Economic Indicators for New Zealand

ANZ Commodity Price Index

Measures the monthly price change of New Zealand's seventeen main commodity exports. Given that the exports act as the driving force of New Zealand’s economy, changes in their prices can affect GDP and exchange rates. An increase in export prices may suggest a strengthening of the Dollar as foreigners pay relatively more for New Zealand’s exports. Conversely, falling export prices may indicate a decline in demand for New Zealand’s commodities; weakening the exchange rate.

The headline value is the percentage change in the index from the previous month. Because the figure measures price changes in commodity goods, it acts as an early indicator of price changes. As such an early indicator the figure is useful in predicting future price direction.

Relevance: Three StarTends to move markets on release
Release schedule: 13:00 (GMT); monthly, on the first week of the following month
Source of report: Australia and New Zealand Banking Group Ltd (ANZ)
Web address: http://www.anz.com
Address of release: http://www.anz.com/nz/about/media/-newslibrary.asp?Commodity_Price_Index

Current Account

The flow of all goods and services, income, and transfer payments to and from New Zealand’s economy. The flow of goods and services to and from a country, also known as the trade balance, makes up the largest portion of the Current Account. The income component includes income-generating assets, dividends from stocks or interest from bonds. Lastly, transfer payments are unilateral payments to and from the country (such as foreign aid donations and foreign worker salaries being sent home).

The Current Account is in surplus when export receipts of goods, services, income, and transfer payments exceed the import payments for them. Positive current account figures are bullish for the New Zealand Dollar because it indicates that New Zealand goods are in demand and that foreigners will seek the NZ Dollar to purchase them. This in turn will drive up the exchange rate. Conversely, a negative current account indicates that imports exceed exports and weigh down the currency rate. In the case that the Current Account reaches critical deficit levels, monetary and fiscal authorities will take measures to reduce it, usually by weakening the New Zealand Dollar to make its exports cheaper and therefore more attractive.

The headline number is the Current Account balance and the percentage change in the Current Account from the previous quarter.

Relevance: Three Star Tends to move markets on release
Release schedule: 22:45 (GMT); quarterly, over 2 months after the reporting period
Source of report: Statistics New Zealand
Web address: http://www.stats.govt.nz/default.htm
Address of release: http://www.stats.govt.nz/products-and-services/info-releases/crown-acct-analysis-info-releases.htm
Refer Crown Accounts Analysis

Gross Domestic Product (GDP)

A comprehensive measure of a New Zealand 's overall production and consumption of goods and services. GDP serves as one of the primary measures of overall economic well-being. Economic expansion, indicated by a growing GDP, raises concerns about inflationary pressure.

GDP calculates the total market value of goods and services produced in New Zealand within a given period after deducting the cost of goods and services used up in the process of production. Therefore, GDP excludes intermediate goods and services and considers final aggregates only. It is calculated as:

GDP = C + I + G + (EX - IM)

C = private consumption
I = private investment
G = government expenditure
EX = exports of goods and services
IM = imports of goods and services

The headline figures for GDP are the percentage growth rate from the previous quarter and the annualized percentage change in GDP. These are the preliminary figures, and are usually revised every following month.

Relevance: Three Star Tends to move markets on release
Release schedule: 22:45 (GMT); quarterly, over 2 months after the reporting period
Revisions schedule: All figures are revised monthly
Source of report: Statistics New Zealand
Web address: http://www.stats.govt.nz/default.htm
Address of release: http://www.stats.govt.nz/default.htm
Refer Main Indicator > GDP

RBNZ Rate Decision

Decision to change or maintain New Zealand 's Official Cash Rate. The RBNZ is known for its clarity regarding monetary policy intentions, thus the result is usually foreseen in advance. The decision aligns with the Reserve Bank of New Zealand’s monetary policy to spur or slow economic growth or affect the exchange rate.

The RBNZ maintains an inflationary target of 1-3 percent and will change rates to keep it within such a range, making rate decisions fairly predictable. Rate changes are significant nonetheless, affecting interest rates in consumer loans, mortgages, and bond rates. Increases or even expectations for rate increases tend to cause the New Zealand Dollar to appreciate, while rate decreases cause the currency to depreciate.

