
risk; we are watching
the data closely.
The week ahead
The risk of a growth wobble has been signalled by our ANZ Business Outlook for a while
now. This possibility was echoed by NZIER’s Quarterly Survey of Business Opinion last
week, with reported activity pointing to GDP growth of 2% y/y – below both the RBNZ’s
and our own expectations. This poses important downside risk to the growth outlook
and adds to the weight of data making us lean towards calling OCR cuts. However, it
will be subject to the same influences as our own business survey, and we will be
looking to see how activity shapes up based on other data sources.
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10
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% o
f dis
posable
incom
e
ANZ quarterly proxy Statistics NZ measure
F
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95 97 99 01 03 05 07 09 11 13 15 17 19
Annual %
change
Consumption (LHS) Consumption per capita (RHS)
Economic overview
ANZ New Zealand Weekly Focus | 8 October 2018 6
Card data will provide
a gauge on spending.
We could see house
price inflation
moderate.
Strength in the
housing market will
be important for
activity…
…and policy settings.
Figure 6. QSBO activity indicators and GDP
Source: NZIER, Statistics NZ
With this in mind, Electronic Card Transactions data are out this week, and will give an
important steer on the pace of Q3 spending growth. While not a perfect indicator,
recent spending data points to a moderation in consumption growth. We will be looking
for moderate growth after recent stabilisation.
Figure 7. Electronic card transactions and consumption
Source: Statistics NZ
We may also get the latest read on the housing market from the REINZ this week.
National house prices have risen in the past two months, but overall house price
pressures remain contained. In fact, it is possible that we see house price inflation
moderate further from its current pace of around 4% y/y. There was a solid increase in
new listings in the month of September. While monthly moves can be volatile,
depending on how sales are tracking, this could indicate some slackening in market
tightness with more supply coming on stream. There are a number of offsetting forces
acting on the housing market, which have led to stability in the market over the year to
date. However, it is possible that there could be some bumps in the road ahead,
particularly in light of policy changes.
The degree of buoyancy in the housing market has a strong connection with household
spending and residential investment, so housing market data will be watched closely. It
will also factor in the RBNZ’s decisions with regard to loan-to-value ratio (LVR)
restrictions at the November Financial Stability Report. We expect that a further
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Net %
Annual %
change
GDP (LHS)
Expected DTA (sa, adv 2 qtrs, RHS)
Past DTA (sa - adv 1 qtr, RHS)
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3m
/3m
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Core ECT (LHS) Consumption (RHS)
Economic overview
ANZ New Zealand Weekly Focus | 8 October 2018 7
We’ll be firming up
our views on Q3
CPI...
…and get the latest
read on the Crown
accounts.
loosening in LVRs may be on the cards, which may, at the margin, reduce the need to
lower the OCR. However, any adjustments are expected to be gradual, with the
restrictions expected to remain “tight” for some time.
Food prices for September are out this week. Given usual seasonal patterns, a modest
decline is expected. Our Monthly Inflation Gauge is also released on Tuesday. Both of
these will contribute to our pick for Q3 CPI inflation (due on the 16th). ANZ Truckometer
for September is also out on Tuesday. We’ll see what the trucks can tell us about Q3
GDP.
The latest read from the Crown accounts is also out, with the Government’s Financial
Statements for the year ended June released on Tuesday. With the tax take running
ahead of forecast, the numbers are likely to be good, giving the Government some
options. However, given that we do not expect economic growth will accelerate from
here, the positive starting point for the fiscal position may wane.
Local data
Quarterly Survey of Business Opinion – Q3. Firms were more downbeat and
activity expectations were pared back, corroborating the soft signal from the ANZBO.
GlobalDairyTrade auction. The GDT index fell 1.9%.
ANZ Job Ads – September. Job ads fell 0.3% m/m, but are up 3.4% q/q, pointing to
modest employment growth.
ANZ Commodity Price Index – September. The world price index fell 1.8% m/m,
the fourth monthly decline in a row.
