Back to top anchor
Weekly economic update

Weekly Economic Update - 26 March 2021

Weekly Economic Update 26 March 2021

Community case linked to MIQ facility

A new community case of a Managed Isolation and Quarantine (MIQ) worker in Auckland reported on Monday has been epidemiologically linked to a case in the MIQ facility. The worker is self-isolating, and no additional cases have been recorded.

Consumer confidence slips…

Consumer confidence fell by 0.8 points to 105.2 in the March quarter release of the Westpac McDermott Miller Consumer Confidence Survey (Figure 1). Confidence remains below long-run average levels, consistent with other measures of consumer confidence.

Figure 1: Consumer Confidence

Figure 1: Consumer Confidence

Source: Westpac McDermott Miller

While households are feeling more confident about their personal financial situation, they are concerned about the economy's long-run trajectory. The survey also showed a big difference in confidence levels across age groups, with younger New Zealanders (those aged 18 to 29), more concerned about their financial situation. According to Westpac, one big factor that's likely to have influenced this split in confidence across age groups is the high level of house price growth.

…and new housing policies announced

New housing policies were announced by the government this week, including the end of tax- deductible interest on investment properties, the extension of the bright-line test from 5 to 10 years, and the establishment of a Housing Acceleration Fund committed to infrastructure investment.

These polices are intended to make inroads towards addressing housing affordability by reducing investor demand for housing, thus freeing up more stock for owner occupiers, and by increasing the supply of new housing.

The annual trade surplus declines further…

The seasonally adjusted monthly trade deficit narrowed from a deficit of $673 million in January to $224 million in February as export values increased and imports fell. The annual trade surplus continued to decline from November's record high, falling to $2.4 billion. Consumption and capital goods imports were both up on an annual basis after recovering at the end of 2020 (Figure 2).

Figure 2: Imports by Broad Economic Category

Figure 2: Imports by Broad Economic Category

Source: Stats NZ

On a seasonally adjusted monthly basis, goods exports rose 1.1% in February, following two months of decreases, though values remain well below year-ago levels. Log exports fell while meat and fruit exports recovered from dips in January, and dairy products were flat. Monthly goods imports fell 7.5% after two months of increases, to be only slightly down compared to February 2020.

Growth in imports is expected to be subdued going forward, now that values are close to pre-pandemic levels. Export values will likely see more robust growth in coming months, driven by the recent strengthening in commodity prices. The annual trade balance is expected to continue declining over 2021 as last year's weakness in imports falls out of the annual balance.

Global recovery appears steady in March…

Purchasing Managers Index (PMI) readings for advanced economies show an ongoing recovery in March, with most headline indices now in expansionary territory (Figure 3). Readings for the United Kingdom (UK) and euro area both rose sharply, though the return of COVID-19 restrictions in Europe will likely result in a fall in the euro area index next month. Australia and the United States (US) remain at high levels, with virus containment in Australia and the successful vaccination programme combined with fiscal stimulus in the US helping them to outperform. Japan's index remains contractionary, with the country's state of emergency being lifted just this week.

Figure 3: Composite Output PMI

Figure 3: Composite Output PMI

Source: Haver

…but UK unemployment fall hides weakness

Despite the renewed national lockdown in January, the UK unemployment rate fell to 5.0% from 5.1% in December. This was not due to an improvement in the labour market, however, as employment numbers dropped by 147,000. The drop in the unemployment rate was instead driven by a reduction in the labour force participation rate as fewer people actively looked for jobs, likely as a result of the renewed COVID-19 restrictions.

Central banks maintain policy support…

Central banks in the UK, Japan and Thailand all maintained their low policy rates this week, and the European Central Bank increased the pace of its bond-buying programme to counter the recent sell-off in debt markets. In the US, Federal Reserve Board Governor Brainard reiterated a commitment to maintain support, noting a focus on "outcomes rather than outlook". Meanwhile, central banks in Turkey, Brazil and Russia increased policy rates amid concerns over rising inflation.

…as inflation remains subdued

Annual consumer price inflation in the UK and Japan remained subdued in February, with the annual rate falling to 0.7% in the UK and rising to 0.4% in Japan (Figure 4).

