New New Zealand Weekly Focus · 2020. 9. 22. · Emerging market currencies have been recovering. New Zealand is not an emerging market, of course, but it is a commodity producer,

10 December 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 11

Key Forecasts 12

Important Notice 14

NZ Economics Team

Sharon Zollner

Chief Economist

Telephone: +64 9 357 4094

[email protected]

Phil Borkin

Senior Macro Strategist

Telephone: +64 9 357 4065

[email protected]

Natalie Denne

Desktop Publisher

Telephone: +64 4 802 2217

[email protected]

Liz Kendall

Senior Economist

Telephone: +64 4 382 1995

[email protected]

Susan Kilsby

Agriculture Economist

Telephone: +64 4 382 1992

[email protected]

Kyle Uerata

Economist

Telephone: +64 4 802 2357

[email protected]

Miles Workman

Economist

Telephone: +64 4 382 1951

[email protected]

Contact

[email protected]

Follow us on Twitter @sharon_zollner

@ANZ_Research (global)

Kiwi flies after all

Economic overview

The NZD has strengthened above 68 US cents, reflecting a perfect storm of

domestic and global factors. Domestically, data has been positive and the RBNZ has

moved towards a neutral stance. Globally, the Fed has struck a more cautious tone,

seeing the NZD pick up in tandem with emerging market currencies. Meanwhile the

AUD has been out of favour on China risk. We see gravity coming calling again for

the NZD, based on both fundamentals and a more challenging environment for risk

currencies. But the outlook is by no means clear cut and more volatility seems

likely. Recent strength in the NZD will weigh on inflation and we have revised down

our CPI forecasts, though expected declines in the NZD will provide some support

to inflation over the projection. We expect that the RBNZ will remain focused on

core inflation and not be overly swayed by volatility in tradable inflation. That said,

recent moves in the NZD highlight the importance of global risks and there is a risk

that the NZD is persistently higher, weighing on core inflation and net exports. But

for now we are comfortable with our forecast for a lower exchange rate.

Chart of the week

The NZD has rebounded spectacularly.

NZD key pairs

Source: Bloomberg

The ANZ heatmap

Variable View Comment Risks around our view

GDP 2.8% y/y

for 2019 Q1

The economy has shown considerable resilience. We see growth of 2½-3% over the next few years (at or below trend).

Unemployment

rate

4.0% for

2019 Q1

Unemployment is expected to fall a little further. The labour market

is “tight”. Wage growth to increase gradually.

OCR 1.75% in

March 2019

We see the OCR on hold for the foreseeable future. We are

mindful of risk on both sides of the ledger.

CPI 2.0% 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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Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18

Index 1

Jan 2

018 =

100

NZD/USD NZD/AUD NZD/EUR NZD/GBP

Negative

Neutral

Positive

Negative

Neutral

Positive

Down

Neutral

Up

Negative

Neutral

Positive

mailto:[email protected]




Economic overview

ANZ New Zealand Weekly Focus | 10 December 2018 2

The NZD has

rebounded and

will dampen

inflation.

It’s a busy week

on the data front.

The NZD has

rebounded

spectacularly.

Summary

The NZD has strengthened above 68 US cents, reflecting a perfect storm of domestic

and global factors. Domestically, data has been positive and the RBNZ has moved

towards a neutral stance. Globally, the Fed has struck a more cautious tone, seeing

the NZD pick up in tandem with emerging market currencies. Meanwhile the AUD has

been out of favour on China risk. We see gravity coming calling again for the NZD,

based on both fundamentals and a more challenging environment for risk currencies.

But the outlook is by no means clear cut and more volatility seems likely. Recent

strength in the NZD will weigh on inflation and we have revised down our CPI

forecasts, though expected declines in the NZD will provide some support to inflation

over the projection. We expect that the RBNZ will remain focused on core inflation

and not be overly swayed by volatility in tradable inflation. That said, recent moves in

the NZD highlight the importance of global risks and there is a risk that the NZD is

persistently higher, weighing on core inflation and net exports. But for now we are

comfortable with our forecast for a lower exchange rate. The main event this week

will be Treasury’s Half-Year Economic and Fiscal Update, with the theme of fiscal

prudence expected to continue.

Forthcoming events

Economic Survey of Manufacturing– Q3 (Monday 10 December, 10:45am).

Manufacturing sales volumes could be in for a small rebound from Q2’s weakness.

REINZ Housing Market Statistics – November (11-14 December). We may see

a few bumps, especially after last month’s volatility.

ANZ Truckometer – November (Tuesday 11 December, 10:00am).

Electronic Card Transactions – November 2018 (Tuesday 11 December,

10:45am). After a soft October, we will be looking for something more robust to see

moderate growth maintained.

ANZ Monthly Inflation Gauge – November (Tuesday 11 December, 1:00pm).