Data calendar
ANZ New Zealand Weekly Focus | 8 October 2018 8
Date Country Data/event Mkt. Last NZ time
8-Oct AU ANZ Job Advertisements MoM - Sep -- -0.6% 13:30
CH Caixin PMI Composite - Sep -- 52.0 14:45
CH Caixin PMI Services - Sep 51.4 51.5 14:45
AU Foreign Reserves - Sep -- A$71.0B 18:30
GE Industrial Production SA MoM - Aug 0.3% -1.1% 19:00
GE Industrial Production WDA YoY - Aug -0.1% 1.1% 19:00
EC Sentix Investor Confidence - Oct 11.6 12.0 21:30
9-Oct NZ ANZ Truckometer Heavy MoM - Sep -- 1.1% 10:00
AU ANZ-RM Consumer Confidence Index - 7-Oct -- 118.1 11:30
JN BoP Current Account Balance - Aug ¥1889.6B ¥2009.7B 12:50
JN BoP Current Account Adjusted - Aug ¥1516.0B ¥1484.7B 12:50
JN Trade Balance BoP Basis - Aug -¥208.0B -¥1.0B 12:50
NZ ANZ Monthly Inflation Gauge MoM - Sep -- 0.6% 13:00
NZ Government Financial Statements -- -- 13:00
AU NAB Business Conditions - Sep -- 15 13:30
AU NAB Business Confidence - Sep -- 4 13:30
GE Trade Balance - Aug €16.2B €16.5B 19:00
GE Current Account Balance - Aug €16.2B €15.3B 19:00
GE Exports SA MoM - Aug 0.4% -0.8% 19:00
GE Imports SA MoM - Aug 0.1% 2.8% 19:00
US NFIB Small Business Optimism - Sep 108.0 108.8 23:00
10-Oct NZ Card Spending Retail MoM - Sep 0.6% 1.0% 10:45
NZ Card Spending Total MoM - Sep -- 1.1% 10:45
AU Westpac Consumer Conf Index - Oct -- 100.5 12:30
AU Westpac Consumer Conf SA MoM - Oct -- -3.0% 12:30
UK Visible Trade Balance GBP/Mn - Aug -£10900 -£9973 21:30
UK Trade Balance Non EU GBP/Mn - Aug -£3100 -£2800 21:30
UK Trade Balance - Aug -£1150 -£111 21:30
UK Industrial Production MoM - Aug 0.1% 0.1% 21:30
UK Industrial Production YoY - Aug 1.0% 0.9% 21:30
UK Manufacturing Production MoM - Aug 0.1% -0.2% 21:30
UK Manufacturing Production YoY - Aug 1.1% 1.1% 21:30
UK Construction Output SA MoM - Aug -0.4% 0.5% 21:30
UK Construction Output SA YoY - Aug 1.2% 3.5% 21:30
UK GDP (MoM) - Aug 0.1% 0.3% 21:30
UK Monthly GDP 3M/3M Change - Aug 0.6% 0.6% 21:30
UK Index of Services MoM - Aug 0.1% 0.3% 21:30
UK Index of Services 3M/3M - Aug 0.5% 0.6% 21:30
NZ REINZ House Sales YoY - Sep -- 3.1% 10-17 Oct
CH Money Supply M2 YoY - Sep 8.5% 8.2% 10-15 Oct
CH Money Supply M1 YoY - Sep -- 3.9% 10-15 Oct
CH Money Supply M0 YoY - Sep -- 3.30% 10-15 Oct
CH New Yuan Loans CNY - Sep 1340.0B 1280.0B 10-15 Oct
11-Oct US MBA Mortgage Applications - 5-Oct -- 0.0% 00:00
US PPI Final Demand MoM - Sep 0.2% -0.1% 01:30
US PPI Final Demand YoY - Sep 2.7% 2.8% 01:30
US PPI Ex Food and Energy MoM - Sep 0.2% -0.1% 01:30
US PPI Ex Food and Energy YoY - Sep 2.6% 2.3% 01:30
Continued on following page
Data calendar
ANZ New Zealand Weekly Focus | 8 October 2018 9
