(Bloomberg) — New Zealand’s economy may be headed for a hard landing after business confidence slumped in the first quarter, the NZ Institute of Economic Research said.
A net 25% of firms are pessimistic about the outlook for the economy over the next six months, up from 2% in the fourth quarter, the institute said Tuesday in Wellington in its Quarterly Survey of Business Opinion. A net 23% said their own trading deteriorated in the three months through March — the weakest reading since mid-2020 during the Covid-19 pandemic.
New Zealand’s central bank has kept interest rates high to slow demand and curb inflation, and this is showing through in squeezed company profits and job cuts, the report shows. The risk is that the economy — which has contracted for four of the past five quarters — slows even further in 2024.
“The key question is whether we are headed for a soft or a hard landing,” NZIER Principal Economist Christina Leung told a briefing. “Previously our forecast was a soft landing for the New Zealand economy. With this release, it suggests increased risk of a hard landing.”
The Reserve Bank is expected to keep the Official Cash Rate at 5.5% tomorrow, and has previously signaled it sees no scope for cuts until 2025. Most economists are tipping a monetary easing will begin in late 2024, though NZIER expects policymakers will stay on hold until May next year.
“If we are in for a hard landing or weaker activity, then naturally if it flows through into a faster slowdown in inflation, then you would expect that that will allow the Reserve Bank to cut the OCR sooner,” Leung said.
Today’s report contained little positive news. A net 11% of firms fired workers in the first quarter and just 2% expect to hire in the three months through June. A net 33% expect their profits to be weaker in the second quarter and investment intentions are falling.
Profits are declining because fewer companies plan to raise prices even as costs rise, which is good news for the inflation outlook, Leung said.
Confidence lifted in the fourth quarter after the election of a center-right government that promised to rid the economy of red tape and cut taxes.
“The post-election honeymoon is now over and the reality of a weak economy is back in the driver’s seat,” said Miles Workman, senior economist at ANZ Bank New Zealand in Wellington. “The overall vibe is a deterioration from last quarter on the activity front, with a little progress on the inflation side.”
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
