NZ | Economy Thread

[SYDNEY]

Real oil on drilling outlook

Announcements due tomorrow on the take-up of oil and gas permits will show just how hungry companies are to explore around New Zealand where offshore drilling is a hard sell. The decision by Brazilian oil giant Petrobras to surrender its permit off East Cape has sharpened the focus on the results of the "block offer" in what's being seen as a crucial test of the Government's push to attract explorers here. Oil and gas production is an important part of its economic strategy and while there have been useful smaller onshore discoveries during the past three years, new offshore projects have been slow to come on stream since the Tui and Maari fields. The Government and officials have put a brave face on the loss of Petrobras, but prospects of its permit being picked up by another explorer as part of a process separate to this block offer suffered a blow when deepwater drilling specialist Anadarko said it was not interested. The Houston-based firm remains on track to start drilling off the South Island and in the Taranaki Basin next summer, but a spokesman said on Friday that Petrobras' Raukumara area was not on its radar. The Brazilian firm was the target of Maori and greens' protests but has said it was not opposition but mediocre results from surveys that persuaded it to abandon its work in New Zealand. In the Great Southern Basin, Shell is six months away from deciding whether to drill and although an $80 million survey shows little evidence of black crude oil, the company has said there are better signs of gas and sought-after condensate which needs little refining ... MORE

[SYDNEY]

NZ median house price sets new record $383,250

The median house price in New Zealand set a new record for a second straight month, reaching $383,250 in the strongest sales volume in five years. Sales rose 24 percent to 7,454 in November from a year earlier and were 12.3 percent up on October, according to the Real Estate Institute. The median price climbed 4.3 percent from the same month last year. Auckland’s median house price rose 1.9% from October to a new record median price of $540,000. Otago’s median price rose 7.5 percent to a record $258,000 and in Canterbury/Westland the median price matched its record $345,000 last reached in August. “Housing turnover has picked up steadily over the past year, as confidence has returned to the housing market underpinned by expectations of low interest rates and gradually improving household confidence,” said Jane Turner, economist at ASB. “Demand continues to outstrip supply, and is placing upward pressure on house prices.“ The REINZ Stratified House Price Index, which adjusts for the proportion of higher or lower-value homes sold, rose 7.3% from November 2011 to a record high 3,544.4. The national median days to sell fell to 32 to 33 days in October. Across New Zealand the total value of residential sales, including sections was $3.62 billion in November, compared to $3.15 billion in October, and $2.67 billion in November 2011.

[SYDNEY]

Govt says 10 winners for oil and gas rights

Energy Minister Phil Heatley says 10 companies have won bids for the 23 blocks put up by the Government this year for oil and gas exploration. A total of 13 blocks were bid on by 24 applicants and 10 have been accepted in the annual block offer. One block had four separate bidders. Some had none. Interest had come from domestic companies as well as foreign investors from Canada, Japan, Brussels, Australia and The successful applicants will be named later this morning by Heatley at Parliament. He told a business breakfast in Wellington this morning that when the Government first started out on the process in April he feared it would have only one bidder. In the past, companies made applications for various areas and other companies were given seven days to say whether they were interested as well. New Zealand had 18 basins and it produced from only one, Taranaki ... MORE

[SYDNEY]