Food prices – November 2018 (Thursday 13 December, 10:45am). With new

season produce coming available, lower food and vegetable prices are expected to

see a modest decline.

Half-year Economic Update and Budget Policy Statement (Thursday 13

December, 1:00pm). The Government looks content to stick to the fiscal-prudence

script.

What’s the view?

Nine months ago, we wrote in the Weekly Focus that the NZD was defying gravity,

but that we thought it was due to capitulate. The NZD/USD duly fell 9 cents to just

under 0.645 by early October. But rather than continuing on towards our year-end

forecast of 0.62, it has rebounded spectacularly, and is now sitting at just over

0.6850 against the USD.

It’s a similar story against the AUD, though moves have been more muted: a round

trip from just over 0.93 when we opined on 12 March to a low under 0.90 in August,

and back up to 0.95 today. Moves against EUR and GBP show a very similar trend.

Economic overview


The NZD fell

through the

middle of the

year…

…with domestic

data weaker….

…commodity

prices lower….

Figure 1. NZD key pairs

Source: Bloomberg

So what’s the deal?

A logical place to start is to discuss what drove the NZD down in the six months from

March. It was, in the parlance, a confluence of factors.

• Domestic data surprised on the downside between March and September.

Business sentiment indicators weakened further, housing was sluggish, consumer

confidence slipped, retail spending indicators fell, net migration weakened, job

ads softened, building activity fell, the PMI eased, and our monthly inflation

gauge lost momentum. It all started to look a bit bleak.

Figure 2. ANZBO own activity and investment intentions

Source: ANZ Research

• At the same time, dairy prices weakened. The NZD/USD does a pretty good job

of following USD GlobalDairyTrade prices, on the whole, and did so between

March and September. The GDT whole milk powder price fell nearly 20% between

its peak in early May and end-November, though it ticked up in the latest auction.

Whole milk powder prices are currently sitting at USD2667.

90

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Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18

Index 1

Jan 2

018 =

100

NZD/USD NZD/AUD NZD/EUR NZD/GBP

-20

-10

0

10

20

30

40

0

10

20

30

40

50

60

70

10 11 12 13 14 15 16 17 18

Net in

dex

Net

index

Own activity (RHS) Investment intentions (RHS)

Economic overview


…and the RBNZ

striking a more

dovish tone.

Figure 3. NZD/USD and the GlobalDairyTrade whole milk powder prices

Source: Bloomberg, GlobalDairyTrade

• The RBNZ duly took note and struck a decidedly dovish tone at August’s

Monetary Policy Statement. It cemented the evolution of market OCR

expectations from year-ahead hikes to small odds of a cut.

Figure 4. OIS pricing 12 March 2018

Source: Bloomberg

Figure 5. OIS pricing 10 August 2018

The domestic

data flow

improved.

The RBNZ moved

to a neutral

stance.

The path ahead seemed fairly clear and the consensus was that the NZD would

remain under pressure. Ironically enough, consensus in itself can increase the odds of

a contrary “squeeze” in the market, causing an abrupt move in the opposite direction

as positions get “stopped out”. And we most certainly have seen that.

So what’s changed since mid-August?

The domestic dataflow started to turn back up again with a stronger-than-

expected Q2 retail trade result in late August kicking it off. There was then a hat-

trick of strong key data: Q2 GDP growth came in twice as strong as expected at

1.0% q/q; Q3 CPI came in more than twice the RBNZ’s expectations at 0.9% q/q;

and Q3 unemployment astounded all observers by dropping from a previously

reported 4.5% in Q2 to 3.9% in Q3. While there were certainly transitory factors

affecting all three releases, a triple-header is hard to ignore.

The Reserve Bank did not change its OCR forecast for 2020 hikes but lifted the

outlook for inflation and implied it now saw the risks as balanced rather than

tilted to the downside. Market pricing for OCR moves adjusted back accordingly.

0

1000

2000

3000

4000

5000

6000

0.45

0.50

0.55

0.60

0.65

0.70

0.75

0.80

0.85

0.90

0.95

08 09 10 11 12 13 14 15 16 17 18

USD

/t

USD

per

NZD

NZD/USD (LHS) GDT WMP (RHS)

Economic overview


Commodity prices

are still

weakening.

Global factors

have been

important too.

Uncertainty about

the US outlook

weighed on USD.

Kiwi moved with

EM currencies.

AUD has been

under pressure

on China risk.

Effects on kiwi

are not always

clear cut.

Figure 6: OIS pricing 4 December 2018

Source: Bloomberg

However, the dataflow hasn’t been one-way: commodity prices are still

weakening. Dairy prices have continued to fall (albeit for ‘good’ reasons – strong

New Zealand spring production thanks to favourable weather) and ANZ’s

Commodity Price Index has fallen for six months straight. This hasn’t been

reflected in the NZD/USD. Relative prices of whole milk powder versus Australia’s

single largest commodity export, iron ore, haven’t been reflected in NZD/AUD of

late either.