Relevance: Three StarTends to move markets on release
Release schedule: 8 times a year
Source of report: Reserve Bank of New Zealand
Web address: http://www.rbnz.govt.nz/index.html
Address of release: http://www.rbnz.govt.nz/monpol/statements/0090630.html
AKA: Official Cash Rate

Retail Trade

Tracks changes in New Zealand retail sales. As consumption contributes heavily to New Zealand’s GDP, a rising Retail Sales figure can be indicative of rising demand and subsequent inflation. While strong economic growth is typically good for the New Zealand economy, uncontrolled growth and rising inflation may lead to instability and corrective action from New Zealand’s central bank. The headline numbers are the percentage change in Retail Trade from the previous month and the percentage change in Retail Trade from the previous quarter.<

Relevance: Three Star Tends to move markets on release
Release schedule: 22:45 (GMT); monthly/quarterly, 2 weeks after each reporting period, with a more in-depth report released every Quarter
Source of report: Statistics New Zealand
Web address: http://www.stats.govt.nz/default.htm
Address of Release http://www.stats.govt.nz/products-and-services/info-releases/rts-info-releases.htm
AKA: Retail Sales

ANZ Job Vacancies

Gauges the availability of employment in the New Zealand job market by comparing job advertisements to employment. When the Job Vacancies figure is low it suggests a tighter job market where more people are chasing relatively fewer positions. An increasing number is an early indicator for employment growth and economic expansion. Firms advertise for additional employees to increase output, thus this has an obvious correlation to economic growth. As more people are hired higher consumer expenditures can also lead to inflationary pressures. The headline value is the number of job advertisements divided by the number of employed individuals in the New Zealand job market.

Relevance: Two Star Moderate market impact
Release schedule: 13:00 (GMT); quarterly, 6 weeks after the reporting period
Source of report: Australia and New Zealand Banking Group Ltd. (ANZ)
Web address: http://www.anz.com
Address of release: http://www.anz.com/nz/about/media/newslibrary.asp-?ANZ_Job_Ads

NBNZ Business Outlook

Monthly measure of New Zealand business confidence. A representative sample of New Zealand's businesses is surveyed about their outlook for the next twelve months. Positive sentiment bodes well for the economy, usually associated with higher employment, rising income, and increased investment due to expectations of economic expansion. It is a good early indicator for the direction of the economy, rising before economic boon and falling prior to recessions. Questions covered: business confidence, labour market, interest rates, inflation, and many other economic outlook conditions.

The figure is reported as the percentage of optimistic businesses surveyed minus the percentage of those that believe conditions will deteriorate.

Relevance: Two Star Moderate market impact
Release schedule: 13:00 (GMT); monthly (except on January), on the last day of the reporting period
Source of report: National Bank of New Zealand
Web address: http://www.nationalbank.co.nz/default.asp
Address of Release: http://www.nationalbank.co.nz/economics/outlook
AKA: NBNZ Business Confidence

Building Permits

Number of new building projects authorized for construction New Zealand . Building Permits, or Building Consents, are issued when a building project has been authorized to begin construction. Since Building Consents serve as one of the earliest signals of expanded housing supply, the report is a leading indicator for the overall housing market. Also, because of the high outlays needed for construction projects Building Permits suggests optimism for corporate or consumer spending. Lastly, housing indicators are popular leading indicators due to the multiplier effect that they have on the rest of the economy. The headline is the percentage change in new consents for the month.

Note: When looking deeper into the report it is important to analyse in detail what the type of projects the consents are for, as Building Consents include residential housing as well as ‘big-ticket’ non-residential buildings and government projects that can create large gyrations in the report month to month.

Relevance: One Star Rarely affects markets
Release schedule: 22:45 (GMT); monthly, one month after the following month
Source of report: Business New Zealand
Web address: http://www.stats.govt.nz/default.htm
Address of release: http://www.stats.govt.nz/economy/industry/construction.htm
Refer Building Consents Issued
AKA: Building Consent

Food Price Index

Measures the price change of food and food services purchased by households. Higher food prices can result in economic slowdown because less disposable income will be used for non-food expenditures. Higher food prices can also result in inflation and signal future monetary action.

Higher domestic food prices may also suggest higher food prices internationally. New Zealand 's economy is largely based on producing and exporting agricultural goods and food products. Therefore, the Food Price Index can reflect demand for New Zealand products and for the New Zealand dollar. A higher reading may suggest a strengthening of the Dollar as foreigners pay relatively more for New Zealand’s exports.

The headline number is the percentage change in the index from the previous month.

Relevance: One Star Rarely affects markets
Release schedule: 22:45 (GMT); monthly, 1-2 weeks after the reporting period
Source of report: Statistics New Zealand
Web address: http://www.stats.govt.nz/default.htm
Address of Release: http://www.stats.govt.nz/products-and-services/info-releases/fpi-info-releases.htm

M3 Supply

The broadest monetary aggregate, accounting for all New Zealand Dollars in circulation plus bank deposits. As an official measure of the New Zealand’s money supply, M3 will show the immediate impacts of monetary policy actions and can give an indication into the future direction of inflation. An expansion in the monetary base is generally inflationary while a decline will likely have the opposite effect.