Kiwis have fewer unpaid bills this year

Kiwis are heading into the silly season with a quarter fewer unpaid bills than the same time last year - and many expect to keep a lid on their traditional Christmas splurge. Latest figures from credit bureau Dun and Bradstreet show people had fewer overdue bills for debts such as credit cards and utilities in the September quarter than in the same quarter last year. The amount of overdue consumer debt also fell by 12 per cent, although Auckland bucked the trend with an increase in the amount owed. However the number of debts referred to the credit agency in the biggest city fell 14 per cent. It remains to be seen how much the traditional pre-Christmas splurge will add to the pressure of overdue credit and bill payments. An earlier survey of 930 adults by Dun & Bradstreet suggested people might be more cautious than last December. Just over half were worried about their current financial situation, and more than two thirds were less likely to splash out on non-essentials over the Christmas period, compared with the same time last year. Overdue debt remains higher than it was in early 2011, said John Scott, general manager of D&B New Zealand. But: "Given the general financial pressures that New Zealand households have been under, it's encouraging to see that the volume and level of debt coming into Dun and Bradstreet have been coming down," he said. Christchurch experienced the greatest fall in debt referrals (34 per cent) for the year to the September quarter, with Wellington decreasing by 17 per cent. Stephen Koukoulas, Dun & Bradstreet's economic advisor, said the decline in debt referrals was part of a gradually improving economic picture. But he said consumers were likely to remain cautious, especially with the unemployment rate still relatively high. The majority of problem debt was being carried by the country's younger generations, with debtors aged 25–44 years accounting for approximately 50 per cent of the debt referrals made in the third quarter of 2012 and those aged 18–24 accounting for 23 per cent.

[SYDNEY]

NZ consumer confidence edges up in Dec as outlook brightens

New Zealand consumer confidence edged up in December from November, with more kiwis expecting their families to be better off in a year’s time and the nation to have better times over the next five years. The ANZ-Roy Morgan Consumer Confidence rose to 114.7 this month from 114.1 in November. A reading above 100 indicates there are more optimists than pessimists. The Current Conditions index fell to 108.6 from 110.2 last month and the Future Conditions index rose to 118.8 from 116.7. The Current Conditions index is still at modest levels, which may reflect a weak labour market and rising unemployment, said Cameron Bagrie, chief economist at ANZ New Zealand. While businesses have signalled jobs growth, “this has failed to translate into reality.” Underlining concerns about the jobs market, the unemployment rate unexpectedly climbed to 7.3 percent in the third quarter. Against that, house prices have been rising, particularly in Auckland and Christchurch, which typically makes people feel wealthier. House price expectations continued their steady rise this month, rising to 3.9 percent from 3.5 percent in November. For Auckland, expectations were 4.5 percent. Those deeming now a good time to buy major household items slipped to 24 percent from 26 percent. The percentage of kiwis feeling worse off than a year ago worsened to -7 from -6. Expectations of inflation two years ahead fell to 3.2 percent from 3.4 percent. Males were more confident than females, falling 1 point to 120 while females gained 3 points to 110. Auckland and Canterbury were the most upbeat regions on 124 – the highest for Canterbury since the February 2011 earthquake. Wellington was in third place on 116.

[SYDNEY]

Building upturn bodes well for manufacturing

A gauge of activity in the manufacturing sector continues to hover in the neutral zone between expansion and contraction. The BNZ-Business New Zealand performance of manufacturing index (PMI) registered 48.8 in November, down from 50.3 in October. A number above 50 indicates the sector is expanding; below suggests contraction. The PMI has stabilised around the 50 mark over the past six months, indicative of a manufacturing sector muddling along, at least on average, said BNZ economist Doug Steel. But the average masked wide variation among sub-sectors. The non-metallic mineral product sector, which includes cement, posted its second consecutive month with a PMI over 77, a level it had surpassed only once before. It implied very rapid growth, but off a low base, Steel said. Food processing, with a PMI of 79, was also deep in expansion territory but metal product manufacturing, while up on October figures, was still going backwards overall. Next year, despite an unhelpful exchange rate and patchy international demand, the manufacturing sector had much to support it, including still buoyant primary production and especially the accumulating rebound in construction activity, he said ... MORE

[SYDNEY]