Figure 7: Ratio of whole milk powder and iron ore prices vs. NZD/AUD

Source: Bloomberg, GlobalDairyTrade, ANZ Research

But there’s more than domestic factors having a say, as all currencies are a relative

price. What’s going on elsewhere in the world matters too, and sometimes matters

more.

Doubts are starting to emerge about the outlook for the US economy and markets

have started to doubt whether the Fed will really go through with as many hikes

as planned. This has weighed on the USD.

Emerging market currencies have been recovering. New Zealand is not an

emerging market, of course, but it is a commodity producer, so it sometimes gets

lumped in.

The AUD is liquid and therefore a popular proxy for China risk. Concern about the

impact of the tariff war on an under-pressure Chinese economy will have weighed

more on the AUD than the NZD. The state of the Australian housing market may

also be contributing to weakness in AUD.

This means that even as uncertainty has been weighing on the global outlook, centred

on China and the US, the NZD has been buoyed. Although the NZD often trades as a

proxy for global risk appetite, even if the global outlook deteriorates, kiwi could still

be buoyed if other currencies are affected more. This highlights that the NZD won’t

always provide a perfect buffer to the NZ economy – and, as always, global risks

should be monitored carefully.

0.70

0.75

0.80

0.85

0.90

0.95

1.00

1.05

10

15

20

25

30

35

40

45

50

55

60

65

12 13 14 15 16 17 18

NZD

/AU

D

Ratio W

MP t

o iro

n o

re (

USD

/mt)

Ratio of WMP to iron ore price USD/mt (LHS) NZD/AUD (RHS)

Economic overview


We expect gravity

will come calling

again.

But we are wary

of risks.

The higher NZD

will weigh on

inflation in the

short term.

The RBNZ will

remain focused

on core inflation…

Looking forward, the market environment is expected to remain more challenging for

risk and risk currencies, weighing on the outlook for the NZD. This reflects a softer

growth outlook, tightening global liquidity, increased attention on credit markets (with

wider credit spreads expected), and plenty of event risk lingering. Indeed, the kiwi

has eased in recent days on the back of weaker global risk sentiment. With

challenging market dynamics expected to be a key theme in 2019, economic

fundamentals may well take somewhat of a back seat, but we also see policy rate

differentials as supportive of a lower NZD.

All up, we see gravity coming calling for the NZD once more – but we are wary of

risks on both sides, especially the possibility that NZD strength lingers for longer than

we anticipate. We see the NZD going to 0.61 by the end of 2019 but we expect

further volatility – perhaps exacerbated by political developments and tweets. And it’s

also worth remembering that for exporters it may well a case of be careful what you

wish for. The surest route south for the NZD would be a nasty commodity price

correction and/or a decent dose of carnage in global credit markets. Definitely not a

net win.

Recent strength in the NZD will weigh on the outlook for inflation. Combined with the

effects of weaker oil/petrol prices, we now expect inflation to be weaker in the short

term, reaching 2.0% y/y in Q1 2019 instead of 2.2%. Inflation now dips above the

mid-point of the target only very briefly in the middle of 2019 before moderating

thereafter.

Despite the softer outlook, we do not expect that recent strength in the exchange

rate will have a large, persistent impact on inflation, with the recent strength in the

NZD expected to be short lived. And on the non-tradable front, we continue to expect

that it will be difficult to see domestic inflation sustainably accelerate from here, with

resource pressures not expected to intensify significantly. As such, we think it will be

difficult to maintain CPI inflation near target over the medium term and are therefore

not forecasting any OCR hikes for the foreseeable future.

Figure 8: ANZ inflation forecasts

Source: Statistics NZ, ANZ Research

Despite a softer outlook for headline inflation, we expect that the RBNZ will remain

focused on core inflation and not be overly swayed by volatility in tradable inflation.

That said, recent strength in the NZD could weigh on core inflation if it proves to be

persistent, given possible effects on inflation expectations and price-setting

behaviour. In this scenario, net exports would also be dampened (or at least be less

positive), although New Zealand exports tend to be more affected by the weather and

variation in agricultural production. This would nonetheless weigh on GDP and

domestic inflation at the margin.

-4

-2

0

2

4

6

8

95 97 99 01 03 05 07 09 11 13 15 17 19

Tradable inflation Non-tradable inflation

Headline inflation

Annual %

change

Economic overview


…but global risks

warrant caution.

The main event

this week is the

HYEFU.

Volatility is

expected in the

housing market

data.

We continue to

pick 0.6% q/q for

Q3 GDP.

