7 Jul 2015
RBNZ scratching its head after NZ business survey? - ANZ
FXStreet (Bali) - Cameron Bagrie, Chief Economist at ANZ, shares her insights after the poor NZIER business survey read, saying that there are signs of firms acting in a leaner manner, adding that the unexpected high capacity utilisation will have the RBNZ scratching its head.
Key Quotes
"The QSBO contained softer nuances, but far from pointed to an economy on its knees. Overall, the survey was very similar in tone to our own Business Outlook, with a number of indicators holding up ok (employment and investment intentions). That said, there were some warnings in weak profitability expectations. Price gauges remained particularly weak as per our Monthly Inflation Gauge for Q2, although there was a warning shot from high capacity utilisation. This will have the RBNZ scratching its head, as are we. There is a sense that there could be a real margin squeeze story across the economy in the coming year."
"The NZIER note signs of firms acting in a leaner manner (historically low levels of firms reporting excess stock). We concur with this anecdotally and it ties in with views on better productivity performance. But we are not sure the survey completely corroborates it. The evidence is tentative at best. The CUBO uplift will therefore remain something the RBNZ will be watching closely. That said, clearly we have little sign of inflation and the tension between that and capacity measures still suggests something else is going on with regard to the evolution of inflation. And it's not cyclical."
Key Quotes
"The QSBO contained softer nuances, but far from pointed to an economy on its knees. Overall, the survey was very similar in tone to our own Business Outlook, with a number of indicators holding up ok (employment and investment intentions). That said, there were some warnings in weak profitability expectations. Price gauges remained particularly weak as per our Monthly Inflation Gauge for Q2, although there was a warning shot from high capacity utilisation. This will have the RBNZ scratching its head, as are we. There is a sense that there could be a real margin squeeze story across the economy in the coming year."
"The NZIER note signs of firms acting in a leaner manner (historically low levels of firms reporting excess stock). We concur with this anecdotally and it ties in with views on better productivity performance. But we are not sure the survey completely corroborates it. The evidence is tentative at best. The CUBO uplift will therefore remain something the RBNZ will be watching closely. That said, clearly we have little sign of inflation and the tension between that and capacity measures still suggests something else is going on with regard to the evolution of inflation. And it's not cyclical."