Traders busy and shoppers happy

New Zealanders are flocking to the shops to stock up for Christmas, with eftpos spending up on last year. Westfield spokeswoman Deb McGhie said it appeared shopping centres were busier this year than last - though they wouldn't know for sure until next year when they could compare sales figures. "It's definitely busy out there, irrespective of it being a lovely day, there's still people out there in the centres. "And we've got another full weekend's trading. If you look at the trends over the years, that week before Christmas really picks up." The chain starts its late-night shopping hours this week. "But on Christmas Eve, we're only open nine to six - Santa's got to get back to get ready," said Ms McGhie. There hadn't been any incidents of Christmas shopping stress rage yet, but Ms McGhie said those sorts of incidents tended to happen closer to December 25. "We brought in extra customer services a little bit earlier this year ... that just helps take the pressure off and so far, so good - people are being kind to one another. Hopefully it stays that way." Paymark figures show spending between December 6 and 12 was up 4.1 per cent on the same dates last year, a higher than average annual growth rate ... MORE

[SYDNEY]

Confidence highest since pre-Cup

Consumer confidence has lifted to its highest level for more than a year, the Westpac McDermott Miller survey has found. The quarterly survey's index rose 8.6 points to 111.1 - any reading over 100 indicates more optimists than pessimists. "The improvement was pervasive," Westpac economist Felix Delbruck said. "Not only have households become more optimistic for the future, but their assessment of their current financial situation is the best it has been in five years." A net 29 per cent of respondents said it was a good time to buy a major household item. While that is only a modest improvement on the September survey's 27 per cent, it is still the second highest reading for this indicator since the recession. The lift in confidence adds to evidence, like electronic card transactions, that the weak September quarter was a pothole, rather than a ditch. It comes despite a stream of high-profile layoffs and an unexpectedly steep rise in the unemployment rate to 7.3 per cent. "Then again, other developments have been more positive: the Canterbury rebuild is accelerating, we've had slightly better news on the global economy, and a continued high exchange rate has helped keep prices for some imported goods low." ... MORE

[SYDNEY]

NZ market rises to five year high

New Zealand shares rose to a new five-year high yesterday as foreign investors were drawn to the nation's relatively attractive returns and cheered the expansion plans of companies such as SkyCity Entertainment Group. Mainfreight and Diligent Board Members Services hit new records. The NZX 50 Index rose 52.45 points, or 1.3 per cent, to 4075.45, the highest close since December 2007. Within the index, 33 stocks rose, eight fell and nine were unchanged. Turnover was a higher-than-average $166 million, surprising traders who were expecting a pre-Christmas wind-down. SkyCity rose 1.3 per cent to $3.84, extending its gains of Wednesday when it announced it had reached agreement with the South Australia state government on the expansion of its Adelaide casino. Separately yesterday SkyCity said it sold its half-share of Christchurch casino and had taken full ownership of Queenstown's gaming centre. The SkyCity announcement on Adelaide "has been very well received", said David Price, a broker at Forsyth Barr. The Adelaide expansion added about 25c to the stock's valuation, he said. Offshore investors were drawn to double-digit returns on New Zealand stocks, Price said. "There's a lot of fresh money coming into the market." ... MORE

[SYDNEY]

Business optimism takes leap on last year

Business confidence has leaped 22 per cent on the same time last year, putting New Zealand's optimism well above that of Australia and even further above the world figure, a new survey shows. Pam Newlove, a partner at Grant Thornton IBR, says the company's survey shows New Zealand sitting 10th on the world business optimism table, and business confidence lifting to 58 per cent, well ahead of Australia where confidence is up but only to 31 per cent. "New Zealand business owners have accepted the tough grind we've been going through over the last couple of years is the new norm and they're just knuckling down and doing the business," Newlove said. Businesses had learned to be smarter about how they operated rather than lament the recent difficult times. Successful firms identified their niche products or services and capitalised on opportunities to secure market share that way. "Australia may not have suffered the level of pain we endured in the global financial crisis, but with the slowdown of China and the fall in commodity prices, indicators have turned south in the 'lucky country' with a slew of major redundancies in some of the larger companies ... MORE

[SYDNEY]