Perhaps most importantly, recent exchange rate developments highlight the

importance of global developments, which tend to have a very significant impact on

the New Zealand business cycle. If the theme of slowing global growth and greater

uncertainty continues, we would expect to see more emphasis on global risks at the

RBNZ’s next MPS. At this stage the domestic economy remains in good stead and

strength in the recent data can’t be denied. But for a small, open economy global

developments have the potential to change the landscape quite quickly.

The week ahead

It’s a data heavy week ahead. The main event will be Treasury’s Half-Year Economic

and Fiscal Update. No surprises are expected, with the theme of fiscal prudence

expected to continue. The Government’s books are set to remain in good shape over

the next few years and there should be a little room for the Government to eke out a

little more spending. But any increase will be modest given the Government’s

prioritisation of the Budget Responsibility Rules.

The November REINZ housing market data is out this week. There are a number of

offsetting forces in the housing market at present and we may see a few bumps,

especially after last month’s volatility. House sales were up a massive 23% m/m in

October, after a fall of 10% in September. With further volatility expected, it may be

a few more months before we can get a good gauge of where sales are settling. Price

pressures are pretty stable and we expect this to continue, if not gradually moderate,

going forward. On the one hand, mortgage rates have been lower recently, population

growth is still strong, and LVRs will be eased further in the new year. But the housing

market is grappling with headwinds, including bank prudence, investor caution in the

face of tax and other policy changes, and affordability constraints.

The partials for Q3 GDP continue to roll in, with the economic survey of

manufacturing out this morning. We expect a small rebound in sales volumes in Q3,

following Q2’s weakness. We continue to forecast 0.6% q/q (2.8% y/y) GDP growth in

Q3 based on the partial indicators received to date, although both retail trade and

building work put in place were on the softer side.

Looking ahead, electronic card transactions should give an early gauge on retail

activity through Q4, but electronic cards transaction data have been a poor gauge of

activity recently, so we will continue to view this data with caution. The ANZ

Truckometer will also give a steer on activity through the end of the year.

On the inflation front, we will have the ANZ Monthly Inflation Gauge out for

November, which will give a steer on how domestic inflation pressures are stacking up

in Q4. Food prices are also out for November, with lower food and vegetable prices

expected to see a modest decline, as tends to happen around this time of year.

Local data

Overseas Trade Indices – Q3. The terms of trade fell 0.3% q/q; volumes were

boosted by strong milk production.

GlobalDairyTrade auction. The GDT index increased 2.2%, after recent declines.

ANZ Job Ads – November. Increased 0.5%, with the data broadly steady.

Building work put in place – Q3. Up 0.7% q/q, a little weaker than expected.

ANZ Commodity Price Index – November. The world index fell 0.6% m/m; the

sixth consecutive monthly fall.