Figure 4: Consumer price inflation

Figure 4: Consumer price inflation

Source: Haver

Euro area consumer confidence jumps…

Consumer confidence in the euro area increased sharply in March, despite expectations of a fall as restrictions were tightened in several countries. The index rose to −10.8, the highest level since February 2020 but still well short of pre-pandemic levels. With virus cases continuing to rise, the recovery in consumer confidence is unlikely to be sustained over the coming months.

...despite new infections rising…

Mobility restrictions have been reinstated in France, Germany and Italy amid a surge in cases of a more transmissible strain of COVID-19. Restrictions are not as tight as during previous lockdowns, suggesting that they may be in place for longer as the countries work to vaccinate their populations.

…and vaccine distribution failing to keep pace

Difficulties with securing and distributing vaccines continue in Europe, with the European Union (EU) now taking a tougher stance on the exporting of EU-made vaccines. Securing vaccines is only part of the problem, however, given that nearly a fifth of delivered vaccines in the EU have not been used and a growing percentage of Europeans consider the AstraZeneca vaccine to be unsafe.

Date Key upcoming NZ Data Previous
30 Mar Building consents issued +2.1% (qpc)
31 Mar ANZ Business Confidence 0.0% (net)
1 Apr ANZ Consumer Confidence 113.1 (index)

High-Frequency Indicators (Domestic)

Traffic Movement

Traffic Movement

Source: Waka Kotahi NZ Transport Agency

Freight Movement

Freight Movement

Source: Waka Kotahi NZ Transport Agency

Spending by Region

Spending by Region

Source: Marketview data via MBIE

Spending by Industry

Spending by Industry

Source: Marketview data via MBIE

Jobseeker (JS) and Income Support Recipients

Jobseeker (JS) and Income Support Recipients

Source: MSD

People Movements at Selected Locations

People Movements at Selected Locations

Source: Google

High-Frequency Indicators (Global)

Trade Weighted Index

Trade Weighted Index (17 Country)