Relevance: One Star Rarely affects markets
Release schedule: 3:00 (GMT); monthly, at the end of the following month
Source of report: Reserve Bank of New Zealand
Web address: http://www.rbnz.govt.nz/index.html
Address of release: http://www.rbnz.govt.nz/statistics/monfin
Refer C1 Monetary aggregates M3 - M3 (R) excl repos

Manufacturing Activity Report

Released by Business New Zealand commenting on the PMI, the New Zealand manufacturing sector, and noteworthy trends. Increased activity in the manufacturing sector is usually a precursor to economic expansion and inflationary pressures. The Manufacturing Activity Report summarizes key points regarding the data gathered by the monthly business surveys sent to manufacturers and gives a concise breakdown of how optimistic manufacturers feel in the short-term. The report takes note of any mid-term trends that have been occurring over that past few months and gives insight into the overall direction of the New Zealand Economy.

Relevance: One Star Rarely affects markets
Release schedule: 22:45 (GMT); monthly, 2 weeks after the reporting period
Source of report: Business New Zealand
Web address: http://www.businessnz.org.nz
Address of release: http://www.businessnz.org.nz/issues/202

Non Resident Bond Holdings

The monetary value of bonds held by non residents of New Zealand . Non Resident Bond Holdings measure the willingness of foreigners to finance New Zealand’s economy and government. A high value is indicative of a budget deficit and debt, suggesting that foreign investments are required to finance New Zealand 's continued patterns of spending.

The figure is also indicative of demand for the New Zealand Dollar. Because holding New Zealand bonds assumes the benefits and risks of holding New Zealand Dollars, changes in bond holdings can reflect changes in sentiment regarding the New Zealand economy, monetary policy, or political stability. Decreased demand for New Zealand securities reflects foreigners liquidating Kiwi assets, leading to more New Zealand Dollars in the market, thus weakening the New Zealand Dollar. The headline is the percentage of New Zealand government bonds that are held by foreigners.

Relevance: One Star Rarely affects markets
Release schedule: 23:00 (GMT); monthly, 2 weeks after the reporting period
Source of report: Reserve Bank of New Zealand
Web address: http://www.rbnz.govt.nz/index.html
Address of release: http://www.rbnz.govt.nz/statistics/govfin/d0/data.html

Performance of Manufacturing Index (PMI)

A measure of business sentiment for the New Zealand Manufacturing sector. The PMI is constructed from a monthly survey of the manufacturing sector, broken down into 5 sub-indexes: production, employment, new orders, finished stock, and deliveries. The index uses 50 as a centreline between economic expansion/contraction expectations; the further the value from 50 the stronger the expected expansion or contraction. Increased activity in the manufacturing sector is usually a precursor to economic expansion and inflationary pressures.

The PMI report also shows the individual performance of 4 New Zealand regions: Northern, Central, Canterbury/Westland and Otago/Southland.

Note: "PMI" usually stands for Purchasing Managers' Index. United States and Euro-Zone PMI is different from the New Zealand PMI, which stands for Performance of Manufacturing Index.

Relevance: One Star Rarely affects markets
Release schedule: 23:30 (GMT); monthly; shortly after the reporting period
Source of report: Business New Zealand
Web address: http://www.businessnz.org.nz
Address of release: http://www.businessnz.org.nz/issues/202

Terms of Trade Index

Measures how favourable New Zealand 's terms of trade are. The terms of trade figure is calculated as the ratio of an export to the price of an import, per commodity. A higher value is generally bullish for the New Zealand economy, signifying that the products New Zealand exports are worth more than the products it imports. Stronger terms of trade can result from increased demand for New Zealand exports or increased demand for the New Zealand dollar, both of which are beneficial for the New Zealand economy. The figure can be important to market participants because New Zealand relies so highly on exports.

The figure is reported in headlines as the percentage change in the index from the previous quarter. A positive change is viewed as favourable for the New Zealand economy, while a negative change is viewed as a bearish sign for the economy.

Relevance: One Star Rarely affects markets
Release schedule: 22:45 (GMT); quarterly, over two months after the reporting period
Source of report: Statistics New Zealand
Web address: http://www.stats.govt.nz/default.htm
Address of release: http://www.stats.govt.nz/products-and-services/info-releases/oseas-trade-indexes-info-releases.htm
Refer > Overseas Trade Indexes report

Visitor Arrivals

Number of new temporary migrants (tourists) entering New Zealand . Because of its unique geography and numerous attractions, New Zealand is a popular global tourist destination. Higher Visitor Arrivals suggests a stronger tourism industry, resulting in higher consumption and growth in the economy. Tourism is one of New Zealand’s biggest exports, contributing to roughly 10 percent of its GDP. Visitor Arrivals are also inversely related to exchange rates, as a weaker New Zealand Dollar attracts foreign tourists. The headline figure is the (unadjusted) percentage growth in visitor arrivals from the previous month.

Relevance: One Star Rarely affects markets
Release schedule: 22:45 (GMT); monthly, 3 weeks after the reporting period
Source of report: Statistics New Zealand
Web address: http://www.stats.govt.nz/default.htm
Address of release: http://www.stats.govt.nz/default.htm
Refer > Main Indicator - Visitor Arrivals

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