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3 Mar 2014
Flash: NZ terms of trade highest since 1861 - BNZ
FXStreet (Bali) - The New Zealand’s economy is breaking long-time records, notes Bank of New Zealand, with further evidence gathered after today's NZ terms of trade, highest since 1861.
Key Quotes
"As just one example, business confidence and activity expectations are the loftiest in 20 years. Then there’s the scale of the (re)construction boom facing the nation – significant on a global scale, massive relative to the size of the local economy. The latest news of extreme, though, was in this morning’s Overseas Trade Indexes. These showed the nation’s merchandise terms of trade increased to its highest in at least 40, verging on 153, years. Yet, at the risk of sounding like another record – a broken one – we note the OCR remains at record lows. It’s extraordinary."
"Statistics NZ reported today that New Zealand’s merchandise terms of trade increased a further 2.3% in the December quarter of 2013. Yes, this involved a slight undershoot for both export and import prices, individually. However, this was all within the margin of error for these bumpy quarterly indices, especially with the still-depressing influence of the high NZ dollar at play (including, more recently, the sharply higher NZD/AUD). For the record, export prices slipped 0.5% in Q4, to be 13.9% up on a year prior, while import prices eased 2.8%, for a 5.1% decline y/y."
"On net, the 2.3% quarterly gain in national purchasing power boosted the annual increase in the merchandise terms of trade to 20%. This scores a fresh 40-year high. And bear in mind it wouldn’t take much of a further increase for it to surpass the 1973 record. If so, it is clear air all the way back to 1861, if, rare, very long-term data can be believed. At the very least, this should help underscore the altitude of the current terms of trade boom."
Key Quotes
"As just one example, business confidence and activity expectations are the loftiest in 20 years. Then there’s the scale of the (re)construction boom facing the nation – significant on a global scale, massive relative to the size of the local economy. The latest news of extreme, though, was in this morning’s Overseas Trade Indexes. These showed the nation’s merchandise terms of trade increased to its highest in at least 40, verging on 153, years. Yet, at the risk of sounding like another record – a broken one – we note the OCR remains at record lows. It’s extraordinary."
"Statistics NZ reported today that New Zealand’s merchandise terms of trade increased a further 2.3% in the December quarter of 2013. Yes, this involved a slight undershoot for both export and import prices, individually. However, this was all within the margin of error for these bumpy quarterly indices, especially with the still-depressing influence of the high NZ dollar at play (including, more recently, the sharply higher NZD/AUD). For the record, export prices slipped 0.5% in Q4, to be 13.9% up on a year prior, while import prices eased 2.8%, for a 5.1% decline y/y."
"On net, the 2.3% quarterly gain in national purchasing power boosted the annual increase in the merchandise terms of trade to 20%. This scores a fresh 40-year high. And bear in mind it wouldn’t take much of a further increase for it to surpass the 1973 record. If so, it is clear air all the way back to 1861, if, rare, very long-term data can be believed. At the very least, this should help underscore the altitude of the current terms of trade boom."