The ANZ Truckometer light traffic index lifted 15.7% month-on-month in December as the Auckland border opened, while the heavy traffic index eased 0.6% m/m.
ANZ chief economist Sharon Zollner says COVID disruptions are likely to continue to cause volatility in both traffic data and economic activity.
“December brought more volatility in traffic flows. The lifting of the Auckland boundary saw car traffic bounce.
“Heavy traffic is not far off pre-Delta levels but light traffic still has a way to go.
“Regional travel restrictions have lessened the usefulness of light traffic in particular as an economic indicator. Flows should normalise now, but whether the economic impact of the looming Omicron outbreak is captured in traffic data is a lottery.
“Heavy traffic is the more useful indicator in these strange times. Over Q4 as a whole the index was up 5.3%. This is consistent with our early Q4 GDP pick for a 2.5% increase (heavy traffic moves roughly twice as much as GDP). This represents a partial bounce-back from the lockdown-induced 3.7% fall in GDP in Q3.
“Both traffic and other economic data are going to remain volatile for a few months yet as the impacts of the previous lockdown work through and inevitably, Omicron hits.
“When the dust settles, we expect a slower pace of growth as consumers digest the new reality of higher interest rates, and the housing boom recedes. But that’s not a bad thing – getting the economy back on a more sustainable path is important.
“The challenge is that inflation pressures are looking extreme, giving the RBNZ limited headroom to take downside risks into account as they reaffirm their inflation-targeting prowess.
“After a whopping, highly inflationary boom, risks of an eventual hard landing are very real – and certainly not just in New Zealand”.