Tills ringing in post-Christmas retail splurge

Retailers might be enjoying a post-Christmas spending bonanza, but an economist warns the sales boom won't last forever. Boxing Day sales figures showed a 13.4 per cent jump in spending from the same time last year. Paymark, which processes about 75 per cent of all electronic transactions, said there were more than two million transactions and $120 million in sales - up $14.2m up from a year ago. The company's head of sales and marketing Paul Whiston said the strong Boxing Day numbers were a fantastic finish to a positive month of spending, and a return to the kinds of growth seen before the global financial crisis. "This is the first time in five years that we've seen double digit growth and we're rapt for retailers.'' But ANZ chief economist Cameron Bagrie said the figures probably just proved that New Zealand shoppers were savvy when it came to spending their cash during sale time ... MORE

[SYDNEY]

December a bumper month for NZX

A near-record year for New Zealand shares has flowed through into the security market operator's equity business, with December trading volumes a quarter higher in December compared to where they were a year ago. Figures release today show 76,000 equity trades were recorded in December, just over 27 per cent higher than in the same month in 2011. The boost came as the NZX50 index chalked up a 25 per cent gain in 2012, compared to a 1 per cent dip in the previous year. More notable perhaps was the value traded for the month, at $3.6 billion, up 65 per cent compared to December 2011. Debt market activity continued to decline with December trading volumes falling 31 per cent to 2310, with values down 25 per cent to $69 million. Total trading volumes rose 24.3 per cent to 78,408, with a value of $3.6b, up 60.8 per cent. Total equity securities on issue declined 2.3 per cent in the month to 167, and total debt securities fell 9.3 per cent to 97 due to ongoing maturities and a shortage of new bond issuance. The total capital raised by all issuers in the month was $1.75 billion, almost two-fifths of the capital raised in the year to date. Equity market capitalisation stood at $66.1b as of the end of December, up 18.3 per cent year-on-year, and accounted for 31.7 per cent of New Zealand's gross domestic product (GDP). Debt capitalisation stood at $14.7b, down 8.3 per cent, which represented 7 per cent of GDP.

[SYDNEY]

Stocks cap off sterling year

The number of sharemarket trades hit a record high in December capping off the best year for the New Zealand stock market since 2004. It's typically a quieter time of year for the sharemarket, yet more than $3.25 billion worth of securities have been traded this month, making it the best December since 1986 when records began. NZX records show the closest December was in 2006 when $2.4 billion in trades took place. BT Funds Management analyst Matt Goodson said the December record was "no surprise" given the level of activity which occurred. Topping the list for December's big deals was the sell-down of the remaining 51 per cent of Trade Me, owned by Australian media company Fairfax, which saw $769 million worth of shares change hands. The biggest takeover deal to happen this year - Haier's bid for Fisher & Paykel Appliances - was also finalised in December with $741.6 million in shares being sold. The NZX50 index has risen more than 24 per cent this year - its best performance since 2004 when the index rose 21.17 per cent. Hamilton Hindin Greene director Grant Williamson said low interest rates were key to the strong sharemarket performance ... MORE

[SYDNEY]

NZ new home consents rise again

The number of consents issued for new homes continued a 20-month growth trend by rising again in November, show figures out today. Statistics New Zealand said 1,658 building consents in the month was 20 per cent higher than November 2011. "Since the latest low point in March 2011, we have seen continuous steady growth in the trend for the number of new houses consented," said industry and labour statistics manager Blair Cardno. "The trend for new houses, including apartments, has climbed 45 per cent over the 20 months to November 2012." Excluding apartments, house consents increased a seasonally adjusted 4.6 per cent from October. When apartments were included, the seasonally adjusted number decreased 5.4 per cent. Consent was given to build 39 new apartments in the month, which was 64 per cent lower than a year earlier ... MORE

[nthbeach]

The regions are still growing

Economy gets traction

Agriculture helps provinces lead way

South Canterbury's economy has kicked off the year in a strong position, buoyed by the agricultural sector.

Statistics for the end of 2012 show positive growth in commercial, passenger car and tractor registrations, and a $20 million increase in building work in Timaru alone.

