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31 Mar 2014
ANZ business confidence still getting stronger - BNZ
FXStreet (Bali) - As economists at Bank of New Zealand note, ANZ business survey strengthened further in seasonally adjusted terms.
Key Quotes
"This afternoon’s ANZ business survey registered a slight decline in its headline confidence – to +67.3, from +70.8 in February. However, we judge an increase in seasonally adjusted terms – to +68.9, from +64.8. Same deal for own-activity expectations, which we reckon burgeoned to +60.5 in March, from +56.1, seasonally adjusted, whereas the actual results were +58.2, from +58.5. The core results are thus still getting stronger, hitting fresh 20-year highs in the process."
"Indeed, taken at face value, March’s results on own-activity now signal GDP growth of 7% over the coming 12 months. No one is even close to forecasting these sorts of numbers. We’re at 4% for calendar 2014, similar to the RBNZ, while the consensus is still catching up, with 3.5%. Even 5% growth could have material implications for NZ rates and the exchange rate."
"What’s going to slow this momentum, which is, to quote a favourite word of Graeme Wheeler’s of late, considerable. Below-normal policy rates for the next 18 months? Not if history is any guide. This suggests the NZ dollar might be called upon to an even greater extent to keep inflation at bay."
"Bear in mind that NZ GDP growth would need to be running at less than 3%, at an annual rate, just to stop the accumulation of inflationary pressure on supply. It’s tantamount to expecting the current levels of optimism in business surveys to approximately halve. We can’t see what would do this, certainly not anytime soon."
"And so we wouldn’t take any comfort from the fact pricing intentions dipped in today’s ANZ business survey. At +30.2, from +32.9, they remain relatively high, consistent with a pick-up in annual CPI inflation to near 3.0%. This is above the 2.0% rate the RBNZ very clearly desires."
Key Quotes
"This afternoon’s ANZ business survey registered a slight decline in its headline confidence – to +67.3, from +70.8 in February. However, we judge an increase in seasonally adjusted terms – to +68.9, from +64.8. Same deal for own-activity expectations, which we reckon burgeoned to +60.5 in March, from +56.1, seasonally adjusted, whereas the actual results were +58.2, from +58.5. The core results are thus still getting stronger, hitting fresh 20-year highs in the process."
"Indeed, taken at face value, March’s results on own-activity now signal GDP growth of 7% over the coming 12 months. No one is even close to forecasting these sorts of numbers. We’re at 4% for calendar 2014, similar to the RBNZ, while the consensus is still catching up, with 3.5%. Even 5% growth could have material implications for NZ rates and the exchange rate."
"What’s going to slow this momentum, which is, to quote a favourite word of Graeme Wheeler’s of late, considerable. Below-normal policy rates for the next 18 months? Not if history is any guide. This suggests the NZ dollar might be called upon to an even greater extent to keep inflation at bay."
"Bear in mind that NZ GDP growth would need to be running at less than 3%, at an annual rate, just to stop the accumulation of inflationary pressure on supply. It’s tantamount to expecting the current levels of optimism in business surveys to approximately halve. We can’t see what would do this, certainly not anytime soon."
"And so we wouldn’t take any comfort from the fact pricing intentions dipped in today’s ANZ business survey. At +30.2, from +32.9, they remain relatively high, consistent with a pick-up in annual CPI inflation to near 3.0%. This is above the 2.0% rate the RBNZ very clearly desires."