Date Country Data/event Mkt. Last NZ time
11-Oct US Wholesale Inventories MoM - Aug F 0.8% 0.8% 03:00
US Wholesale Trade Sales MoM - Aug -- 0.0% 03:00
NZ Food Prices MoM - Sep -- -0.5% 10:45
UK RICS House Price Balance - Sep 1% 2% 12:01
JN PPI MoM - Sep 0.2% 0.0% 12:50
JN PPI YoY - Sep 2.9% 3.0% 12:50
AU Consumer Inflation Expectation - Oct -- 4.0% 13:00
12-Oct US CPI MoM - Sep 0.2% 0.2% 01:30
US CPI YoY - Sep 2.4% 2.7% 01:30
US CPI Ex Food and Energy MoM - Sep 0.2% 0.1% 01:30
US CPI Ex Food and Energy YoY - Sep 2.3% 2.2% 01:30
US Initial Jobless Claims - 6-Oct 210k 207k 01:30
US Continuing Claims - 29-Sep -- 1650k 01:30
NZ BusinessNZ Manufacturing PMI - Sep -- 52.0 10:30
AU Home Loans MoM - Aug -1.0% 0.4% 13:30
AU Investment Lending - Aug -- -1.3% 13:30
AU Owner-Occupier Loan Value MoM - Aug -- 1.3% 13:30
AU RBA Financial Stability Review - -- -- 13:30
GE CPI MoM - Sep F 0.4% 0.4% 19:00
GE CPI YoY - Sep F 2.3% 2.3% 19:00
GE CPI EU Harmonized MoM - Sep F 0.4% 0.4% 19:00
GE CPI EU Harmonized YoY - Sep F 2.2% 2.2% 19:00
EC Industrial Production SA MoM - Aug 0.4% -0.8% 22:00
EC Industrial Production WDA YoY - Aug -0.3% -0.1% 22:00
CH Trade Balance - Sep $24.55B $27.89B UNSPECIFIED
CH Imports YoY - Sep 14.5% 19.9% UNSPECIFIED
CH Exports YoY - Sep 8.7% 9.8% UNSPECIFIED
13-Oct US Import Price Index MoM - Sep 0.2% -0.6% 01:30
US Import Price Index YoY - Sep 3.1% 3.7% 01:30
US Export Price Index MoM - Sep 0.2% -0.1% 01:30
US Export Price Index YoY - Sep -- 3.6% 01:30
US U. of Mich. Sentiment - Oct P 100.6 100.1 03:00
Key: AU: Australia, EC: Eurozone, GE: Germany, JN: Japan, NZ: New Zealand, UK: United Kingdom, US: United States, CH: China. Source: Dow Jones, Reuters, Bloomberg, ANZ Bank New Zealand Limited. All $ values in local currency. Note: All surveys are preliminary and subject to change
Local data watch
ANZ New Zealand Weekly Focus | 8 October 2018 10
Though activity growth in Q2 was solid, the economy appears to have lost some steam since then. We don’t expect
that it will roll over, but we think it will struggle to grow above trend. Inflation is expected to increase gradually, but
the medium-term outlook is not assured. The OCR is expected to be on hold for the foreseeable future. We still see
the balance of risks tilted towards the next move being a cut.
Date Data/event Economic
signal Comment
Tue 9 Oct
(10:00am)
ANZ Truckometer –
September -- --
Tue 9 Oct
(1:00pm)
ANZ Monthly Inflation
Gauge – September -- --
Tue 9 Oct
(1:00pm)
Government Financial
Statements – year ended
June
Options The numbers are likely to be good, giving the Government
some options, but the positive starting point may wane.