Source: RBNZ

Volatility Index

Volatility Index

Source: Haver

US Activity and Equities

US Activity and Equities

Sources: Federal Reserve Bank of New York, Haver

Labour Markets

Labour Markets

Source: Haver

COVID-19 Cases

COVID-19 Cases

Sources: World Health Organisation/Haver

World Commodity Prices

World Commodity Prices

Source: ASB

Tables

Quarterly Indicators   2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4
Real Production GDP1 qpc 0.7 0.1 -1.2 -11.0 13.9 -1.0
  aapc 2.8 2.4 1.7 -1.7 -2.3 -2.9
Current account balance (annual) %GDP -3.7 -3.3 -2.8 -1.8 -0.8 -0.8
Merchandise terms of trade apc 0.9 7.1 5.4 6.3 -0.3 -1.7
CPI  inflation qpc 0.7 0.5 0.8 -0.5 0.7 0.5
  apc 1.5 1.9 2.5 1.5 1.4 1.4
Employment (HLFS)1 qpc 0.6 0.4 1.0 -0.3 -0.7 0.6
Unemployment rate1 % 4.2 4.1 4.2 4.0 5.3 4.9
Participation rate1 % 70.7 70.4 70.7 69.9 70.1 70.2
LCI salary & wage rates - total2 apc 2.5 2.6 2.5 2.1 1.8 1.6
QES average hourly earnings - total2 apc 4.2 3.6 3.6 3.0 3.6 4.2
Core retail sales volume apc 5.4 3.3 4.0 -11.7 7.7 4.2
Total retail sales volume apc 4.5 3.3 2.3 -14.2 8.3 4.8
WMM - consumer confidence3 Index 103.1 109.9 104.2 97.2 95.1 106.0
QSBO - general business situation1,4 net% -37.1 -30.8 -67.9 -57.6 -37.6 -16.3
QSBO - own activity outlook1,4 net% -0.6 2.9 -12.9 -24.1 0.5 9.4
Monthly Indicators   Sep 20 Oct 20 Nov 20 Dec 20 Jan 21 Feb 21
Merchandise trade balance (12 month total) NZ$m 1,655 2,223 3,287 2,984 2,733 2,364
Dwelling consents - residential apc 7.7 7.2 19.9 26.9 18.0 ...
House sales - dwellings apc 41.9 30.0 34.0 46.3 6.2 14.6
REINZ - house price index apc 10.8 13.2 16.0 17.8 18.9 21.4
Estimated net migration (12 month total) people 69,341 60,060 52,019 44,127 ... ...
ANZ NZ commodity price index apc -6.5 -5.6 -10.9 -5.9 -1.6 0.1
ANZ world commodity price index apc -3.1 -2.3 -5.5 -0.4 5.2 11.1
ANZBO - business confidence net% -28.5 -15.7 -6.9 9.4 ... 7.0
ANZBO - activity outlook net% -5.4 4.7 9.1 21.7 ... 21.3
ANZ-Roy Morgan - consumer confidence net% 100.0 108.7 106.9 112.0 113.8 113.1
Weekly Benefit Numbers   12 Feb 19 Feb 26 Feb 5 Mar 12 Mar 19 Mar
Jobseeker Support number 211,026 210,573 208,335 206,541 205,446 203,925
Work Ready number 132,858 132,234 130,113 128,415 127,272 125,682
Health Condition and Disability number 78,171 78,339 78,219 78,126 78,174 78,243
COVID-19 Income Relief Payment number ... ... ... ... ... ...
Full-time number ... ... ... ... ... ...
Part-time number ... ... ... ... ... ...
Daily Indicators   Wed
17/03/21
Thu
18/03/21
Fri
19/03/21
Mon
22/03/20
Tue
23/03/21
Wed
24/03/21
NZ exchange and interest rates5              
NZD/USD $ 0.7186 0.7249 0.7158 0.7151 0.7111 0.6994
NZD/AUD $ 0.9291 0.9259 0.9245 0.9263 0.9200 0.9194
Trade weighted index (TWI) index 75.3 75.6 75.0 75.0 74.5 73.6
Official cash rate (OCR) % 0.25 0.25 0.25 0.25 0.25 0.25
90 day bank bill rate % 0.33 0.34 0.34 0.35 0.34 0.34
10 year govt bond rate % 1.73 1.79 1.84 1.82 1.71 1.57
Share markets6              
Dow Jones index 33,015 32,862 32,628 32,731 32,423 32,420
S&P 500 index 3,974 3,915 3,913 3,941 3,911 3,889
VIX volatility index index 19.2 21.6 21.0 18.9 20.3 21.2
AU all ords index 7,048 7,004 6,960 6,995 6,987 7,014
NZX 50 index 12,622 12,496 12,515 12,329 12,394 12,359
US interest rates              
3 month OIS % 0.07 0.07 0.07 0.07 0.07 ...
3 month Libor % 0.19 0.19 0.20 0.19 0.20 ...
10 year govt bond rate % 1.63 1.71 1.74 1.69 1.63 1.62
Commodity prices6              
WTI oil US$/barrel 64.55 59.95 61.43 61.48 57.75 61.18
Gold US$/ounce 1,730 1,725.90 1,735.20 1,736.15 1,726.20 1,730.50
CRB Futures index 498 498.87 505.03 506.84 507.65 506.74

Data in Italic font are provisional.
... Not available.

(1) Seasonally adjusted
(2) Ordinary time, all sectors
(3) Westpac McDermott Miller
(4) Quarterly Survey of Business Opinion
(5) Reserve Bank (11am)
(6) Daily close

Country Indicator Aug 20 Sep 20 2020Q3 Oct 20 Nov 20 Dec 20 2020Q4 Jan 21 Feb 21 Mar 21
United
States

