On the down side: residential construction consents in December sunk to the lowest level since 1965; import growth exceeded export growth in the December quarter; the Household Labour Force Survey shows the unemployment rate rising from 6.4% to 6.8% in the same quarter while job numbers slipped by 11,000 or 0.5%.
On the up side: businesses appear to be importing more capital equipment and commodity prices continue their surge beyond record levels. But while the net economic impact from rising commodity prices (especially for dairy exports) is positive, Kiwi shoppers are bracing for another round of price increases for milk, butter, cheese and so on.
BNZ chief economist Tony Alexander summed it up: “Overall the data give little basis for claiming an acceleration in the pace of economic growth is under way and one now cannot rule out the possibility that we have slipped back into technical recession. Dang.”
In its latest monthly review of economic data, the Treasury said another recession is likely to be avoided because real GDP is expected to rise in the December quarter. But it conceded that growth “could be weaker than previously forecast” with aftershocks in Canterbury delaying reconstruction and La Nina weather pattern leading to drought conditions in that quarter.
The Treasury takes comfort from higher business and consumer confidence, however. The latest NZIER Quarterly Survey of Business Opinion showed domestic trading activity in the December quarter was the strongest in almost three years and in line with positive (albeit if only moderate) growth. Forward-looking indicators in the survey suggested further recovery this year.
The ANZ-Roy Morgan measure of consumer confidence lifted 5 points in January, too. The current conditions index lifted above 100 for the first time in four months.
The outlook from No 1 The Terrace, just over the road from the Beehive in Wellington, accordingly is more positive for this year than last, largely owing to the Rugby World Cup, earthquake reconstruction and those high commodity prices.