Wed 10 Oct
(10:45am)
Electronic Card Transactions
– September Looking
Spending growth has stabilised after recent softness; we will
be looking for moderate growth in coming months.
Thu 11 Oct
(10:45am)
Food Price Index –
September Small fall
Usual seasonal variation suggests a small fall could be on the
cards.
10-17 Oct REINZ Housing Market
Statistics – September Contained
After ticking up over the past two months, house price
pressures are likely to remain contained or even moderate.
Fri 12 Oct
(10:30am) BNZ-BusinessNZ PMI Soft
We will be looking to see whether the soft activity signal is
maintained.
Mon 15 Oct
(10:30am) BNZ-BusinessNZ PSI Bounce?
The signal for the services sector has been pretty weak of
late; a bounce is possible.
Tue 16 Oct
(10:45am) Consumer Price Index – Q3 Fuelled
Higher fuel prices are expected to contribute to rising CPI
inflation in the quarter.
Fri 19 Oct
(10:45am)
International Travel and
Migration – September Easing
Net migration flows are expected to continue easing, with
departures to Australia lifting further.
Thu 25 Oct
(10:45am)
Overseas Merchandise Trade
– September Recovery
Exports are expected to lift on the back of the weaker NZD
and solid milk production.
Thu 25 Oct
(3:00pm)
New mortgage lending data
– September Share
With policy changes potentially dissuading investors, we
might see the first home buyer share increase further.
Wed 31 Oct
(10:45am)
Building Consents –
September How far?
We will start to get a sense regarding the extent of the recent
downward trend.
Wed 31 Oct
(1:00pm)
ANZ Business Outlook –
October -- --
Wed 31 Oct
(3:00pm)
RBNZ Sectoral lending data
– September Tick up
We’ve seen a tick up in private sector credit growth on
business lending – will it be maintained?
Thu 1 Nov
(10:00am) ANZ Job Ads – October -- --
Fri 2 Nov
(10:00am)
ANZ Consumer Confidence –
October -- --
Mon 5 Nov
(1:00pm)
ANZ Commodity Price Index
– October -- --
Wed 7 Nov
(10:45am)
Labour Market Statistics –
Q3 Steady
Improvement in the labour market is expected to be a slow
grind from here, with wage growth remaining subdued.
Thu 8 Nov
(9:00am)
RBNZ Monetary Policy
Statement – November Up or down
With little to change the picture in the next wee while, we
expect the RBNZ will retain a similar message of caution.
Fri 9 Nov
(10:00am) ANZ Truckometer – October -- --
Fri 9 Nov
(10:45am)
Electronic Cards
Transactions – October Fuel
We’ll be looking for moderate spending growth, although
increases in fuel prices could induce some volatility.
12-16 Nov REINZ Housing Market
Statistics – October Ban
With the foreign buyer ban coming in, we might be due for
some bumps.
On balance Data watch The short-term data pulse may improve, but the
medium-term picture is looking less assured.
