Supporting information:
Historical data (Excel spreadsheet)
Special noteJ6 Survey of expectations – a survey of businesses
Survey operation conducted by The Nielsen Company
September 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 12 and Thursday 13 August 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 little changed
Consumer price index (CPI) inflation expectations for both the one and two-year horizons are little changed from last quarter. Average one-year-ahead (CPI) inflation expectations remain 1.8 percent, unchanged from the June quarter survey. Two-year-ahead expectations have moved from 2.2 percent last quarter to 2.3 percent (or 2.25 percent to two decimal places) this quarter. The median two-year rate is 2.2 percent.
Expectations of the quarterly change in the CPI are also little changed. A quarterly rise of 0.4 percent is expected for the September 2009 quarter, unchanged from respondents’ expectations in the June quarter survey, with a figure of 0.5 percent expected for December. These quarterly increases are equivalent to annual rates of 0.8 percent for the year to September 2009 and 1.7 percent to December 2009.
Some tightening in monetary conditions is expected
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 percentage figures across the expectation horizon indicates the fairly even spread of views.
At the time the survey was completed, the net percentage of respondents who believed monetary conditions were easier than neutral was 5 percent. This compares with a net 9 percent in the June quarter who believed conditions were tighter than neutral. By December of this year, a net 3 percent of respondents believe conditions will be easier than neutral, while by June 2010 conditions are expected to be tighter than neutral by a net 10 percent.
Hourly earnings growth expectations fall
One-year-ahead hourly earnings growth expectations have fallen by 0.3 percentage points since the June quarter survey, to 1.7 percent. In the September 2008 quarter survey, the one-year-ahead expected rate peaked at 3.9 percent. Since September 2008, the two-year rate has fallen by just over one percentage point, and is now 2.3 percent (2.5 last quarter).
The unemployment rate is expected to increase
By June next year the unemployment rate is expected to have increased to 7.2 percent. A year later, in June 2011, the unemployment rate is expected to have improved slightly, to 6.7 percent. These expectations are (respectively) 0.4 and 0.2 percentage points higher than those recorded in the last survey. The latest official unemployment figure (for the June 2009 quarter) is 6.0 percent.
GDP growth expectations recover
Respondents’ one-year expectations of growth in real Gross Domestic Product have increased since the last survey by one full percentage point to be 0.8 percent. Two-year growth expectations have also improved further since last quarter and are now 2.0 percent, compared with an expectation of 1.2 percent in the June quarter survey and negative 0.1 percent the quarter before. The latest Statistics New Zealand data indicates real GDP fell by 2.7 percent between March 2008 and March 2009 (annual percentage change).
Near-term quarterly growth is expected to remain weak, with quarterly falls of 0.2 expected for the June 2009 quarter and with no movement expected between the June and September 2009 quarters. Half of the respondents believe quarterly GDP growth over the September quarter will be zero or negative.
Exchange rates close to current levels are expected
An exchange rate of US$0.65 is expected for the NZ dollar at the end of this year, and to be at roughly the same level in June 2010. The NZD/AUD exchange rate is expected to be around NZ$0.80 by the end of June 2010, 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 September 2009, which is around the rate prevailing at the time of the survey. By June 2010, respondents believe 90-day rates will have increased to 3.2 percent, consistent with respondent expectations of tighter monetary conditions at that time.
10-year government security yields are expected to be around 6.1 percent at the end of June 2010, implying a positive yield gap of 2.9 percent with the expected 90-day rate. Two quarters ago 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 66 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 |
33 |
|
Agriculture |
9 |
|
Labour |
5 |
|
Other |
7 |
|
|
__ |
|
TOTAL |
79 |
|
|
|
Published 25 August 2009
