Taking the definition of inflation as an increase in the price level of goods and services that the Reserve Bank of New Zealand (RBNZ) uses. And combined with the Policy Targets Agreement (PTA) which specifies that this measure should remain at 2% on average we could be forgiven for thinking inflation is a non-issue right now.
The scale of our migrant flows for the last three years are quite out of the ordinary.
With the continuing solid foundation of strong employment growth and tourist visitor arrivals, the retail sector remains in buoyant mood. The core sector, which excludes motor vehicle related industries, is registering sales close to 5% above those of the previous year. While slightly below the heady heights of 6% to 7% growth in earlier years, sales continue to expand in an accommodative environment. Low interest rates, solid house prices, and a positive employment picture add to the confident consumer story that keeps the tills ringing. Deducting the impact of price inflation, the volume of sales are still expanding at a respectable 4% per annum.
Despite some glib talk about there being a post-industrial age, or a sector in crisis, Manufacturing in New Zealand has continued to grow in the longer term, at least in terms of production.
In the year to March 2017, the US economy grew by 1.9 percent. As shown in the figure below this is down slightly on the 2 percent growth seen in December 2016, and below the average growth across the last five years of 2.1 percent.
The Real Estate Institute of New Zealand (REINZ) has introduced a new house price index (HPI). It improves on the previous index by better accounting for the quality-mix of real-estate sales. The quality-mix of houses sold will differ from period to period, making it difficult to unpick whether price changes reflect genuine movements in underlying house prices or simply changes in the quality-mix of houses sold.
The good news from the GDP data for the March 2017 quarter was of continued growth, with expansion of 3.1% for the year confirmed. However, the good news hid the rather sobering news of the export sector contracting for the third consecutive quarter. Consequently, exports for the March year reportedly grew by a meagre 1.2%, as meat, textiles, and metal and machinery products all slumped with sizable negative growth recorded.
Merchandise exports have been pretty flat for around two years, with a slight uptick near the end of the last period for which we have data.
The 12-month running total for residential building consents stood at 30,571 in May 2017. Year-on-year, residential building consents were up eight percent with consents for residential housing in Wellington, Auckland, Otago and Waikato leading the way. Canterbury and Gisborne saw a slowdown, with consents down in May 2017 compared to May 2016. Annualised totals, as shown in the figure below, indicate that consents could potentially hit the 31,000 mark in June 2017, and are well ahead of the 29,100 consents witnessed in the 12 months to June 2016
The official Press Release for the March quarter 2017 GDP said that the fall-back in construction was to some extent compensated for by the increase in agricultural GDP. It is true that agricultural GDP in March quarter had increased by 4.3%, or 2.8% inflation adjusted, but that may well have been a seasonal effect. That was the increase over the preceding quarter, December quarter 2016. The March quarter 2017 agricultural GDP was just 0.25% greater than the similar seasonal March 2016 quarter, inflation adjusted.