ANZ's Heavy Traffic Index rose 1.6% in June but ended up down 1% for the June quarter, which suggests Gross Domestic Product (GDP) growth will be weak or possibly even negative, towards the end of the year, according to the bank's Truckometer report.
The Index measures the traffic of vehicles weighing more than 3.5 tonnes at various points around the country and is regarded as an early predictor of movements in GDP.
ANZ also produces a Light Traffic Index which tracks flows of smaller vehicles, mainly cars and vans, at selected points around the country.
It rose by 0.9% in June but was up just 0.1% in the June quarter compared to the previous quarter, which also suggested a flattening of the economy, the bank said in the Truckometer report
And while the rebound in both indices in June was welcome, the overall trend remained soft and the 1% decline in the Heavy Traffic Index suggested the economy grew little and may have even contracted slightly in the June Quarter, the report said.
That is a concern because if the GDP figures eventually mirror that trend and show a decline, and then decline again for a second successive quarter, the country will officially be in recession.
"It's encouraging to see a rebound in traffic flows over June," ANZ said in the report.
"However , it's clear that the New Zealand economy has slowed markedly in recent months; the rebound in our Heavy Traffic Index is tepid given the it followed five months of declines.
"We expect the OCR to be cut again this month."
You can read the full Truckometer report here:
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7 Comments
Eventually we'll realize that paying expensive mortgages and redirecting productive investment towards non-productive "investment" (like acquiring non productive assets) is extremely harmful for any economy in the mid-long term.
And when that happens, not only the productive economy will be already seriously damaged and unemployment spreading but also the financial economy will collapse to meet the real one affecting the whole financial system and hurting also the healthy businesses.
In other words, What were we expecting? to get richer by selling houses to each other without paying any attention to growth through productivity increases? to keep increasing milk exports and over-investing in an already saturated market while production costs kept rising, and global commodity prices decline? to keep growing based on unusual positive migration flows and damaged cities rebuilding?
And yes, RBNZ can lower again interests but the only we will get is some kind of relief in over indebted businesses and families to slowly trying to deleverage, but consumption won't increase until the assets bubble bursts. The sooner the better.
Wrong path, again. Haven't we learned anything from EU and USA failed attempts to reactivate the economy?
Yet debt is growing..
Every sane man would know this. I bet most of politicians know that as well.
But, which way is a quicker, easier, and effortless way to get to a seemingly well performed economy? Of course, selling each other and oversea buyers assets, therefore bidding up prices.
Given the political system that NZ is running, it is hard to envisage any real economic development coming from inside.
Together with the fact that all our major trading partners are, have been or slowly heading towards slowing economies, this problem won't be solved in years.
We could turn to a consumer lead economy, but most are still paying from the last consumer lead economy (2002-2007).
We could turn to the government to spend on infrastructure, but that fact that debt is already rising, how much can we rely on this?
So yes there will either be a slow deleveraging of debt, both in the public and private sector, but this will compound our problems with GDP, and take more than a lifetime,
or a bubble will go bang, we will be in pain for a decade or so, then slowly and very slowly regain some faith.
or more likely continue like the US, Japan etc to live past our means, and keep increasing debt levels around the world, and maybe because most of the world is in a similar boat, the system will keep adapting to support this model.
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