Last week positive labor market data was published with an unexpected drop in New Zealand’s unemployment rate in the fourth quarter decreasing to 6.3% from 6.6%, better than the 6.5% predicted. Furthermore, Labor Cost Index improved by 0.7% in the last quarter from 0.5% gain in the third quarter. Will New Zealand continue ots recovery?

Last week new housing approvals jumped 2.1% in December rising 13% in from a year earlier; however 2011 has been a bad year for the housing sector being the worst year for building since records started in 1965. Will we see an improvement during 2012?

Last week the Reserve Bank of New Zealand maintained its benchmark interest rate at 2.50% in light of ongoing uncertainty concerning global market conditions. Meanwhile Trade balance swung to surplus in December reaching NZ$338 million beating expectations for NZ$74 million deficit and providing positive news about the NZ economy.

Last week New Zealand business confidence plunged from 25 to 0 in the 4th quarter. The private sector survey revealed that companies are pessimistic regarding future business conditions believing things will be worse in the near future. NZ has slowed down disregarding the EU debt crisis with declines in the retail sector. The EU crisis may further worsen NZ economic condition. Will this slowdown continue?

Weak readings were released in the last 7 days with a widening trade balance deficit of NZ$308 million, building consents dropping 6.4% after 10.7% rise in September and ANZ Commodity Prices continuing to decline by 0.8%. Let’s see what this week has in store for us. Despite a fall in Australian employment numbers, the European optimism sent the kiwi up as well.

The improvement seen in the US job market began helping the US dollar against risk currencies, contrary to behavior seen beforehand. Yet this change might be temporary. The New Zealand dollar managed to make an impressive break above 0.79 and topped out at 0.7964 before new worries hit Europe.

End of year adjustments pushed the kiwi higher, despite worries from China. Will the Chinese landing hurt the kiwi in 2012? The first week of the year could provide an indication.

New Zealand enjoyed strong growth in Q3 – 0.8%. But on the other hand, this came on top of significant downwards revisions for many quarters that preceded this one. The uplift came from no eruption of new bad news from Europe.

Last week figures revealed that New Zealand’s manufacturing sector contracted further in October, reaching 45.7 from 46.6 in the previous month. The drop occurred despite the approaching holiday season when production usually increases. Will the manufacturing sector improve this month?

Last week the Reserve Bank of New Zealand maintained rates at 2.50% despite the positive state of the NZ economy the RBNZ members are still worried about the European debt crisis situation which may badly affect global markets. Meantime REINZ house price index increased by 1.1% after 0.3% drop in the previous month. Will NZ continue to grow despite the current global situation?