Data calendar


Date Country Data/event Mkt. Last NZ time

10-Dec NZ Mfg Activity Volume QoQ - Q3 -- -1.2% 10:45

NZ Mfg Activity SA QoQ - Q3 -- 1.8% 10:45

JN GDP SA QoQ - Q3 F -0.5% -0.3% 12:50

JN GDP Annualized SA QoQ - Q3 F -2.0% -1.2% 12:50

JN GDP Nominal SA QoQ - Q3 F -0.5% -0.3% 12:50

JN GDP Deflator YoY - Q3 F -0.3% -0.3% 12:50

JN BoP Current Account Balance - Oct ¥1262.7B ¥1821.6B 12:50

JN Trade Balance BoP Basis - Oct -¥265.4B ¥323.3B 12:50

AU Home Loans MoM - Oct -0.4% -1.0% 13:30

AU Investment Lending - Oct -- -2.8% 13:30

AU Owner-Occupier Loan Value MoM - Oct -- -4.2% 13:30

GE Trade Balance - Oct €17.1B €18.3B 20:00

GE Current Account Balance - Oct €18.8B €21.1B 20:00

GE Exports SA MoM - Oct 0.4% -0.7% 20:00

GE Imports SA MoM - Oct 0.5% -0.1% 20:00

UK Visible Trade Balance GBP/Mn - Oct -£10500M -£9731M 22:30

UK Trade Balance Non EU GBP/Mn - Oct -£3200M -£2343M 22:30

UK Trade Balance - Oct -£1267M -£27M 22:30

UK Industrial Production MoM - Oct 0.1% 0.0% 22:30

UK Industrial Production YoY - Oct -0.1% 0.0% 22:30

UK Manufacturing Production MoM - Oct 0.0% 0.2% 22:30

UK Manufacturing Production YoY - Oct 0.0% 0.5% 22:30

UK Construction Output SA MoM - Oct -0.5% 1.7% 22:30

UK Construction Output SA YoY - Oct 3.3% 3.0% 22:30

EC Sentix Investor Confidence - Dec 8.3 8.8 22:30

UK GDP (MoM) - Oct 0.1% 0.0% 22:30

UK Monthly GDP 3M/3M Change - Oct 0.4% 0.6% 22:30

UK Index of Services MoM - Oct 0.1% -0.1% 22:30

UK Index of Services 3M/3M - Oct 0.3% 0.4% 22:30

CH Money Supply M1 YoY - Nov 3.0% 2.7% 10-15 Dec


CH Aggregate Financing CNY - Nov 1350.0B 728.8B 10-15 Dec


CH New Yuan Loans CNY - Nov 1200.0B 697.0B 10-15 Dec

11-Dec US JOLTS Job Openings - Oct 7100 7009 04:00

NZ ANZ Truckometer Heavy MoM - Nov -- 4.6% 10:00

NZ Card Spending Retail MoM - Nov 0.3% 0.1% 10:45

NZ Card Spending Total MoM - Nov -- -0.1% 10:45

AU ANZ-RM Consumer Confidence Index - 9-Dec -- 119.5 11:30

NZ ANZ Monthly Inflation Gauge - Nov -- -0.4% 13:00

AU NAB Business Conditions - Nov -- 12 13:30

AU NAB Business Confidence - Nov -- 4 13:30

AU House Price Index QoQ - Q3 -1.6% -0.7% 13:30

AU House Price Index YoY - Q3 -2.0% -0.6% 13:30

UK Claimant Count Rate - Nov -- 2.7% 22:30

UK Jobless Claims Change - Nov -- 20.2k 22:30

UK Average Weekly Earnings 3M/YoY - Oct 3.0% 3.0% 22:30

UK Weekly Earnings ex Bonus 3M/YoY - Oct 3.2% 3.2% 22:30

Continued on following page

Data calendar



11-Dec UK ILO Unemployment Rate 3Mths - Oct 4.1% 4.1% 22:30

UK Employment Change 3M/3M - Oct 25k 23k 22:30

GE ZEW Survey Current Situation - Dec 55.0 58.2 23:00

GE ZEW Survey Expectations - Dec -25.0 -24.1 23:00

EC ZEW Survey Expectations - Dec -- -22.0 23:00

NZ REINZ House Sales YoY - Nov -- 15.5% 11-14 Dec

12-Dec US NFIB Small Business Optimism - Nov 107.0 107.4 00:00

US PPI Final Demand MoM - Nov 0.0% 0.6% 02:30

US PPI Final Demand YoY - Nov 2.5% 2.9% 02:30

US PPI Ex Food and Energy MoM - Nov 0.1% 0.5% 02:30

US PPI Ex Food and Energy YoY - Nov 2.5% 2.6% 02:30

AU Westpac Consumer Conf Index - Dec -- 104.3 12:30

AU Westpac Consumer Conf SA MoM - Dec -- 2.8% 12:30

JN PPI YoY - Nov 2.4% 2.9% 12:50

JN PPI MoM - Nov -0.1% 0.3% 12:50

EC Industrial Production SA MoM - Oct 0.2% -0.3% 23:00

EC Industrial Production WDA YoY - Oct 0.8% 0.9% 23:00

13-Dec US MBA Mortgage Applications - 7-Dec -- 2.0% 01:00

US CPI MoM - Nov 0.0% 0.3% 02:30

US CPI YoY - Nov 2.2% 2.5% 02:30

US CPI Ex Food and Energy MoM - Nov 0.2% 0.2% 02:30

US CPI Ex Food and Energy YoY - Nov 2.2% 2.1% 02:30

US Monthly Budget Statement - Nov -$197.0B -$100.5B 08:00

NZ Food Prices MoM - Nov -- -0.6% 10:45

NZ Half-Yearly Fiscal & Economic Update - -- -- 13:00

AU Consumer Inflation Expectation - Dec -- 3.6% 13:00

UK RICS House Price Balance - Nov -10% -10% 13:01

GE CPI MoM - Nov F 0.1% 0.1% 20:00

GE CPI YoY - Nov F 2.3% 2.3% 20:00

GE CPI EU Harmonized MoM - Nov F 0.1% 0.1% 20:00

GE CPI EU Harmonized YoY - Nov F 2.2% 2.2% 20:00

14-Dec EC ECB Main Refinancing Rate - Dec 0.00% 0.00% 01:45

EC ECB Marginal Lending Facility - Dec 0.25% 0.25% 01:45

EC ECB Deposit Facility Rate - Dec -0.40% -0.40% 01:45

