February 3 issue of the BNZ Weekly Overview

We are running our first confidence survey of the year this week so if time permits please click on the link and let us know if you think the economy will get better or worse in the coming year. If possible also pen a sentence specifying what industry you are in and how you see things in that industry currently. Many thanks to those who have responded in the past six years.

http://survey.usuite.com/survey/7f801dd05f3742619b046cc119c15106.sur

This week we have learnt the following.

The house building sector is sinking into deeper recession with the lowest number of dwelling consents issued in a December since 1965. Correlating with that, for the first time in our records housing debt fell in December thus showing consumers are increasingly determined to get debt down. The implication is continuing weak retail spending. Export growth remains mediocre but commodity prices keep soaring which means firm support for the NZ dollar, rising food costs to householders, and of course rising rural incomes and presumably more people (local and foreigners) wanting to buy farmland. Job numbers fell 0.5% during the December quarter and the unemployment rate rose to 6.8% from 6.4%.

One cannot rule out that the economy may have gone back into recession over the second half of last year and we now don?t expect to see any cash rate increase from the Reserve Bank before September. Floating rate borrowing remains king.

Global manufacturing data is very strong, growth forecasts have recently been revised upward for Germany and the US and these factors have spurred increases in energy, food, minerals and materials prices over the week on top of panic buying of oil futures on worries about the supply implications of unrest in the Middle East. This implies rising input costs here in New Zealand including eventually petrol.

ENDS

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