[9.6%
share of
total goods
exports]
GDP1 qpc     7.5       1.0      
Industrial production1 mpc 1.0 -0.1   1.0 0.9 1.0   1.1 -2.2 ...
CPI apc 1.3 1.4   1.2 1.2 1.4   1.4 1.7 ...
Unemployment rate1 % 8.4 7.8   6.9 6.7 6.7   6.3 6.2 ...
Employment change1 000s 1583.0 716.0   680.0 264.0 -306.0   166.0 379.0 ...
Retail sales value apc 3.6 6.1   5.4 3.8 2.3   9.5 6.3 ...
House prices2 apc 5.4 6.7   8.1 9.2 10.1   ... ... ...
PMI manufacturing1 index 55.6 55.7   58.8 57.7 60.5   58.7 60.8 ...
Consumer confidence1,3 index 86.3 101.3   101.4 92.9 87.1   88.9 91.3 ...
Japan
[6.1%]
GDP1 qpc     5.3       2.8      
Industrial production1 mpc 1.0 3.9   4.0 -0.5 -1.0   4.3 ... ...
CPI apc 0.1 0.0   -0.4 -0.9 -1.1   -0.6 -0.4 ...
Unemployment rate1 % 3.0 3.0   3.1 3.0 3.0   2.9 ... ...
Retail sales value apc -1.9 -8.7   6.4 0.6 5.0   2.7 ... ...
PMI manufacturing1 index 47.2 47.7   48.7 49.0 50.0   49.8 51.4 ...
Consumer confidence1,4 index 29.3 32.8   33.3 33.6 31.8   30.0 33.7 ...
Euro area
[5.5%]
GDP1 qpc     12.5       -0.7      
Industrial production1 mpc 0.9 0.1   2.5 2.2 -0.1   0.8 ... ...
CPI apc -0.2 -0.3   -0.3 -0.3 -0.3   0.9 0.9 ...
Unemployment rate1 % 8.7 8.6   8.4 8.1 8.1   8.1 ... ...
Retail sales volume apc 4.5 2.5   4.4 -1.9 0.9   -6.4 ... ...
PMI manufacturing1 index 51.7 53.7   54.8 53.8 55.2   54.8 57.9 ...
Consumer confidence5 index -14.6 -13.6   -15.5 -17.6 -13.8   -15.5 -14.8 -10.8
United
Kingdom

[2.7%]
GDP1 qpc     16.1       1.0      
Industrial production1 mpc 0.5 0.7   0.9 0.3 0.2   -1.5 ... ...
CPI apc 0.2 0.6   0.7 0.4 ...   ... ... ...
Unemployment rate1 % 4.5 4.8   4.9 5.0 5.1   5.0 ... ...
Retail sales volume apc 2.7 4.5   6.0 2.3 3.1   -5.9 ... ...
House prices6 apc 3.7 5.0   5.8 6.5 7.3   6.4 6.9 ...
PMI manufacturing1 index 55.2 54.1   53.7 55.6 57.5   54.1 55.1 ...
Consumer confidence1,5 index -27.0 -25.0   -31.0 -33.0 -26.0   -28.0 -23.0 -16.0
Australia
[15.8%]
GDP1 qpc     3.4       3.1      
CPI apc     0.7       0.9      
Unemployment rate1 % 6.8 6.9   7.0 6.8 6.6   6.3 5.8 ...
Retail sales value apc 5.4 6.6   7.7 12.1 10.3   10.3 ... ...
House Prices7 apc     5.0       4.3      
PMI manufacturing1 index 49.3 46.7   56.3 52.1 55.3   55.3 58.8 ...
Consumer confidence8 index 79.5 93.8   105.0 107.7 112.0   107.0 109.1 111.8
China
[24.3%]
GDP apc     4.9       6.5      
Industrial production apc 5.6 6.9   6.9 7.0 7.3   35.1 35.1 ...
CPI apc 2.4 1.7   0.5 -0.5 0.2   -0.3 -0.2 ...
PMI manufacturing1 index 51.0 51.5   51.4 52.1 51.9   51.3 50.6 ...
South
Korea

[3.0%]
GDP1 qpc     2.1       1.2      
Industrial production1 mpc 0.7 3.1   -0.5 0.5 2.7   -1.6 ... ...
CPI apc 0.7 1.0   0.1 0.6 0.5   0.6 1.1 ...

(1) Seasonally adjusted
(2) Case-Shiller Home Price Index 20 city
(3) The Conference Board Consumer Confidence Index
(4) Cabinet Office Japan
(5) European Commission
(6) Nationwide House Price Index
(7) Australian Bureau of Statistics
(8) Melbourne/Westpac Consumer Sentiment Index

Last updated: 
Friday, 26 March 2021