US Import Price Index MoM - Nov -1.0% 0.5% 02:30

US Import Price Index YoY - Nov 1.3% 3.5% 02:30

US Export Price Index MoM - Nov -0.4% 0.4% 02:30

US Export Price Index YoY - Nov -- 3.1% 02:30

US Initial Jobless Claims - 8-Dec 225k 231k 02:30

US Continuing Claims - 1-Dec 1650k 1631k 02:30

NZ BusinessNZ Manufacturing PMI - Nov -- 53.5 10:30

AU CBA PMI Mfg - Dec P -- 54.6 11:00

AU CBA PMI Services - Dec P -- 53.7 11:00

JN Tankan Large Mfg Index - Q4 18 19 12:50

JN Tankan Large Mfg Outlook - Q4 17 19 12:50

JN Tankan Large Non-Mfg Index - Q4 21 22 12:50

JN Tankan Large Non-Mfg Outlook - Q4 21 22 12:50

JN Nikkei PMI Mfg - Dec P -- 52.2 13:30

CH Retail Sales YoY - Nov 8.8% 8.6% 15:00

Continued on following page

Data calendar



14-Dec CH Retail Sales YTD YoY - Nov 9.2% 9.2% 15:00

CH Industrial Production YoY - Nov 5.9% 5.9% 15:00

CH Industrial Production YTD YoY - Nov 6.4% 6.4% 15:00

CH Fixed Assets Ex Rural YTD YoY - Nov 5.9% 5.7% 15:00

GE Markit/BME Manufacturing PMI - Dec P 51.7 51.8 21:30

EC Markit Services PMI - Dec P 53.4 53.4 21:30

EC Markit Composite PMI - Dec P 52.8 52.7 21:30

GE Markit Services PMI - Dec P 53.5 53.3 21:30

GE Markit/BME Composite PMI - Dec P 52.4 52.3 21:30

EC Markit Manufacturing PMI - Dec P 51.8 51.8 22:00

EC Labour Costs YoY - Q3 -- 2.2% 23:00

15-Dec US Retail Sales Advance MoM - Nov 0.1% 0.8% 02:30

US Retail Sales Ex Auto MoM - Nov 0.2% 0.7% 02:30

US Retail Sales Ex Auto and Gas - Nov 0.4% 0.3% 02:30

US Retail Sales Control Group - Nov 0.5% 0.3% 02:30

US Industrial Production MoM - Nov 0.3% 0.1% 03:15

US Capacity Utilization - Nov 78.6% 78.4% 03:15

US Markit Manufacturing PMI - Dec P 55.1 55.3 03:45

US Markit Services PMI - Dec P 55 54.7 03:45

US Business Inventories - Oct 0.6% 0.3% 04:00

CH New Home Prices MoM - Nov -- 1.02% 14:30

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


The domestic data has been undeniably strong, but global risks have increased. We expect that inflation will increase

only gradually and remain comfortable with our call that the OCR will be on hold for the foreseeable future. However,

we are mindful of risks on both sides of the ledger. Heading into the New Year, the resilience of domestic data, the

trend in inflation and global developments will all bear watching closely.

Date Data/event Economic

signal Comment

Mon 10 Dec

(10:45am)

Economic Survey of

Manufacturing – Q3 Small rebound

Manufacturing sales volumes could be in for a small rebound

from Q2’s weakness.

10 – 14 Dec REINZ Housing Market

Statistics – November Bumps

With offsetting forces at play, we may see a few bumps, with

recent declines in mortgage rates passing through.

Tue 11 Dec

(10:00am)

ANZ Truckometer –

November -- --

Tue 11 Dec

(10:45am)

Electronic Cards

Transactions – November

Looking for

more

After a soft October, we will be looking for something more

robust to see moderate growth maintained.

Tue 11 Dec

(1:00pm)

ANZ Monthly Inflation

Gauge – November -- --

Thu 13 Dec

(10:45am)

Food Price Index –

November

Summer is

coming!

With new season produce coming available, lower food and

vegetable prices are expected to see a modest decline.

Thu 13 Dec Half-Yearly Fiscal &

Economic Update Content

The Government looks content to stick to the fiscal-prudence

script.

Tue 18 Dec

(1:00pm)

ANZ Business Outlook –

December -- --

Wed 19 Dec

(10:45am) Balance of Payments – Q3

Broadly

stable

Solid export earnings are expected to broadly offset imports

growth and lifting primary income outflows.

Thu 20 Dec

(10:45am)

Gross Domestic Product –

Q3 Moderate

At this stage we are picking a moderate 0.6% q/q print,

which would see annual growth stable at 2.8%.

Fri 21 Dec

(10:00am)

ANZ Consumer Confidence –

December -- --

25 Dec Christmas Day -- --

1 Jan New Year’s Day -- --

Wed 9 Jan

(10:00am) ANZ Job Ads – December -- --

Wed 9 Jan

(1;00pm)

ANZ Commodity Price Index

– December -- --

Thu 10 Jan

(10:00am)

ANZ Truckometer –

December -- --

Fri 11 Jan

(10:45am)

Building Consents –

November More

More growth in consents is needed to see building activity

levels push higher.

