New Zealand economy shows some signs of picking up

The fundamental data given some positive signs about the New Zealand economy after the natural disaster that hit the economy this week, where the NZ retail sales soared during the first quarter, adding that the economic recovery starts its rebounding curve. 

New Zealand retail sales ex. inflation index has increased to 0.9% during the first three months of this year, after a drop by 0.4% a year earlier, while the actual reading came inline with the analysts' expectations that referred to 0.9%. 

Retail Sales index is one of important indicators that indicating to consumers spending, where we can see that the improvement in New Zealand retail sales index in May will help the economy to recovery and fight negative results that caused by natural disaster, along with the keeping borrowing costs near of their lowest levels. 

As for the negative results that hurt the New Zealand economy after the earthquake, the RBNZ governor Mr. Alan bollard kept this month the interest rates steady at their lowest level at 2.50% to revive the economy from its hurdle phase. 

Rising consumer spending and employment add to evidence the nation’s economy grew modestly in the first quarter, buoyed by record-low interest rates and a surge in commodity prices. Continued growth in domestic demand this year may prompt central bank Governor Alan Bollard to raise interest rates as early as the fourth quarter. 

On of the main factors that may help consumers spending to increase is the labor market improved during the period, with the improvement in labor market will fuel income of workers, supporting the spending cycle on goods and sales. 

Meanwhile, there are signs indicate that the New Zealand monetary policy maker will keep the rates unchanged steady at 2.50% until this year due to the economic growth is to be slow. In March, Bollard cut the key rate by half a percentage point after earthquakes. 

Moreover, today’s report showed that first-quarter sales were led higher by a 6.3% rise in vehicle and parts sales, while fuel sales fell 3.9% while supermarket and grocery store purchases declined 0.4%.