February 17 issue of the BNZ Weekly Overview

This week we have learnt nothing of startling importance regarding the current state of the NZ economy or where we think we are headed. Retail trade data for the December quarter were very weak and they just confirm what we already know regarding consumers keeping their wallets closed and paying down debt. The January real estate numbers were however weaker than we thought they might be so that restraint in household spending is still extending into not buying houses. Guessing when this will change is an impossible task because no models tell us how household savings behaviour changes after a global financial crash.

We saw some good real estate numbers from the farming sector however backing up our view that farmers are increasing their spending.

We start this week?s Overview with some thought?s regarding the low NZD/AUD exchange rate making NZ a more attractive location perhaps for some Australian manufacturing activities. We also briefly comment on the aging of the population which is now underway in earnest and how when combined with what we think could be a phenomenal loss of skilled people to Australia in the next two years will place a lot of pressure on businesses to increase their sourcing of staff from other countries.

Wholesale interest rates have done nothing over the week but the NZ dollar has shed almost two cents against the greenback in response to the weak retailing numbers and a few jitters regarding Portugal causing global risk tolerance to fall.

Click here for full PDF of February 17 issue of the BNZ Weekly Overview: http://img.scoop.co.nz/media/pdfs/1102/WOFeb17.pdf

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