NZ truckometer: lower revs

At ANZ Research we are unabashed truck spotters – but for what they tell us about the economy. Cars too.

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And what they are saying is the New Zealand economy may be losing some grunt

"If we do not see a significant bounce-back the trend will soon start to decline more markedly.”

There are two indexes in the ANZ Truckometer suite. The Heavy Traffic Index (mostly trucks, a few buses) tells us what is happening in the economy now. The Light Traffic Index (mostly cars, some vans) leads the economy by six months.

Let’s start with the trucks.

The ANZ Heavy Traffic Index was correct in foretelling September quarter GDP growth would be modest (it came out at 0.3 per cent quarter on quarter). With the weak December month read dragging down the December quarter, it is now suggesting a pretty limited bounce-back in the last three months of the year.

The Heavy Traffic Index is pretty volatile but once the data is smoothed to reduce noise, the recent fall doesn’t look like a big deal particularly. However it is pretty clear if we do not see a significant bounce-back the trend will soon start to decline more markedly.

Turning to the cars and vans, the Light Traffic Index has a pretty good relationship with annual GDP growth six months later. You can play with the axes to make the levels look more or less scary as you prefer but the downward trend in annual growth is getting harder to ignore. Indeed, we’ve just seen the weakest quarterly growth in the Index since 2012. Higher petrol prices will have played a part here, so let’s hope subsequent declines will help out. But it will take more than a one-month bounce to turn it around.

At ANZ Research we’ll keep on truckin’. Whether the economy will continue to do so with the same drive is looking a little doubtful.

Sharon Zollner is Chief Economist NZ at ANZ

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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13 Jan 2017

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