Economic Week

July 14, 2017
By Nick Clark

We’ve had a great response to the latest six-monthly Farm Confidence Survey, which closed on Monday.  Nearly 800 farmers took the time to complete the survey, which as the election nears will provide invaluable information on how farmers are feeling, what things they are concerned about, and what they want the government to address.  

The results are now being analysed by Research First and we expect to release them later in July, so watch this space.  Many thanks to everyone who participated.  

Onto this week’s data releases…

Food prices rose by 0.2 percent in June, according to Statistics NZ’s monthly Food Price Index.  

Fruit and vegetable unwound a little of April and May’s big weather-driven increases, easing back 0.4 percent. Vegetable prices were down 2.1 percent while fruit prices were up 2.6 percent.

Meat, poultry and fish prices were up 1.0 percent, with beef and veal down 1.1 percent and lamb, mutton and hogget up 0.1 percent.  Prices for the grocery foods group fell 0.3 percent, with bread and cereals down 0.8 percent and milk, cheese and eggs down 2.0 percent.

On an annual basis food prices were up 3.0 percent.  The main driver was fruit and vegetable prices which were up 9.3 percent (fruit down 2.4 percent but vegetables up 18.2 percent).  Meat, poultry and fish were prices were up 1.8 percent (beef and veal up 1.2 percent and lamb, mutton and hogget up 14.5 percent).   Grocery food prices were up 2.1 percent (bread and cereals down 0.8 percent and milk, cheese and eggs up 6.1 percent).

Statistics NZ also released data from Electronic Card Transactions, which showed spending flat in June with increased hospitality spending – thanks to all those Lions fans – offset by lower petrol prices.  It also released its monthly Accommodation Survey which showed guest nights up 7.3 percent in May 2017 compared to May 2016.

The Auckland residential property market showed continued signs of cooling, according to the Real Estate Institute’s June 2017 Residential Property Statistics.  

The Auckland median price was up 2.5 percent from June 2016 to $850,500.  For the rest of New Zealand (ex-Auckland), the median price was up 11.4 percent to $431,000.  Overall for New Zealand the median price was up 5.8 percent to $529,000.

The REINZ House Price Index (which adjusts for various factors making it a more reliable measure of market movements than median prices) was up 2.8 percent for New Zealand as a whole, with Auckland down 0.6 percent and the rest of New Zealand up 9.2 percent (but also slowing).

Sales volumes were down 24.7 percent nationwide, with Auckland down 33.2 percent.

There were also a couple of other confidence surveys this week, including the July 2017 monthly ANZ-Roy Morgan Consumer Confidence Survey (eased back slightly but still strong), and Business NZ’s June 2017 monthly Performance of Manufacturing Index (showing steady expansion).

ANZ’s June 2017 Truckometer survey, which measures heavy and light traffic volumes, also indicated positive economic impetus. The Heavy Traffic Index was flat for the month, but held onto a strong lift in May and is maintaining an upward trend.  The Light Traffic Index matched the previous month’s increase, lifting another 1.3 percent. 

Next week sees the June quarter inflation figures which will as always be closely watched.  Lower petrol prices could see the annual rate of inflation ease back below 2 percent.

	This Week (13/7/17)	Last Week (6/7/17)	Last Month (13/6/17)	Last Year (13/7/16)
OCR	1.75%	1.75%	1.75%	2.25%
90 Day Bank Bill	1.97%	1.98%	1.93%	2.44%
10 Year Government Bond	2.97%	2.95%	2.79%	2.33%

Source: Reserve Bank of NZ