NZ QSBO: Up, up and away - ANZ

Research Team at ANZ, suggests that New Zealand’s QSBO indicators flag an economy expanding at an above-trend rate of close to 4%! That’s too high (the survey omits the agriculture sector) but we get the spirit.

Key Quotes

“The majority of demand-side gauges (domestic trading activity, employment, investment etc) were above average, and indicative of a broad-based economic expansion and one with a reasonable head of steam up.

Firms are finding it more difficult to find staff, especially in construction. But once again, inflation and the pricing side of the economy remain contained. It is an ongoing dichotomy, but nothing new.

We have an economy that is performing very well. That means a strong currency, not a weaker one, which of course complicates things for the RBNZ. If you are a true flexible inflation-targeting central bank, today’s figures should give you reason to pause and ponder. The economy does not need more stimulus, with interest rate sensitive sectors flying and now struggling to get staff. Demand is above trend. However, the sticking point remains the weak transmission into broader inflation and the elongated period of low inflation (with the strong NZD making that more problematic). So market will continue to dice with an August easing.”