BNZ Weekly Overview + Survey Feb. 17

BNZ Weekly Overview
The key points of this week's publication include the following.

The main interesting things we have learned over the past week include the following.

- New Zealand's labour market is so tight we have the lowest unemployment rate in the OECD at 3.6%. But with the number of hours worked up just over 4% for the year and output up just under 5% productivity growth has slowed and is low at a time when the Reserve Bank needs it rising to keep inflationary pressures under control.

- Retail spending volumes were weak over the December quarter, rising just 0.7%. But our more up to date debit and credit card data show things recovered in January - perhaps at the expense of margins. The retailing sector is going through some interesting competitive times.

- Consumer confidence has eased a tad since the last monthly survey in December but remains above average and therefore suggestive of reasonable consumer spending strength.

- The swap rates at which we banks borrow to lend fixed have risen to two and half year highs for the popular 2-3 year terms as corporate borrowers scramble to get protection against rising floating rates and the markets build in expectations of monetary policy tightening both here and across the Tasman.

The Weekly Overview is freely available to all BNZ staff, customers, and the public with a centralised EMAIL ONLY distribution list managed here. If you wish to add, change or delete an email address please reply to this message or email tony.alexander@bnz.co.nz. Sections of the WO may be reproduced by anyone other than mortgage brokers provided the BNZ is noted as the source.

If you fail to receive the WO in a week please go to www.bnz.co.nz and look for it under "About Us" on Friday afternoon. Failed emails will not be resent or requests for such answered given the workload involved.

Best Regards

Tony Alexander Chief Economist Bank of New Zealand

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