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Monthly Economic Indicators

Executive Summary

  • Retail spending picked up in the June quarter and momentum is likely to have continued into the September quarter. There is evidence of some Lions tour effects across the two quarters.
  • House prices and sales volumes fell in July, driven by weaker Auckland activity. Building consents fell for the second month in a row in July, although they remain high on an annual basis.  Capacity pressures appear to be increasing in the construction sector, with input costs increasing at their fastest rate in six years.
  • The annual merchandise trade deficit narrowed, thanks in part to an atypical July trade surplus and elevated commodity prices.
  • Producer input and output prices increased by 4.7% and 5.2% in the year to June.  Higher commodity prices influenced a number of industries.  Price increases were modest in the services sector.
  • Economic growth remains robust in advanced economies, however, inflation and wage growth remain subdued and risks to the outlook remain.

Economic data released through August point to a continuation of steady, moderate growth in the economy, in line with the Treasury’s expectations in the 2017 Pre-election Economic and Fiscal Update (PREFU). 

Retail spending picked up in the June quarter and momentum is likely to have continued into the September quarter, although the softening housing market may pose some risks to private consumption.  Both the volume and value of retail trade picked up in the June quarter, increasing by 2.0% and 1.6% respectively on a seasonally adjusted basis, with core retail increasing by similar amounts.  The value of core retail electronic card transactions was unchanged from June in July and consumer confidence remains relatively buoyant.  There is evidence of some Lions tour effects in the retail trade, electronic cards and visitor arrivals data, which could cause some timing related volatility in the national accounts. 

The housing market continues to slow, with seasonally adjusted house prices falling 0.4% in July and sales volumes down 3.3%.  The slowdown is most pronounced in Auckland.  The seasonally adjusted number of new dwelling consents fell for the second month in a row in July, with annual consents issued easing to 30,400.

The annual merchandise trade deficit narrowed to $3.2 billion, thanks in part to an atypical monthly July surplus.  Gains were fairly broad based on the export side, with commodity export prices fairly flat in the month, but considerably higher than a year ago.  The overseas trade indices, released after this report is finalised, but before it is published, are expected to show the terms of trade at a new 40 year high.  International tourism revenues were unchanged in the year to June 2017 at $10.3 billion.

Producer input and output prices increased by 4.7% and 5.2% respectively in the year to June 2017.  Higher commodity prices were evident in the input and output prices of a range of industries including agriculture, mining and food-related manufacturing.  Capacity pressures appear to be increasing in the construction sector, with input costs increasing at their fastest rate in six years.  Price increases were fairly muted in the services industries.

The global economy continued to expand at a healthy pace over the second quarter of 2017. Economic activity accelerated in most advanced economies. Despite the pickup in growth, inflation and wage growth remain subdued and some risks to the outlook remain.

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