New Zealand data
ANZ remarks on the results (in brief):
- Consumer sentiment is still up and running; confidence lifted in May.
- The level adds up to good times ahead across the economy.
- Consumers' view of their financial position lifted to the highest level since the global financial crisis; that's positive for near-term spending momentum.
- Expectations of both inflation and house prices eased (House price inflation expectations reversed last month's rise, dropping from 5.2% to 4.6%. Inflation expectations eased from 4.0% to 3.6%. )
Further from the report ANZ looks at risks ahead ...
So what could upset things?
- Headline inflation has popped to 2.2% and necessary items (housing, food etc) are rising faster than the 'fun' items (international travel, clothing, audio equipment etc). Attention will swivel to whether wages rise to at least match it, to maintain purchasing power.
- Chicken Little's perennial fear that something could go awry in the property market could yet be realised. Candidates are a global event or rapid-fire lifts in interest rates from the RBNZ a la 1997 and 2007. That said, there's been a strong negative correlation between house price expectations and confidence levels for 25-34 year olds of late: not everyone would consider housing market weakness a bad thing.
- The RBNZ is not hiking, but retail borrowing rates are being pressured to rise nonetheless as banks scramble for deposits. Though that benefits savers, it is not great news for borrowers.
