MNI 5 Things: New Zealand ANZ Survey Shows Retail Sector Risk

--Retail Pricing Intentions Drop But Inflation Expectations Little-Changed

By Sophia Rodrigues

     SYDNEY (MNI) -  - Below are the five observations we made from the ANZ

bank's New Zealand business outlook survey for April published Monday:

     --Inflation expectations was little-changed and importantly remained within

the Reserve Bank of New Zealand's target band but pricing intentions which is

another important indicator for future inflation eased. The decline in pricing

intentions was due to a fall in retail pricing intention which dropped to the

lowest level since 2004. If this sustains, it would be a risk for the RBNZ's

inflation outlook.

     --Business confidence worsened in April and has been in the negative zone

for the sixth straight survey. Confidence has been in the negative for all the

five main sectors for the second straight month, with the worst confidence in

agriculture (-45.7) and the highest in services (-14.3). The key change in the

latest survey was further decline in construction confidence to -36.0.

     --Activity outlook fell in April with activity in the construction sector

lagging the others at 3.9 versus 23.4 in manufacturing which is the best

performing sector.

     --Retail confidence fell further in April to -21.5 from -17.9 in March,

with the decline likely a reflection of slowing housing market activity. The

data will need to be watched closely in coming months as it could indicate

slowing household consumption.

     --ANZ's composite growth indicator which is a combination of business and

consumer confidence is pointing to 2% y/y growth compared to 2% to 3% signalled

in the previous three surveys. ANZ economists remain confident the economy could

grow above that level but it may not be a smooth sailing due to decline in

consumer confidence and business growth indicators.

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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