Supporting information:
Historical data (Excel spreadsheet)J6 Survey of expectations – a survey of businesses
Survey operation conducted by The Nielsen Company
September 2010 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 11 and Thursday 12 August 2010. 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
One-year inflation expectations climb higher
Respondents’ one-year-ahead inflation expectations of consumer price index (CPI) inflation climbed higher this quarter as respondents continue to factor GST and other likely price rises into their short-term expectations. One-year-ahead annual CPI expectations rose from 2.9 to 3.9 percent. This follows the 0.8 percentage point rise seen in the June quarter survey. The median of the one-year question is higher still, at 4.5 percent. The difference with the mean appears to have arisen because of a cluster of respondents holding expectations of around 2-3 percent, producing a bimodal effect in the distribution of responses.
Two-year-ahead expectations have fallen since last quarter, from 2.80 to 2.56 percent. The median two-year rate is 2.70 percent.
Turning to quarterly CPI expectations, a quarterly rise of 0.7 percent is expected for the September 2010 quarter, unchanged from last quarter. However, in the December quarter a rise of 1.6 percent is expected. These quarterly increases are equivalent to annual inflation rates of 1.2 percent for the year to September and 3.0 percent for the year to December.
Tighter monetary conditions are expected
Monetary conditions are currently perceived to be relatively neutral, however by the second quarter of 2011 an increasing proportion of respondents expect tighter monetary conditions.
At the time the survey was completed, the net percentage of respondents who believed monetary conditions were easier than neutral was 3 percent. This compares to a net 11 percent in the June quarter survey who believed conditions were currently easier than neutral. By September this year a net 3 percent of respondents believe conditions will be tighter than neutral, while six months later a net 19 percent of respondents believe conditions will be tighter than neutral.
Small increase in hourly earnings growth expectations
Since the last survey both one and two-year-ahead hourly earnings growth expectations increased by 0.2 percentage points. They are now 2.4 and 2.9 percent respectively.
The unemployment rate is expected to fall
By June 2011 the unemployment rate is expected to have fallen to 6.1 percent. A year later, the unemployment rate is expected to have dropped further, to 5.7 percent. The latest official unemployment figure (for the June 2010 quarter) is 6.8 percent.
One-year GDP growth expectations fall
Respondents have revised down their one-year-ahead expectations of GDP growth to 2.3 percent. This result is 0.4 percentage points lower than in the last quarter. At the two year horizon, respondents’ expectations are unchanged at 2.8 percent. The latest Statistics New Zealand data indicates real production-based GDP increased by 1.8 percent between March 2009 and March 2010 (annual percentage change).
Positive near-term quarterly growth of 0.5 and 0.7 percent is expected for the June and September 2010 quarters respectively.
Higher interest rates are expected.
The 90-day bank bill rate is expected to be 3.4 percent at the end of September 2010, a little higher than the rate prevailing at the time the survey was taken (3.3 percent). However, by June 2011, respondents believe 90-day rates will have increased to 4.3 percent, consistent with their expectations of tightening monetary conditions.
10-year government security yields are expected to be around 5.7 percent at the end of June 2011, implying a positive yield gap of 1.4 percent with the expected 90-day rate. From the start of 2009 the gap between short-term and long-term rates widened significantly as short-term rates fell and long-term rates trended upwards. Over recent quarters this “expected gap” has been trending downwards again.
Exchange rates close to current levels are expected
An exchange rate of US$0.71 is expected for the NZ dollar at the end of December this year. The rate is expected to be a little lower by the end of June 2011. A rate of NZ$0.80 is predicted for the NZD/AUD exchange rate at the end of June 2011, not far from where the rate was when the survey was completed.
Sample Composition
The response rate for this quarter was 58 percent out of a sample of 121. Of the completed questionnaires received by the cut-off date, the distribution across activity groups was:
|
Financial |
23 |
|
Business |
27 |
|
Agriculture |
7 |
|
Labour |
5 |
|
Other |
8 |
|
|
__ |
|
TOTAL |
70 |
|
|
|
Published 24 August 2010