Key forecasts and rates
ANZ New Zealand Weekly Focus | 8 October 2018 11
Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20
GDP (% qoq) 1.0 0.6 0.5 0.7 0.7 0.6 0.6 0.6 0.6 0.6
GDP (% yoy) 2.8 2.8 2.6 2.8 2.5 2.5 2.6 2.5 2.4 2.4
CPI (% qoq) 0.4 0.6 0.4 0.7 0.4 0.5 0.2 0.5 0.4 0.5
CPI (% yoy) 1.5 1.7 2.0 2.2 2.2 2.1 1.8 1.7 1.7 1.7
LCI Wages (% qoq) 0.6 0.6 0.5 0.4 0.7 0.6 0.5 0.5 0.7 0.6
LCI Wages (% yoy) 2.1 1.9 2.0 2.0 2.1 2.1 2.2 2.3 2.4 2.4
Employment (% qoq) 0.5 0.3 0.4 0.5 0.5 0.4 0.4 0.4 0.4 0.3
Employment (% yoy) 3.7 1.8 1.8 1.7 1.6 1.7 1.7 1.6 1.5 1.5
Unemployment Rate
(% sa) 4.5 4.4 4.4 4.4 4.5 4.3 4.2 4.2 4.3 4.1
Current Account
(% GDP) -3.3 -3.5 -3.7 -3.5 -3.5 -3.7 -3.8 -3.9 -3.9 -3.9
Terms of Trade (% qoq) 0.6 -1.9 -0.5 0.3 0.2 0.1 0.3 0.2 0.3 0.1
Terms of Trade (% yoy) 1.4 -1.9 -3.7 -1.5 -1.9 0.1 0.8 0.8 0.8 0.9
Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18
Retail ECT (% mom) 0.3 1.2 -0.3 1.7 -2.3 0.8 0.8 0.2 1.0 --
Retail ECT (% yoy) 3.8 4.1 4.0 6.7 1.4 4.2 4.9 3.8 6.3 --
Credit Card Billings
(% mom) 0.6 -0.6 0.7 1.0 0.6 -1.4 2.0 -1.3 2.6 --
Credit Card Billings
(% yoy) 6.3 4.6 7.0 7.3 6.9 3.7 5.9 3.3 7.7 --
Car Registrations
(% mom) -4.6 2.9 -8.4 -4.5 -0.9 13.7 -6.3 -0.3 2.9 -4.1
Car Registrations
(% yoy) 4.7 6.2 -4.2 -11.9 -9.0 -0.6 -4.9 -0.7 -4.7 -10.8
Building Consents
(% mom) -9.1 -0.2 6.4 13.0 -3.8 6.7 -8.1 -10.8 7.7 --
Building Consents
(% yoy) 4.5 4.1 -0.6 18.5 15.3 23.2 11.9 -5.8 -2.9 --
REINZ House Price Index
(% yoy) 3.7 3.5 4.0 4.1 3.7 3.6 3.8 4.8 4.1 --
Household Lending
Growth (% mom) 0.6 0.4 0.5 0.5 0.5 0.5 0.5 0.5 0.5 --
Household Lending
Growth (% yoy) 5.9 5.8 5.7 5.7 5.8 5.8 5.8 6.0 6.0 --
ANZ Roy Morgan
Consumer Conf. 121.8 126.9 127.7 128.0 120.5 121.0 120.0 118.4 117.6 117.6
ANZ Business Confidence -37.8 .. -19.0 -20.0 -23.4 -27.2 -39.0 -44.9 -50.3 -38.3
ANZ Own Activity Outlook 15.6 .. 20.4 21.8 17.8 13.6 9.4 3.8 3.8 7.8
Trade Balance ($m) 614 -662 188 -151 200 199 -296 -196 -1484 --
Trade Bal ($m ann) 56476 57252 57451 58071 58675 58982 59707 60720 61395 --
ANZ World Comm. Price
Index (% mom) -1.9 0.7 2.8 1.2 1.0 1.5 -0.9 -3.3 -1.1 -1.8
ANZ World Comm. Price
Index (% yoy) 3.2 4.1 5.0 5.8 7.1 5.4 2.3 -0.2 -0.5 -3.0
Net Migration (sa) 5670 6230 4870 5350 4900 5080 4850 4750 5010 --
Net Migration (ann) 70016 70147 68943 67984 67038 66243 64995 63779 63288 --
ANZ Heavy Traffic Index
(% mom) -4.2 4.1 -2.5 -0.3 1.4 3.0 -1.5 -0.4 1.1 --
ANZ Light Traffic Index
(% mom) -1.7 -0.5 -0.2 2.2 -0.5 1.1 0.7 0.4 0.9 --
