The BusinessNZ planning forecast shows the sun is still shining on the New Zealand economy.
Indicators, including exports, freight movement, investment and employment, are all positive. Investment in plant, machinery and equipment is currently at its highest ever level.
For the first time since June 2008 there have been three consecutive quarters of increased investment in plant, machinery and equipment.
The BNZ-BusinessNZ performance of manufacturing index (PMI) and performance of services (PSI) index are showing strong expansion in these sectors.
The ANZ Bank truckometer which measures heavy traffic movements, has continued to show strong growth over recent months. BusinessNZ says historically there has been a relatively close relationship between this index and future GDP growth.
BusinessNZ chief executive Phil O’Reilly says many of the indicators, such as freight movement and investment in plant, are forward-looking and bode well for future economic strength.
But he says there are also potential risks to the economy from over-reliance on trade with China and Australia, the impact of interest rate rises, household and farm debt, and regulatory uncertainty.
The BusinessNZ planning forecast incorporates BusinessNZ’s economic conditions index (ECI) which tracks 33 indicators, including GDP, export volumes, commodity prices and inflation, debt and confidence figures.
The ECI sits at 17 for the March 2014 quarter, up 4 on the previous quarter and up 3 on a year ago.
