Meat & Livestock News

New Zealand’s Economic Landscape: A Week in Review

Reserve Bank Holds Steady on Official Cash Rate

In a move that met widespread expectations, the Reserve Bank has kept the Official Cash Rate (OCR) at 5.50%. The institution clarified that this rate is effectively tempering economic activity and easing inflationary pressures.

The bank also emphasized that the New Zealand economy will need to experience a prolonged period of subdued activity to further mitigate inflation. The OCR is anticipated to remain at this restrictive level for an extended timeframe.

Agricultural Sector Faces Lending Dip

Recent data from the Reserve Bank’s Sector Lending Statistics indicates a decline in agricultural lending for August. The sector’s total lending was $63.17 billion, showing a $249 million decrease compared to July.

Despite this monthly downturn, the sector has witnessed a year-on-year growth of $927 million, or 1.5%, bolstered by strong performance from April to July.

Commodity Prices Show Signs of Recovery

Breaking a three-month decline, the ANZ World Commodity Price Index rose by 1.3% in September. Dairy prices experienced a modest 0.2% increase, largely driven by renewed demand for whole milk powder. The meat and fibre sector saw a significant 4.3% price hike, with beef, lamb, and wool all posting notable gains.

Government Deficit Exceeds Projections

The 2022/23 Financial Statements reveal a government deficit larger than initially forecasted in the May Budget. The total revenue reached $153.0 billion, an $11.4 billion increase from the previous year but still $2.5 billion short of budget estimates.

Business Confidence Sees Marginal Improvement

According to the NZIER’s Quarterly Survey of Business Opinion for September, business confidence has slightly improved. While 53% of businesses expect worsening general economic conditions, this represents a 7-point improvement compared to the June quarter.

Consumer Sentiment Remains Pessimistic

The Consumer Confidence Index for September inched up by 1.4 points to 86.4. However, a score below 100 indicates a predominance of pessimistic views, a trend that has persisted since October 2021.

Residential Building Consents on the Decline

August 2023 recorded a total of 3,170 residential building consents, valued at $1.5 billion. On a seasonally adjusted basis, this marks a 6.7% decrease for the month, following a 5.4% decline in July.

Soil Moisture Levels Show Regional Variance

The latest data from the National Institute of Water and Atmospheric Research (NIWA) indicates a disparity in soil moisture levels across New Zealand. The North Island is experiencing normal to above-average levels, while the South Island is grappling with below-average conditions.

Exchange Rates Experience Minor Fluctuations

As of 6 October, the New Zealand dollar traded at 0.6885 against the US dollar, a slight depreciation from 0.6915 on 30 September.

Wholesale Interest Rates Show Mixed Trends

Wholesale interest rates on 6 October were varied. The 90-day bank bill rate remained stable at 5.50%, unchanged from 30 September. However, the 10-year government bond yield saw a minor increase, moving from 3.10% to 3.15%.