BNZ Weekly Overview
The key points of this week's publication include the following.
- Retail spending boomed 2.6% during the September quarter implying continued strong overall economic growth and upward
pressure on interest rates and the exchange rate.
- World growth prospects look good - perhaps especially in light of the improved US growth outlook following the recent
strong jobs report, and oil prices pulling back amid what many consider to be a growing glut of oil as we enter 2005.
This is good for exports including tourist flows and commodity prices - for now.
- Higher floating interest rates and talk of falling house prices notwithstanding, consumer confidence has gone up over
the past month. This probably reflects the strong labour market and low fixed housing interest rates. The data imply a
good retailing Christmas plus yet again upward pressure on the exchange rate and interest rates.
- The NZD has risen to just below US 71 cents - as we have been expecting - on the back of fresh weakness in the
greenback. Some unhedged exporters will begin to feel pain, but the higher the NZD goes the less the upward pressure on
floating interest rates.
ENDS