New Zealand Exports, Building Approvals Data Underscore Sluggish Recovery
A gauge of homebuilding in New Zealand fell for a third month in September and exports were less than economists predicted, adding to the case for sluggish economic growth and no change in interest rates until next year.
Exports were NZ$3.16 billion ($2.4 billion) in September, less than the NZ$3.3 billion median expectation in a Bloomberg News survey of nine economists, Statistics New Zealand said today in Wellington. Homebuilding approvals excluding apartments fell 2.6 percent from August to a 14-month low, a separate report showed.
Falling domestic demand, a weak housing market and a slump in consumer confidence have curbed economic growth and add to signs that central bank Governor Alan Bollard won’t raise borrowing costs for the rest of this year. Yesterday, he kept the official cash rate at 3 percent for a second month, while saying monetary policy support will be removed at some stage.
“It’s consistent with very moderate, modest growth,” said Craig Ebert, senior markets economist at Bank of New Zealand Ltd. in Wellington. “It’s good that it’s not going backwards but nor is it going forward with any gusto.”
All 14 economists surveyed by Bloomberg News yesterday expect Bollard will keep the cash rate unchanged at his next reviews in December and January before a likely quarter-point increase in March.
Gross domestic product rose 0.2 percent in the second quarter and growth is also likely to be subdued in the third quarter, Ebert said. He forecasts 0.5 percent.
Growth estimates are complicated by effects on activity from the magnitude 7 earthquake that rocked Canterbury province on Sept. 4. Statistics New Zealand today said some of the weakness in building approvals was exacerbated by the temblor, which closed council offices and disrupted consent processing.
Consumer confidence fell to a 14-month low in October, according to an index from ANZ National Bank Ltd. and Roy Morgan Research.
“There is a view the New Zealand economy is somewhat fragile,” Nigel Morrison, chief executive officer of Sky City Entertainment Group Ltd., the nation’s largest casino operator, said today in an interview.
“We know the economy is still challenging in New Zealand and we have to work very hard to do better than the economy,” he said. “There’s still a lot of companies in Auckland finding business tough.”
Exports rose 0.3 percent from August led by milk powder, butter and cheese, today’s report showed. Third-quarter exports fell 2.5 percent from the second quarter, the statistics agency said, citing data adjusted for seasonal changes.
In September, total homebuilding approvals were little changed near a 13-month low, the statistics agency said today.
Economists prefer to look at homebuilding approval figures that exclude apartments because of the volatility of approvals for large projects.
“Activity is going to remain weak for the remainder of the year if not into the early part of next year,” Ebert said.
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