ANZ Job Ads (% mom) -0.1 2.9 -1.4 0.6 -1.9 2.5 -1.2 3.2 0.4 -0.3
Figures in bold are forecasts. mom: Month-on-Month; qoq: Quarter-on-Quarter; yoy: Year-on-Year
Key forecasts and rates
ANZ New Zealand Weekly Focus | 8 October 2018 12
Actual Forecast (end month)
FX rates Aug-18 Sep-18 Today Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20
NZD/USD 0.662 0.662 0.64 0.62 0.61 0.61 0.61 0.61 0.62 0.62
NZD/AUD 0.920 0.916 0.91 0.89 0.87 0.87 0.87 0.87 0.88 0.88
NZD/EUR 0.570 0.570 0.56 0.53 0.50 0.49 0.48 0.48 0.48 0.48
NZD/JPY 73.45 75.26 73.32 70.1 67.1 65.9 62.2 61.0 59.5 58.9
NZD/GBP 0.510 0.508 0.49 0.48 0.46 0.45 0.44 0.44 0.43 0.42
NZ$ TWI 69.9 70.1 70.8 66.1 63.9 63.1 62.2 61.9 62.2 61.9
Interest rates Aug-18 Sep-18 Today Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20
NZ OCR 1.75 1.75 1.75 1.75 1.75 1.75 1.75 1.75 1.75 1.75
NZ 90 day bill 1.91 1.91 1.89 1.95 1.95 1.95 1.95 1.95 1.95 1.95
NZ 10-yr bond 2.54 2.61 2.62 2.70 2.75 2.80 2.85 2.90 2.95 3.00
US Fed funds 2.00 2.25 2.25 2.50 2.50 2.75 2.75 2.75 2.75 2.75
US 3-mth 2.32 2.40 2.41 2.90 2.90 3.10 3.10 3.10 3.10 3.10
AU Cash Rate 1.50 1.50 1.50 1.50 1.50 1.50 1.75 2.00 2.00 2.00
AU 3-mth 1.95 1.94 1.92 2.05 2.05 2.00 2.30 2.50 2.50 2.50
5-Sep 1-Oct 2-Oct 3-Oct 4-Oct 5-Oct
Official Cash Rate 1.75 1.75 1.75 1.75 1.75 1.75
90 day bank bill 1.90 1.91 1.90 1.90 1.90 1.89
NZGB 05/21 1.67 1.76 1.77 1.76 1.77 1.77
NZGB 04/23 1.89 1.98 1.98 1.95 1.98 1.97
NZGB 04/27 2.37 2.43 2.44 2.41 2.45 2.43
NZGB 04/33 2.72 2.77 2.78 2.74 2.79 2.78
2 year swap 1.98 2.04 2.02 2.01 2.01 2.02
5 year swap 2.30 2.40 2.38 2.35 2.38 2.38
RBNZ TWI 71.32 72.14 72.04 71.83 71.31 71.17
NZD/USD 0.6564 0.6607 0.6578 0.6561 0.6490 0.6443
NZD/AUD 0.9145 0.9152 0.9176 0.9173 0.9162 0.9131
NZD/JPY 73.24 75.31 74.83 74.69 74.19 73.26
NZD/GBP 0.5119 0.5067 0.5082 0.5055 0.4999 0.4909
NZD/EUR 0.5661 0.5692 0.5711 0.5679 0.5643 0.5588
AUD/USD 0.7178 0.7220 0.7168 0.7153 0.7084 0.7052
EUR/USD 1.1594 1.1609 1.1517 1.1554 1.1500 1.1524
USD/JPY 111.58 113.99 113.76 113.82 114.32 113.72
GBP/USD 1.2824 1.3039 1.2944 1.2980 1.2982 1.3120
Oil (US$/bbl) 68.72 75.30 75.23 76.41 74.33 74.34
Gold (US$/oz) 1194.82 1186.33 1189.94 1202.96 1198.68 1203.63
NZX 50 9228 9327 9327 9294 9257 9215
Baltic Dry Freight Index 1477 1555 1570 1574 1554 1536
NZX WMP Futures (US$/t) 2790 2720 2720 2730 2730 2725
Important notice
ANZ New Zealand Weekly Focus | 8 October 2018 13
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