Mon 14 Jan

(1:00pm)

ANZ Monthly Inflation

Gauge – December -- --

Tue 15 Jan

(10:00am)

Quarterly Survey of

Business Opinion – Q1 Resilient

Given recent strong data, we’ll be looking to see an

improvement in sentiment into the new year.

Tue 15 Jan

(10:45am)

Food Price Index –

December

Christmas

cheer

We expect modest tick-up in food and veg prices to be more

than offset by competition down the other grocery aisles.

Wed 16 Jan

(10:45am)

Electronic Card Transactions

– December

Looking for

more

After a soft October, we will be looking for something more

robust to see moderate growth maintained.

Wed 23 Jan

(10:45am) Consumers Price Index – Q4 Dampened

It’s early days but we’re currently picking a 0.1% q/q (1.9%

y/y) rise, dampened by weak tradable inflation.

Fri 25 Jan

(10:45am) Net migration – November More volatility

With movement away from departure cards and volatility in

trans-Tasman arrivals of late, it could be choppy.

On balance Data watch Domestic data has been solid. We are circumspect on

the outlook, with risks in both directions.

Key forecasts and rates


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 0.9 0.1 0.7 0.5 0.6 0.2 0.6 0.5 0.5

CPI (% yoy) 1.5 1.9 1.9 2.0 2.1 1.8 2.0 1.9 1.9 1.8

LCI Wages (% qoq) 0.6 0.5 0.5 0.3 0.5 0.6 0.6 0.5 0.7 0.6

LCI Wages (% yoy) 2.1 1.9 2.0 2.0 1.9 2.0 2.1 2.2 2.4 2.5

Employment (% qoq) 0.6 1.1 0.2 0.4 0.4 0.4 0.4 0.4 0.4 0.3

Employment (% yoy) 3.7 2.8 2.5 2.3 2.1 1.4 1.6 1.6 1.5 1.5

Unemployment Rate

(% sa) 4.4 3.9 4.1 4.0 4.0 3.9 3.9 3.9 3.8 3.8

Current Account

(% GDP) -3.4 -3.6 -3.6 -3.3 -3.3 -3.4 -3.6 -3.7 -3.8 -3.9

Terms of Trade (% qoq) 0.4 -0.3 -0.2 -0.9 0.0 0.2 0.1 0.2 0.3 0.2

Terms of Trade (% yoy) 1.2 -0.5 -2.1 -1.0 -1.4 -0.9 -0.6 0.6 0.8 0.8

Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18

Retail ECT (% mom) -0.4 1.7 -2.1 0.6 0.8 0.3 1.1 1.1 0.1 --

Retail ECT (% yoy) 4.0 6.7 1.4 4.2 4.9 3.8 6.3 5.7 6.2 --

Credit Card Billings

(% mom) 0.7 1.1 0.6 -1.5 2.2 -1.4 2.9 0.8 -0.1 --

Credit Card Billings

(% yoy) 7.0 7.3 6.9 3.7 5.9 3.4 7.8 7.8 6.3 --

Car Registrations

(% mom) -8.2 -4.1 -1.1 13.6 -6.3 0.1 2.2 -4.3 3.0 -6.0

Car Registrations

(% yoy) -4.2 -11.9 -9.0 -0.6 -4.9 -0.7 -4.7 -10.8 -5.4 -17.9

Building Consents

(% mom) 6.1 12.8 -3.9 6.8 -8.0 -9.6 7.0 -1.3 1.5 --

Building Consents

(% yoy) -0.6 18.3 15.0 23.1 11.9 -5.7 -2.7 -3.0 8.4 --

REINZ House Price Index

(% yoy) 4.0 4.1 3.7 3.6 3.8 4.8 4.0 4.0 3.8 --

Household Lending

Growth (% mom) 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.4 0.4 --

Household Lending

Growth (% yoy) 5.7 5.7 5.8 5.8 5.8 6.0 6.0 5.9 5.8 --

ANZ Roy Morgan

Consumer Conf. 127.7 128.0 120.5 121.0 120.0 118.4 117.6 117.6 115.4 118.6

ANZ Business Confidence -19.0 -20.0 -23.4 -27.2 -39.0 -44.9 -50.3 -38.3 -37.1 -37.1

