New Zealand Is On The Curve of Recovery

The Outlook for New Zealand Economy Improves Despite the June Quake 

The New Zealand economy has entered into the recovery curve before the June earthquake, and still gives a positive signs for the economic rebounding. However, consumer confidence in New Zealand rose this quarter along with the expanded manufacturing sector to the fastest level in about a year. 

New Zealand's economy has ability to exit from the hurdle phase that faced after the February quake, while the nation has a lot of resources that help the economy to rebound once again this quarter. 

On the other hand, the New Zealand policy makers decided to leave the rates at a record low 2.50%, in one effort to give some pushes to the economy around this year, while the Reserve Bank of New Zealand noted that it won't increase the interest rates until next year, helping the business investment to advance their lending because NZ's government aims to expand the investment in the nation before the year's ending. 

Westpac consumer confidence in New Zealand inclined to 112.0 during the month of May, from 97.9 a month earlier. Moreover, the New Zealand business PMI index has advanced to 54.7 in May, which compared with a prior reading 51.5 during April that revised to 52.0. 

A Purchasing Managers Index (PMI) is an economic indicator; it is a composite index that is based on five major indicators including: new orders, inventory levels, production, supplier deliveries, and the employment environment. However, the manufacturing index was led higher by an increase in new orders, while new orders rebounded by domestic demand as consumption increases and from the rural industry as farmers benefit from higher prices for milk, meat and wool. 

Furthermore, New Zealand 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. 

The nation's exports (which are main engine for economic recovery) rebounded this period as the Asian demand for New Zealand's products has accelerated, while prices of exports rose 6.3% in the three months through March, led by demand for milk and lumber. 

Meanwhile, employers added 30,000 workers in the first quarter, the biggest increase since the second quarter of 2008, and further Unemployment rate came much better than forecasts giving signs of a healing labor sector that used to represent a major problem for the economy in the way out of the crisis. 

Yet, falling unemployment and a record-low benchmark interest rate may help restore confidence and lift spending and investment later this year. Gross domestic product was “flat to slightly negative” in the three months through March after disruption caused by the 6.3 magnitude earthquake that wrecked buildings and closed the Christchurch central business district.