Economy heads for slow lane: ANZ
Declining growth in goods traffic on New Zealand roads may be an early warning of slower economic growth ahead, the country’s largest bank has warned.
ANZ monitors the volume of heavy and light commercial vehicle traffic on the roads via its ‘‘Truckometer’’ indexes, which are created using data provided by the Transport Agency.
The bank said there was virtually no change in either index in the month of December, and its light traffic index fell 0.6 per cent in the final three months of 2016 – its first fall in three years.
‘‘Given it leads the economy by six months, this suggests economic growth will slow into mid-2017,’’ ANZ said.
ANZ senior economist Sharon Zollner said that while quarterly heavy goods traffic was still trending higher, the data was consistent with the bank’s assessment that the economy was starting to hit some ‘‘speed limits’’ as a result of skills shortages and big debts.
That assessment is likely to be unwelcome news for the Government, in what is an election year.
‘‘It could be that we are approaching the peak of the economic cycle,’’ Zollner said.
That did not necessarily mean something ‘‘nasty’’ was around the corner, as the economy was in ‘‘better structural shape’’ than usual at this point in the economic cycle, she said.
However, the economy was at ‘‘something of a crossroads’’.
‘‘A return of the household borrow-and-spend behaviours of old would increase risks of a wilder boom-bust cycle and that would not be great for business.’’
ANZ said its heavy truck index fell 0.1 per cent in the month of December, while its light traffic index rose 0.1 per cent, against a backdrop of annual growth that had averaged 3 per cent in the past few years.
The bank said it had adjusted the traffic volumes it used to calculate the index to take into the account the impact of the Kaikoura earthquake, which had changed container freight flows on some highways.
ASB published an upbeat assessment of the outlook for 2017 last week, saying it expected GDP growth to remain above 3 per cent.
The year ahead was shaping up to be full of promise for the New Zealand economy ‘‘assuming the rest of the world also holds together’’, ASB said.
‘‘Strong population growth and low interest rates have fuelled construction demand. A tourism boom has the retail sector humming. The labour market has tightened and households feel more confident. And dairy prices have finally turned around.’’
A fresh clue on the direction of the economy will be revealed on Tuesday next week, when the New Zealand Institute of Economic Research issues its quarterly survey of business opinion.