ANZ Own Activity Outlook 20.4 21.8 17.8 13.6 9.4 3.8 3.8 7.8 7.4 7.6

Trade Balance ($m) 188 -151 200 199 -285 -203 -1573 -1596 -1295 --

Trade Bal ($m ann) 57451 58071 58675 58982 59696 60708 61387 62272 63030 --

ANZ World Comm. Price

Index (% mom) 2.8 1.2 1.0 1.5 -0.9 -3.3 -1.1 -2.4 -2.4 -0.6

ANZ World Comm. Price

Index (% yoy) 5.0 5.8 7.1 5.4 2.3 -0.2 -0.5 -3.6 -5.6 -5.3

Net Migration (sa) 4870 5360 4910 5090 4860 4750 4990 4630 4660 --

Net Migration (ann) 68943 67984 67038 66243 64995 63779 63288 62733 61751 --

ANZ Heavy Traffic Index

(% mom) -1.6 0.6 -0.5 3.7 0.0 -0.5 1.0 -3.2 4.6 --

ANZ Light Traffic Index

(% mom) 0.0 1.4 -0.5 1.1 0.0 0.3 0.9 -1.0 0.4 --

ANZ Job Ads (% mom) -1.3 0.7 -1.9 2.4 -1.3 3.1 0.4 -0.2 1.4 0.5

Figures in bold are forecasts. mom: Month-on-Month; qoq: Quarter-on-Quarter; yoy: Year-on-Year

Key forecasts and rates


Actual Forecast (end month)

FX rates Oct-18 Nov-18 Today Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20

NZD/USD 0.654 0.687 0.69 0.68 0.64 0.62 0.61 0.61 0.61 0.62

NZD/AUD 0.922 0.941 0.96 0.97 0.94 0.93 0.87 0.87 0.87 0.89

NZD/EUR 0.577 0.607 0.60 0.61 0.58 0.57 0.55 0.53 0.51 0.50

NZD/JPY 73.99 78.05 77.23 76.8 70.4 67.0 62.2 61.0 58.6 58.9

NZD/GBP 0.513 0.539 0.54 0.54 0.52 0.52 0.50 0.49 0.47 0.47

NZ$ TWI 70.0 73.2 75.0 73.3 69.7 67.9 65.2 64.2 62.9 63.1

Interest rates Oct-18 Nov-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 1.98 1.98 1.95 1.95 1.95 1.95 1.95 1.95 1.95

NZ 10-yr bond 2.54 2.56 2.45 2.70 2.75 2.80 2.85 2.90 2.95 3.00

US Fed funds 2.25 2.25 2.25 2.50 2.50 2.75 2.75 2.75 2.75 2.75

US 3-mth 2.56 2.74 2.77 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 1.50 1.50 1.50 1.50

AU 3-mth 1.91 1.95 1.99 2.05 2.05 2.00 2.30 2.50 2.50 2.50

7-Nov 3-Dec 4-Dec 5-Dec 6-Dec 7-Dec

Official Cash Rate 1.75 1.75 1.75 1.75 1.75 1.75

90 day bank bill 1.97 1.97 1.97 1.97 1.98 1.98

NZGB 05/21 1.92 1.81 1.78 1.77 1.76 1.76

NZGB 04/23 2.14 2.03 1.98 1.95 1.93 1.92

NZGB 04/27 2.58 2.42 2.36 2.32 2.29 2.29

NZGB 04/33 2.92 2.75 2.69 2.65 2.63 2.62

2 year swap 2.14 2.09 2.08 2.06 2.06 2.06

5 year swap 2.54 2.45 2.42 2.39 2.37 2.36

RBNZ TWI 73.78 75.18 75.44 75.55 75.12 75.15

NZD/USD 0.6780 0.6918 0.6963 0.6921 0.6863 0.6866

NZD/AUD 0.9302 0.9381 0.9425 0.9492 0.9532 0.9524

NZD/JPY 76.66 78.55 78.51 78.23 77.42 77.41

NZD/GBP 0.5148 0.5439 0.5432 0.5423 0.5391 0.5387

NZD/EUR 0.5900 0.6101 0.6104 0.6102 0.6058 0.6023

AUD/USD 0.7288 0.7374 0.7387 0.7292 0.7200 0.7208

EUR/USD 1.1492 1.1339 1.1406 1.1343 1.1330 1.1379

USD/JPY 113.07 113.55 112.76 113.02 112.80 112.69

GBP/USD 1.3169 1.2719 1.2817 1.2765 1.2731 1.2726

Oil (US$/bbl) 61.67 52.95 53.25 52.89 51.49 52.61

Gold (US$/oz) 1233.86 1230.18 1239.47 1236.26 1236.28 1249.31

NZX 50 8855 8876 8866 8782 8758 8767

Baltic Dry Freight Index 1304 1203 1237 1296 1339 1372

NZX WMP Futures (US$/t) 2600 2635 2635 2635 2635 2635

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New New Zealand Weekly Focus · 2020. 9. 22. · Emerging market currencies have been recovering. New Zealand is not an emerging market, of course, but it is a commodity producer,

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