The New Zealand Activity Index (NZAC) was launched today to provide a more granular and timelier signal of movements in the New Zealand economy. It has been constructed by staff at the Treasury, Statistics New Zealand and the Reserve Bank of New Zealand.
The NZAC index summarises changes in several monthly activity indicators. The first edition of the index shows that activity in April 2020 was 19% down on the same month last year and, even though activity bounced back in May, it still remained 6.5% down on May 2019. The May rebound was driven largely by sharp bounces in electronic card spending and light and heavy traffic movements (all up more than 80% on activity in April). Other contributing indicators, such as electricity grid demand, the BNZ-BusinessNZ Performance of Manufacturing Index (PMI) and the ANZ activity outlook, also saw an encouraging uptick in May - as did labour market indicators.
While the NZAC is not an official statistic, it is a composite index that seeks to track New Zealand’s economic activity each month. Methodology and data sources will continue to be refined.
"This is an exciting new collaboration that we see as providing further timely insight for government, policy makers, economists and the general public into the impacts of COVID-19 on New Zealand’s economy and how its recovery is tracking," said Stats NZ General Manager of Economic and Environmental Insights Richard Evans.
The NZAC is not an interim estimate of GDP; rather, it summarises eight monthly indicators of economic activity covering consumer spending, unemployment, job vacancies, traffic volumes, electricity generation, economic outlook and manufacturing expectations. It will be updated around 14 days after the end of each month.
"In essence, the NZAC index is a weighted average of these underlying indicators and provides a more comprehensive measure than each individual indicator by itself," said Treasury Chief Economic Advisor Tim Ng.
"We have aimed to strike a good balance between including enough key indicators to ensure a good quality index, and maintaining timely publication," said Mr Ng.
Data that goes into making the monthly index will be hosted on the Stats NZ COVID-19 data portal, making it available for everyone to download and use.
"The data portal that Stats NZ began developing during the lockdown period gathers high frequency and near real-time economic indicators to help track the impact of COVID-19. This new data series will add to the wealth of information already available," said Mr Evans.
The new NZAC Index will be published each month on the Treasury website alongside its other economic commentary products.