Eftpos figures show increased spending, and nearly 10 million kilograms more milk solids was produced than in 2011.

Unemployment has tracked downward as the buoyant economy soaks up job seekers.

South Canterbury Chamber of Commerce chairman Tony Howey said the drop in unemployment was the ultimate telltale sign the economy was doing well.

"There is a good level of confidence out there, in part because of the agricultural and commercial sectors.

"The pessimism that surrounded the dairy payout has lifted as the forecast was revised upward.

"Even the weather getting back to a traditional Canterbury summer has had a positive impact," he said.

Latest statistics from the Motor Trade Association (MTA) show Timaru bucked the national trend with a 46 per cent increase in commercial vehicle registrations from 242 vehicles in 2011, jumping to 353 last year when the national increase was only 16 per cent.

New passenger car registrations increased 29 per cent, against a national average of 20 per cent.

MTA spokesman Ian Stronach said Timaru reflected what other provincial areas were experiencing.

"This is something we saw in several other provincial areas - the real growth seems to have come from places like Timaru, Invercargill and Palmerston North," he said.

"This is a reflection of the flow-through of good confidence from the surrounding agricultural and associated supply businesses," Mr Stronach said.

Building has taken off in South Canterbury with 1104 new buildings and alterations carried out last year, compared with 969 in 2011. The overall value of the work was $128m last year, $15m more than the $113m 2011's building work was valued at.

South Canterbury tractor dealer Paul Wilkins said statistics from the Tractor and Machinery Association, showed there had been an 18.3 per cent increase since 2011 in retail sales of tractors over 20 horsepower (15 kilowatts) in South Canterbury.

The dairy industry had seen a lot of amalgamations, sheep and beef farmers had capitalised on last season's good returns by replacing worn out tractors, and arable farmers were also buying larger tractors over 300 horsepower (220kW) to replace smaller machinery because of higher incomes, he said.
"Compared to everywhere else in the country, South Canterbury's doing particularly well. There seems to me to be a lot of money wooshing around at the moment in all of the sectors," he said.

http://www.stuff.co.nz/timaru-herald...-gets-traction

[SYDNEY]

Firing up Maori economic engine

The departing head of the Maori Development Ministry says Maori business has transformed in the past decade, and iwi are no longer considered a risk to the NZ economy. Leith Comer has stepped down as chief executive of Te Puni Kokiri, the Ministry of Maori Development, after nearly 12 years in charge. He believes that during his tenure the perception that Maori were an obstacle to economic progress and a politically correct "add-on" has changed dramatically. "Maori culture and our way of doing business are now seen as enhancing NZ Inc rather than a risk to be managed," he wrote in his final annual report for the ministry. Mr Comer has battled critics inside and outside Parliament who have questioned the ministry's success and whether Maori need a distinct economic development agency. He told the Herald that Te Puni Kokiri could not claim sole credit for Maori gains in the past decade, but it had played a part in many of them. "I would say, without boasting, that most significant advances that have occurred by Maori have been led by Maori, but Te Puni Kokiri has played a role, a small role, somewhere in every positive Maori advancement." ... MORE

[SYDNEY]

Giant China bank seeks NZ licence

The biggest bank in the world, China's state-controlled ICBC, is attempting to set up in New Zealand. The Industrial and Commercial Bank of China is understood to have applied for a banking licence last year, and has reserved the name "ICBC New Zealand Limited" on the Companies Office website. A spokesman for the Reserve Bank said it could not comment on applications for banking licences until they were approved. The ICBC's Sydney branch confirmed that preparation work was under way in New Zealand and directed further inquiries to the head office in China. Beijing-based executive Amanda Lu, who could not be reached for comment, is listed as the deputy head of the New Zealand preparatory team on social network LinkedIn. According to her profile, Lu has primed the "launch and application work" for the new subsidiary and overseen budgeting and finance. ICBC is listed on the Hong Kong and Shanghai stock exchanges with a market capitalisation more than four times the size of the entire New Zealand market. Massey University banking expert Claire Matthews said a global lender of ICBC's magnitude was unlikely to face much difficulty in getting the green light ... MORE

