The ANZ bank’s ‘truckometer’ gave up some of its gains last month, with heavy traffic making an expected fall.
The ‘truckometer’ system is based on monitoring selected roads for traffic flow, which has proven to be a relatively good indicator of the economic condition of the country.
The ‘truckometer’ jumped sharply in May (+4.1%), but gave up around half of these gains in June (-1.9%).
ANZ senior economist Sharon Zollner says the division between heavy and light transport showed some interesting trends.
“The heavy traffic index has the closest fit to GDP over history, whereas the light traffic has given some false steers in the past through having larger cycles,” says Zollner. “However, the six-month lead the light traffic index gives is hugely useful.
“The heavy traffic (>3.5 tonnes) index fell right back to trend (or lower), as we expected,” Zollner says. “This is consistent with our interpretation that the leap in May was largely due to an extremely strong end to the dairy season.”
The truck index went against the predictions of light traffic.
“This is quite a contrast with the message coming from the light traffic index,” she says. “The light traffic index fell in the latter months of 2011, suggesting, given its six-month lead to growth, a negative GDP outturn in Q2.”
“We are therefore left with a mixed story for Q2 – weak base economic momentum “saved” to some extent by extremely strong primary production. We’ll have to wait for Q2’s partial indicators to get the full story.”
“There is a lot going on in the New Zealand economy at present. Prudent debt repayment is going head-to-head with a broadening housing market upswing,” Zollner explained. “An exceptional growing season has now come to an end; the global outlook is worsening; commodity prices are volatile; an earthquake rebuild is pending. It makes for confusing times and mixed messages.
“The messages coming from traffic flows are also mixed at present,” she says. “But it is certainly encouraging that the downward trend in the ‘truckometer’ evident at the end of last year, now looks more like a pothole than the start of a slippery slope.”
