The ANZ Truckometer moved ahead in June, and a pickup in light traffic activity signals a continuation of strong economic momentum along the road.
Both the Heavy Traffic Index at 4.7% and the Light Traffic Index at 2.8% lifted during the month.
“Despite the strong increase in the Heavy Traffic Index in June it suggests weaker economic growth in the second quarter than was seen in the first,” says ANZ senior economist Sharon Zollner.
“That said, this index has been volatile recently, likely reflecting mixed fortunes in the agriculture sector.
“Annual growth in the Heavy Traffic Index on a three-month average eased a touch to 4%, suggesting annual GDP growth of 2-3%, though confidence surveys suggest a higher range.”
Zollner explains that after a dip in May, the Light Traffic Index is back in the fast lane, suggesting strong momentum in the economy is set to continue.
“This index, which gives a six-month lead on the economy, has had a very strong upward trend in recent years and annual growth, at 5.3% on a three-month average, is the strongest since 2003. Strong population growth is no doubt a factor,” she points out.
“Economic indicators are suggesting interest rate sensitive parts of the New Zealand economy are accelerating, offsetting dairy sector challenges. However, the quality of overall growth is deteriorating accordingly, becoming more dependent on borrowing.
“Exceptionally easy monetary policy globally limits the Reserve Bank’s ability to raise rates without putting a rocket under the New Zealand dollar. So we are anticipating a prompt macroprudential response to the housing boom. This could cool activity. Developments offshore are also a key risk factor for the economy.”
The ANZ Truckometer is a measure of economic activity using real-time hard traffic data from around New Zealand as opposed to measuring sentiment.
