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
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
Susan Kilsby
Agriculture Economist
Telephone: +64 4 382 1992
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)
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.
90
92
94
96
98
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102
104
106
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
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
ANZ New Zealand Weekly Focus | 10 December 2018 3
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.
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106
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
ANZ New Zealand Weekly Focus | 10 December 2018 4
…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
ANZ New Zealand Weekly Focus | 10 December 2018 5
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
ANZ New Zealand Weekly Focus | 10 December 2018 6
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
ANZ New Zealand Weekly Focus | 10 December 2018 7
…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
ANZ New Zealand Weekly Focus | 10 December 2018 8
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 Money Supply M0 YoY - Nov 3.0% 2.8% 10-15 Dec
CH Aggregate Financing CNY - Nov 1350.0B 728.8B 10-15 Dec
CH Money Supply M2 YoY - Nov 8.0% 8.0% 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
ANZ New Zealand Weekly Focus | 10 December 2018 9
Date Country Data/event Mkt. Last NZ time
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
ANZ New Zealand Weekly Focus | 10 December 2018 10
Date Country Data/event Mkt. Last NZ time
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
ANZ New Zealand Weekly Focus | 10 December 2018 11
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
ANZ New Zealand Weekly Focus | 10 December 2018 12
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
ANZ New Zealand Weekly Focus | 10 December 2018 13
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
Important notice
ANZ New Zealand Weekly Focus | 10 December 2018 14
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Important notice
ANZ New Zealand Weekly Focus | 10 December 2018 15
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