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Analysts at TD  Securities note that New Zealand’s Q3 consumer spending was strong as TDS expected, fed by not only transfer payments, but also an overall strong environment for consumers with strong employment and rising wages growth.

Key Quotes

“Q3 average card spending +1.9%/q, offering at least 1.2%/q real consumption growth and poses a very strong start to Q3 GDP (consumption contributes to 60% of GDP in NZ).”

“NZD rightly bouyant this morning but fears of Governor Orr going back to “rate cut” talk next month (8 Nov) to prevent OIS from pricing in hikes still linger. Fonterra nudged down its estimated farmer payout for 2018/19 from $NZ7.05/kg to $NZ6.675/kg as global supply is somewhat higher than expected. However, this payout is in line with the last two years ($NZ6.52/kg and $NZ6.79/kg) hence not a material shock to the sector.”