7 Apr 2014
New Zealand quarterly business confidence eyed - BNZ
FXStreet (Bali) - According to Stephen Toplis, Head of Research at BNZ, the most important domestic report in New Zealand this week is Tuesday morning’s Quarterly Survey of Business Opinion (QSBO), noting that chances are quite good it will come stronger than last read.
Key Quotes
"In terms of headline numbers, though, it’s worth bearing in mind that seasonal impacts are normally depressing for the March quarter. This is presumably as the festive rush is fading from the system. And so even if net confidence “stalls” around last quarter’s highly creditable +52, it would imply a further gain in seasonally adjusted terms."
"While we expect QSBO to log very strong business confidence in the general economic outlook, we’ll be more interested in its activity and capacity measures. On activity, note that trading condition reports covering the last three months normally reduce for Q1. So as long they hold in the teens they will be consistent with our expectations that Q1 GDP expanded 1.0%. We don’t think we’re asking too much on this."
"As for QSBO respondent expectations for their activity over the coming three months – let’s call it Q2 – anything around the +30 mark (as was registered in the previous survey) would be high enough to suggest GDP growth is probably picking up the pace. This will keep our GDP forecasts for this year on their toes, should they need to be revised up to more than solid."
"But if we had to single out the most important category of numbers in QSBO it would be those to do with the labour market. Something looks to be going nuts on this front. The latest example came from today’s Trade Me job advertising results. For the March quarter these were up 21% on a year ago, following a 17% annual gain in the December quarter. If this can be taken as a proxy for job security then it’s looking very good indeed for households."
"From the point of the business sector, however, the implication is staffing constraints (booming immigration will help in this respect, but only to be outpaced by the strength of demand for employees). And so the QSBO staffing constraint variables will be worth their weight in gold. They had already crept up into a zone indicative of a modest tightening in the labour market through 2013. We expect the reported difficulty in finding staff in tomorrow’s survey – whether for the skilled or unskilled – becomes more noticeable. Following the logic, a pick-up in wage and salary inflation can’t be too far off."
"As such, the labour market data will probably be more informative of core inflation trends and risks than will immediate pricing intentions regarding products and services. The latter are still being suppressed, for the meantime, by the high NZ dollar and this should be borne in mind when reading QSBO's results in this regard."
Key Quotes
"In terms of headline numbers, though, it’s worth bearing in mind that seasonal impacts are normally depressing for the March quarter. This is presumably as the festive rush is fading from the system. And so even if net confidence “stalls” around last quarter’s highly creditable +52, it would imply a further gain in seasonally adjusted terms."
"While we expect QSBO to log very strong business confidence in the general economic outlook, we’ll be more interested in its activity and capacity measures. On activity, note that trading condition reports covering the last three months normally reduce for Q1. So as long they hold in the teens they will be consistent with our expectations that Q1 GDP expanded 1.0%. We don’t think we’re asking too much on this."
"As for QSBO respondent expectations for their activity over the coming three months – let’s call it Q2 – anything around the +30 mark (as was registered in the previous survey) would be high enough to suggest GDP growth is probably picking up the pace. This will keep our GDP forecasts for this year on their toes, should they need to be revised up to more than solid."
"But if we had to single out the most important category of numbers in QSBO it would be those to do with the labour market. Something looks to be going nuts on this front. The latest example came from today’s Trade Me job advertising results. For the March quarter these were up 21% on a year ago, following a 17% annual gain in the December quarter. If this can be taken as a proxy for job security then it’s looking very good indeed for households."
"From the point of the business sector, however, the implication is staffing constraints (booming immigration will help in this respect, but only to be outpaced by the strength of demand for employees). And so the QSBO staffing constraint variables will be worth their weight in gold. They had already crept up into a zone indicative of a modest tightening in the labour market through 2013. We expect the reported difficulty in finding staff in tomorrow’s survey – whether for the skilled or unskilled – becomes more noticeable. Following the logic, a pick-up in wage and salary inflation can’t be too far off."
"As such, the labour market data will probably be more informative of core inflation trends and risks than will immediate pricing intentions regarding products and services. The latter are still being suppressed, for the meantime, by the high NZ dollar and this should be borne in mind when reading QSBO's results in this regard."