BNZ Weekly Overview March 8

Welcome to the March 8 2012 issue of the BNZ Weekly Overview.

This week we released the results of our monthly BNZ Confidence Survey and BNZ-REINZ Residential Market Survey. The former showed a rise in sentiment to a six month high of a net 27% optimistic. The latter showed further evidence of investors starting to follow the wave of first home buyers entering the market with Auckland leading the housing market forward. Good results basically.

On the data front we have learnt that registrations of cars fell more between January and February than in any year bar 2009, that in the past three months commercial vehicle registrations have declined 10%, but tractor regos were ahead a reasonable 5% and dwelling construction rose 3% in the December quarter. So we continue to get mixed data though we retain our view that “at some stage” growth is going to get a firm lift from farmers spending record incomes, householders growing comfortable with debt levels and catching up on delayed durable goods spending, and the Christchurch residential rebuild getting a full head of steam.

Yet this morning the Reserve Bank placed high weight on the restraining influence on inflation from the high NZD, slashed their inflation predictions, and now forecast only 0.5% worth of official cash rate rises between now and the end of 2013, starting late this year perhaps. The outlook for NZ interest rates remains low but the gap between floating and fixing is as low as we think it will get so those wanting the security of fixing have little incentive for holding off – even though we do not expect fixed rates to shoot up to any major degree in the next wee while.

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