Plunging business confidence and easing consumption should suppress import growth. Should the economic slowdown be more pronounced than expected, the trade deficit may have benefited. |
The New Zealand dollar continues to be hampered by the recent swag of weak economic data. We suspect the currency will continue to come under pressure. |
The news will be frowned on by the Reserve Bank, which has yet to see a sustained easing in the housing market. |
The significant drop in residential approvals (excluding apartments) suggests the impact of consecutive rate hikes in late 2005 may be finally taking hold, although we remain wary of calling a downward trend after just one month of negative data in this volatile series. |
With successive (interest) rate hikes in late 2005, inflation easing and the domestic economy in a slowdown phase, we believe the Reserve Bank will keep rates on hold over the near-term. |