Supporting information:
Historical data (Excel spreadsheet)J6 Survey of expectations – a survey of businesses
Survey operation conducted by The Nielsen Company
June 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 13 and Thursday 14 May 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 fallen
Consumer price index (CPI) inflation expectations for both the one and two-year horizons have fallen. The one-year rate is now 0.4 percentage points below the two-year rate. Apart from last quarter, the one-year rate has exceeded the two-year rate in every survey since 2004. Average one-year-ahead (CPI) inflation expectations are now 1.8 percent, a fall of 0.4 percentage points since the March quarter survey. Two-year-ahead expectations fell slightly and are now 2.2 percent, compared with the previous figure of 2.3 percent. However, the median two-year rate is 2.0 percent, indicating a slight rightward skew in the distribution of responses above the median, lifting the mean.
Expectations of the quarterly change in the CPI for June 2009 have fallen to 0.3 percent (a fall of 0.1 percentage points). A quarterly increase of 0.4 percent is expected for the September 2009 quarter. These quarterly increases are equivalent to annual rates of 1.6 percent for the year to June 2009 and 0.5 percent to September 2009.
Easier monetary conditions are expected.
Monetary conditions are currently perceived as being tighter than neutral by a small majority of respondents. In the second half of the year and into the first quarter of next year monetary conditions are expected to become easier than neutral. The relatively small size of the net percentage figure in absolute terms indicates the fairly even spread of views on the expected future direction of monetary conditions.
At the time the survey was completed, the net percentage of respondents who believed monetary conditions were tighter than neutral was 9 percent. This compares with a net 7 percent in the March 2009 quarter survey and a net 62 percent in the quarter before. By September of this year, a net 3 percent of respondents believe conditions will be easier than neutral, and by March 2010 the figure shifts slightly to 6 percent.
Hourly earnings expectations fall
One-year hourly expectations have fallen by 0.4 percentage points since the March quarter survey, to 2.0 percent. Since the September 2008 quarter survey, the one-year-ahead expected rate has fallen almost two percentage points. Over the same period, the two-year rate has fallen almost one percentage point. However, this quarter the two-year rate actually increased slightly from 2.4 to 2.5 percent.
The unemployment rate is expected to increase
By March next year the unemployment rate is expected to have increased to 6.8 percent. A year later, in March 2011, the unemployment rate is expected to have improved slightly, to 6.5 percent. These expectations are (respectively) 0.7 and 0.5 percentage points higher than those recorded in the last survey. The latest official unemployment figure (for the March 2009 quarter) is 5.0 percent.
Two-year GDP growth expectations recover
Respondents’ one-year expectations of growth in real Gross Domestic Product are little changed since the last survey at -0.2 percent. However, the two-year expectation, for the year to March 2011, has jumped to 1.2 percent, indicating that respondents expect some recovery in GDP growth to have occurred by then. This quarter’s figure is a significant change in two-year expectations compared to the annual rate of 0.1 percent growth that was predicted for the two-year rate in the last survey. The latest Statistics New Zealand data indicates real GDP fell by 1.9 percent between December 2007 and December 2008 (annual percent change).
Near-term quarterly growth is expected to remain weak with quarterly falls of 0.3 and 0.2 percent expected over the March and June 2009 quarters. As in the previous quarter’s survey, seventy five percent of respondents believe quarterly GDP growth over the next two quarters will be zero or negative.
Exchange rates close to current levels are expected
An exchange rate of US$0.57 is expected for the NZ dollar at the end of September 2009, and to be at about the same level in March 2010. The NZD/AUD exchange rate is expected to be around NZ$0.79 at the end of 2009, not far from where the rate was when the survey was completed.
Little change in interest rates is expected.
The 90-day bank bill rate is expected to be 2.8 percent at the end of June 2009, a little lower than the rate prevailing at the time of the survey. By March 2010, respondents believe 90-day rates will be little changed at 2.9 percent, perhaps suggesting that further OCR reductions are not greatly anticipated.
10-year government security yields are expected to be around 5.7 percent at the end of March 2010, implying a positive yield gap of 2.8 percent with the expected 90-day rate. Last quarter the yield gap was just 0.9 percent. 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 57 percent out of a sample of 118. Of the completed questionnaires received by the cut-off date, the distribution across activity groups was:
|
Financial |
17 |
|
Business |
28 |
|
Agriculture |
9 |
|
Labour |
5 |
|
Other |
8 |
|
|
__ |
|
TOTAL |
67 |
|
|
|
Published 26 May 2009
