Supporting information:
Historical data (Excel spreadsheet)J6 Survey of expectations – a survey of businesses
Survey operation conducted by The Nielsen Company
December 2009 quarter report
Introduction
The Reserve Bank of New Zealand (RBNZ) Survey of Expectations is a New Zealand-wide quarterly survey of business managers. The Nielsen Company conducts the survey on the RBNZ’s behalf. Respondents are asked for their expectations of future outcomes of a range of key macroeconomic data.
The latest RBNZ Survey of Expectations was conducted on Wednesday 11 and Thursday 12 November 2009. Note that the results of the survey represent expectations held by respondents and in no way represent the views or forecasts of the RBNZ. Graphs and figures in the following report refer to the mean expectation levels of respondents.
Summary of Results
Inflation expectations have risen
Respondents have revised upwards their expectations of consumer price index (CPI) inflation quite significantly this quarter, at both the one and two-year horizons. Average one-year-ahead CPI inflation expectations have increased from 1.8 percent to 2.1 percent since last quarter. Two-year-ahead expectations have increased from 2.25 percent last quarter to 2.61 percent now, an increase of 0.36 percentage points. The median two-year rate is 2.5 percent.
Expectations of quarterly CPI inflation are little changed. A quarterly rise of 0.5 percent is expected for the December 2009 quarter, unchanged from respondents’ expectations in the September quarter survey, with a figure of 0.5 percent is also expected for March 2010. These quarterly increases are equivalent to annual inflation rates of 2.7 percent for the year to December 2009 and 2.9 percent to March 2010.
Relatively easy monetary conditions are perceived
Monetary conditions are currently perceived as being easier than neutral by a small majority of respondents. The fairly small size, in absolute terms, of the net figures indicates the fairly even spread of views either side of neutral.
At the time the survey was completed, the net percentage of respondents who believed monetary conditions were easier than neutral was 8 percent. This compares with a net 5 percent in the September quarter who believed conditions were easier than neutral. By March next year, a net 5 percent of respondents believe conditions will be easier than neutral, while by September 2010 a net 6 percent expect conditions will be tighter than neutral.
Hourly earnings growth expectations increase
One-year-ahead hourly earnings growth expectations have increased by 0.4 percentage points since the September quarter survey, to 2.1 percent, almost reversing the falls seen in the last two quarters. The two-year rate has increased by 0.5 percentage points to 2.8 percent, putting it back up to December 2008’s growth expectation.
The unemployment rate is expected to increase
By September next year the unemployment rate is expected to have increased to 6.9 percent. A year later, in September 2011, the unemployment rate is expected to have dropped to 6.2 percent. These expectations are (respectively) 0.3 and 0.5 percentage points lower than those recorded in the last survey. The latest official unemployment figure (for the September 2009 quarter) is 6.5 percent.
GDP growth expectations increase
In the space of six months, respondents’ expectations of one-year-ahead GDP growth have leapt from their nadir of -0.2 percent, recorded in the June 2009 quarter survey, to 1.7 percent. This represents an increase of 1.9 percentage points since the June quarter survey and 0.9 percentage points since September. Two-year growth expectations have also improved, albeit less dramatically than the one-year series, from 2.0 percent last quarter to 2.3 percent now. The latest Statistics New Zealand data indicates real GDP fell by 2.1 percent between June 2008 and June 2009 (annual percentage change).
In contrast with last quarter’s survey, near-term quarterly growth is expected to be positive, with quarterly increases of 0.3 percent expected for the September 2009 quarter and 0.5 percent in December.
Exchange rates close to current levels are expected
An exchange rate of US$0.73 is expected for the NZ dollar at the end of March next year, and to be at US$0.71 at the end of September 2010. The NZD/AUD exchange rate is expected to be around NZ$0.80 by the end of September 2010, not far from where the rate was when the survey was completed.
Higher interest rates are expected.
The 90-day bank bill rate is expected to be 2.9 percent at the end of December 2009, fractionally higher than the rate prevailing at the time of the survey. However, by September 2010, respondents believe 90-day rates will have increased to 3.7 percent, consistent with respondent expectations of tightening monetary conditions.
10-year government security yields are expected to be around 6.2 percent at the end of September 2010, implying a positive yield gap of 2.5 percent with the expected 90-day rate. Four quarters ago the yield gap was just 0.3 percentage points. Over this year the gap between short-term and long-term rates has widened significantly as short-term rates have fallen and long-term rates have trended upwards. Implicitly, the survey results suggest respondents expect this gap to persist.
Sample Composition
The response rate for this quarter was 68 percent out of a sample of 120. Of the completed questionnaires received by the cut-off date, the distribution across activity groups was:
|
Financial |
25 |
|
Business |
36 |
|
Agriculture |
8 |
|
Labour |
5 |
|
Other |
7 |
|
|
__ |
|
TOTAL |
81 |
|
|
|
Published 24 November 2009
