The ANZ Truckometer light traffic index fell 2.8% month-on-month in April while the heavy traffic index fell 2.2%.
The Q1 traffic data suggests a small lift in activity in the quarter, consistent with ANZ’s forecast. Falling traffic volumes in April marked a weak start to Q2, but weather could again be playing a role, ANZ chief economist Sharon Zollner says.
“Light traffic dipped in April but remains within recent ranges. Typically, the data provides a six-month lead on momentum in the economy, but COVID lockdowns have played havoc with the data.
“The extreme volatility caused by lockdowns makes any other variation look small, but given it remains well off its peaks, overall the data can be characterised as consistent with consumer spending cooling as RBNZ rate hikes continue to bite.
“Heavy traffic tends to provide a good steer on production GDP. Over Q1 the heavy traffic index was consistent with our expectation that the economy eked out modest growth, but a 2.2% fall in April sees Q2 set out on the wrong foot.
“Expectations of recession this year are widespread, but so far, traffic data is holding up pretty well. We are forecasting the ‘real’ recession to start in the third quarter of this year, but soaring net migration and expansionary fiscal policy mean this is far from a given.
“But at the end of the day, if the RBNZ concludes that a marked slowdown is the price of getting inflation down, they’ll keep hiking rates until they get it,” Zollner says.
