Economic week
January 12, 2018
by Nick Clark
Happy New Year! With New Zealand in holiday mode there has been relatively little economic news since Christmas. So this is a pretty short commentary.
Global Dairy Trade
After a weak second half of 2017, the Global Dairy Trade started 2018 with a welcome rise. It was up 2.2% on the previous auction, thanks mainly to a 4.2% increase for whole milk powder and a 1.6% increase for skim milk powder. Most of the other commodities fell.
The rise came shortly after Fonterra predicted its 2017/18 season milk collections would be down 4% on last season due to dry weather in many areas.
Overall the average selling price was $US 3,124 and 25,400 tonnes were sold. Compared to the same time last year the GDT is down 7.6%.
Agricultural Debt
Released just before Christmas, the Reserve Bank’s monthly Sector Lending Statistics for November 2017 showed agricultural debt at $60.6 billion. This is up $29 million on October and up $1.2 billion on November 2016, a 2.1% annual increase. The annual growth rates for other sectors were somewhat higher, with housing debt up 6.2%, personal consumer debt up 7.2%, and business debt up 7.4%.
Farm Confidence Survey
Next week Federated Farmers’ six-monthly Farm Confidence Survey will be in the field. On Monday Federated Farmers members will be emailed a link to the survey. Will this survey continue the run of pessimistic business confidence surveys since the election or will farmers be looking to put 2017 behind them and enter 2018 with more confidence? The survey will also be very useful for getting a handle on the issues of concern for farmers and what they think the new Government should be focusing on. So let us know what you think! Expect to see the results in mid-February.
Soil Moisture Data
The latest NIWA soil moisture data as at 11 January shows the effect of recent rain. However, some parts of the country, especially the lower South Island, remain not only dry but drier than usual.
Exchange Rates
|
NZ Dollar versus
|
This Week (11/1/18)
|
Last Week (4/1/18)
|
Last Month (11/12/17)
|
Last Year (11/1/17)
|
|
US Dollar
|
0.7201
|
0.7086
|
0.6854
|
0.6976
|
|
Australian Dollar
|
0.9143
|
0.9057
|
0.9127
|
0.9479
|
|
Euro
|
0.6022
|
0.5901
|
0.5822
|
0.6608
|
|
UK Pound
|
0.5330
|
0.5245
|
0.5119
|
0.5727
|
|
Japanese Yen
|
80.26
|
79.86
|
77.90
|
80.90
|
|
Chinese Renmimbi
|
4.6928
|
4.6077
|
4.5357
|
4.8302
|
|
Trade Weighted Index
|
75.03
|
73.93
|
72.83
|
77.74
|
Source: Reserve Bank of NZ
Wholesale Interest Rates
|
|
This Week (11/1/18)
|
Last Week (4/1/18)
|
Last Month (11/12/17)
|
Last Year (11/1/17)
|
|
OCR
|
1.75%
|
1.75%
|
1.75%
|
1.75%
|
|
90 Day Bank Bill
|
1.87%
|
1.88%
|
1.89%
|
1.99%
|
|
10 Year Government Bond
|
2.87%
|
2.77%
|
2.82%
|
3.18%
|