In particular, the quarterly change in the ANZ Light Traffic Index turned negative for the first time in more than three years in the December quarter.
"It might be wise to ease off the accelerator for a while if a boom/bust scenario is to be avoided."
Sharon Zollner, Associate Director & Senior Economist ANZ NZ
Given the index leads the economy by half a year, this suggests the New Zealand economy is set to slow heading into the middle of 2017.
This is not the same as saying the end of the good times is nigh. In ANZ’s view an easing in growth wouldn’t be surprising or alarming – the economy is hitting speed limits with regard to labour supply and credit growth.
In fact, it might be wise to ease off the accelerator for a while if a boom/bust scenario is to be avoided.
Households are vital to determining which path the economy goes down. In that light, the negative surprise in December card spending suggests a bit more restraint is being exercised than is typically seen during periods of strong house-price growth (like New Zealand has recently experienced).
It’s a bit tough on retailers in the near term, who may be disappointed with their Christmas takings, but steady-as-she-goes is in everyone’s interests in the longer run.
The ANZ Heavy Traffic Index comprises flows of vehicles weighing more than 3.5 tonnes (primarily trucks) on 11 selected roads around NZ. It is contemporaneous with GDP growth.
Sharon Zollner is an Associate Director & Senior Economist, ANZ NZ
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
10 Jan 2017
19 Dec 2016
16 Dec 2016