Bloomberg News

N.Z. Manufacturing, Confidence Add to Case for Modest Recovery

July 11, 2012

New Zealand’s manufacturing industry almost stalled last month while consumer confidence rebounded from a 12-month low, private surveys showed today.

The performance of manufacturing index dropped to 50.2 in June from 55.8 in May, Bank of New Zealand Ltd. and Business New Zealand said today. Consumer confidence rose by 4.7 points in July after falling 8.1 points in June, according to an ANZ National Bank Ltd.-Roy Morgan index.

Sluggish manufacturing and consumer caution add to signs of weak domestic demand and growth after gross domestic product surged 1.1 percent in the first quarter. Investors are betting the central bank may respond to slow growth and benign inflation by cutting interest rates this year.

“Consumer confidence has been bouncing along a flat trend for over a year, at a level that shows consumers remain wary,” Sharon Zollner, senior economist at ANZ National in Wellington, said in an e-mailed report.

Investors are pricing in a 54 percent chance the central bank will lower the official cash rate this year, according to interest-rate swaps figures compiled by Bloomberg. Reserve Bank of New Zealand Governor Alan Bollard left the rate at a record- low 2.5 percent on June 14 and signaled no change until 2013.

ANZ National’s consumer confidence index rose to 110.5 from 105.8 the prior month. An index of future conditions lagged behind a gauge of present conditions for the first time since the 2008 recession as a majority of consumers continue to expect bad times over the next year, the report showed.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net


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