[SYDNEY]

Record December, Near Record Year for New Vehicle Sales

“NZTA registration data released today confirms earlier MIA numbers of a strong finish to the end of the year for new vehicle sales”, said Mr Perry Kerr, Chief Executive Officer of the Motor Industry Association. “December passenger car registrations of 6,102 were the highest monthly total since 1976 the year after the MIA began collating industry numbers. December registrations were up 14.6% (776 units) on December 2011. Commercial registrations of 1,649 were a massive 43.4% (499 units) ahead of 2011 and were the highest monthly registrations since 2000” he said. “Toyota dominated the market taking 36% (2,202 units) of passenger car registrations and 30% (500 units) of the commercial segment. In the passenger car sector Ford held onto second place with 534 registrations (9%) followed by Holden with 467 registrations (8%). With commercials Nissan was second with 187 registrations (11%) and Ford third with 177 registrations (11%)” ... MORE


New vehicle sales top 100,000 for third time in 23 years

Car yards proved to be one of the more resilient segments of the retail sector last year, according to figures compiled by the Motor Trade Association, with sales of new vehicles topping 100,000 units for only the third time since 1989. With 100,795 new passenger cars and commercial vehicles sold, sales were 19 per cent up on 2011. New car sales reached their highest level in five years, with 76,871 vehicles sold - a 20 per cent rise, the MTA said. Spokesman Ian Stronach said the growth last year was off a low base following the global financial crisis, but business had been much stronger than anyone in the industry had expected. "Forecast growth predictions were easily exceeded, with most segments and the majority of distributors all sharing in the strengthening market." He said car buyers had been benefiting from the strong Kiwi dollar - which was helping keep retail car prices down - and consumer confidence was being bolstered by rising house prices in many areas. The entrance of new brands, particularly from China, had helped keep the market competitive, Stronach said ... MORE

[SYDNEY]

Firms start year with confidence

Led by Auckland, businesses start 2013 more confident than they have been for years, the New Zealand Institute of Economic Research's quarterly survey of business opinion has found. A net 16 per cent of firms recorded an increase in their own trading activity in the December quarter, after a net 9 per cent had reported going backwards in the September survey. Even when adjusted for seasonal effects, this indicator improved by 12 points to the highest level it has been since June 2007, before the recession. It is consistent with annual economic growth of around 2.3 per cent, according to the institute's principal economist, Shamubeel Eaqub. Trading activity has been stronger in Auckland than the rest of the economy for the past couple of years. The strength of the Auckland housing market was part and parcel of a bigger recovery in the region, Eaqub said. Its population was still growing and it might have benefited from a post-earthquake relocation of some businesses. Activity also rebounded in Canterbury but that was heavily concentrated in the building sector. Nationwide, all sectors recorded more activity, but builders led the pack ... MORE

[SYDNEY]

Card data reveals rise in spending

Retail sales charged to electronic cards rose 0.3 per cent last month, adjusted for seasonal effects, continuing a trend of slow but steady increases in consumer spending. Core retail sales, which exclude petrol stations and car yards, rose 0.5 per cent, on top of a 1.1 per cent rise in November. For the December quarter, retail sales paid for with electronic cards rose 1.4 per cent from the September quarter, and by 1.1 per cent when the automotive sector is excluded. Three-quarters of the quarterly increase was in spending on durable goods (excluding cars). Infometrics economist Matt Nolan said the increase in spending on durables in the quarter occurred even as prices were held down by the very high New Zealand dollar, indicating that the volume of sales had been rising sharply. It was consistent with the lift in house sales over recent months, he said. When people moved house they often used it as an opportunity to replace furniture and appliances. By contrast, spending on consumables such as groceries and pharmaceuticals increased only 0.1 per cent in the quarter ... MORE