March 10 forecasts
Transport
Ripe for recovery? | Economic OutlookPDFThe New Zealand economy is slowly hauling
itself off the couch and getting moving again. GDP growth will look impressive
over the next two years, averaging 4%pa, but it’s worth remembering that the
economy is currently smaller than it was at the start of 2007.
Tourism ActivityThese forecasts mark the introduction of a
new chapter in our transport forecast book. Tourism activity is an important
driver of demand for rental cars, bus and ferry services, and air travel.
Tourism is also a significant driver of retail sales and general domestic
economic activity, indirectly affecting demand for road freight. The tourism
sector has seen reasonably good growth heading into 2010. Tourism arrivals
during the three months to January were up 4.1% from a year earlier. Large
numbers of Australians coming to New Zealand has been behind much of this
recent strength, and this trend will continue to support overall arrival
numbers during 2010. Arrivals from Asia, Europe, and America will also begin to pick up during 2010 as the international economy improves.
Although we expect a slowdown in Australian arrivals during 2011, the Rugby
World Cup will help further boost arrivals from New Zealand’s long-haul
markets.
The Car MarketIn our November publication we proclaimed
that the car market was nearing a turning point, and the most recent data suggests
that this assessment was accurate. Both new and used car sales have now begun
to pickup and we expect this trend to continue, though it will be a slow
recovery at first. High unemployment and a battered business sector will
constrain the recovery in car sales during 2010. Both new and used car sales
will increase significantly over the next 2-3 years. But the rebound in used
car sales will be constrained by a tighter regulatory environment,
consolidation in the industry, and relatively low new car prices.
Residual ValuesHigh car prices over the last few months
will be benefiting those looking to realise residual values on three-year-old
cars. However, fewer cars are being sold at these published prices, and demand
conditions mean some sellers may need to lower their prices to ensure stock is
sold. During 2010, and over the following two years, this trend will reverse.
Prices will fall but demand for cars will pick up significantly. For residual
values being set at present, the most important consideration is the rise in
the exchange rate with the yen we are forecasting. The downward effect of a weaker
yen on car prices will be offset slightly by higher GST and the ongoing effects
of tight regulations on used cars.
Road Freight and External TradeRoad freight activity appears to have
stabilised, but remains very weak. A lot of this weakness can be attributed to
the large fall in imports during 2009. The good news for freight operators is
that labour costs have eased considerably, and wage pressure will remain
subdued until at least 2011. Import volumes will bounce back strongly during
2010 as business investment and consumer spending pick up. Export volumes are
already elevated, thanks to strong growth in forestry and agricultural exports
over the last year. Exports will continue to perform well, but the prospect
for additional growth in volumes during the next three years is limited. Given
the outlook for imports and the economy at large, we expect to see a relatively
strong bounce-back in road freight activity from mid-2010.
Commercial VehiclesWhile new light commercial sales have shown tentative signs of recovery,
medium and very heavy truck sales weakened further in December and January. There
have been some minor revisions to our forecasts for light commercials since
November, due to a stronger retail sector and a better outlook for business
investment. We now expect light commercial sales to reach 14,000pa by early
2011. New medium truck registrations will top 800pa in early 2011, as
non-residential building activity picks up and the domestic economy improves.
Relatively strong dairy volumes, a buoyant forestry sector, and a pick-up in
road freight should see very heavy truck sales also turn around from mid-2010,
reaching 1,200pa by mid-2011.
Recent releases
TransportBuilding / vehicle costs 16/02/2010
Dec qtr 09 | residential a.p.c: -0.6%
Retail sales 12/02/2010
Dec qtr 09 | excl. auto a.p.c: 1.7%
Monetary policy 28/01/2010
Jan 10 | OCR: 2.50% (prev. 2.50%)
CPI - inflation 20/01/2010
Dec qtr 09 | a.p.c: 2.0%
Car sales 3/05/2007
Apr 07 | new 3m.a.p.c: -3.8%
Light commercials 13/04/2007
Mar 07 | new 3m.a.p.c: -2.0%
Heavy commercials 13/04/2007
Mar 07 | total 3m.a.p.c: -4.5%
Dec qtr 09 | residential a.p.c: -0.6%
Retail sales 12/02/2010
Dec qtr 09 | excl. auto a.p.c: 1.7%
Monetary policy 28/01/2010
Jan 10 | OCR: 2.50% (prev. 2.50%)
CPI - inflation 20/01/2010
Dec qtr 09 | a.p.c: 2.0%
Car sales 3/05/2007
Apr 07 | new 3m.a.p.c: -3.8%
Light commercials 13/04/2007
Mar 07 | new 3m.a.p.c: -2.0%
Heavy commercials 13/04/2007
Mar 07 | total 3m.a.p.c: -4.5%
ReportsTransport update, July 2009
(22/01/2010)
Transport update, November 2009
(22/12/2009)
Transport update, November 2009
(23/11/2009)
Transport update, September 2009
(27/10/2009)
Transport update, August 2009
(25/09/2009)
Transport update, July 2009
(19/08/2009)
(22/01/2010)
Transport update, November 2009
(22/12/2009)
Transport update, November 2009
(23/11/2009)
Transport update, September 2009
(27/10/2009)
Transport update, August 2009
(25/09/2009)
Transport update, July 2009
(19/08/2009)
Transport update, January 2010 19/02/2010Unemployment jumped a whopping 0.8 percentage points to 7.3% in the December quarter. This result was significantly worse than anyone, including us, expected. The Reserve Bank will take unemployment into account when reviewing the official cash rate over the coming months, and we now think it is most likely they will wait until June to lift rates. However, with rates at emergency levels they will rise rapidly following the first hike. The OCR is likely to be back to 5% by mid-2011. The TWI averaged 66.1 in January but has eased over the last couple of weeks on the back of international credit concerns and a later expected move by the Reserve Bank. We expect the TWI to move higher over the first half of 2010 before easing slightly later in the year as the US dollar strengthens
Computers lead capital cost drop 16/02/2010Dec qtr 09 | residential a.p.c: -0.6%
The price of capital goods declined during the December quarter, as domestic economic activity remained weak and the dollar continued to strengthen. With New Zealand economic activity showing signs of recovery, we expect to see capital good prices lift through 2010.
Retail sales strong, but momentum wanes 12/02/2010Dec qtr 09 | excl. auto a.p.c: 1.7%
The volume of core (non-automotive) retail sales during the December quarter rose 1.3% from September (seasonally adjusted). However, the value of core spending declined a massive 1.8% from November (seasonally adjusted), taking spending to it’s lowest level since July. Some stability in the labour market and increasing consumer confidence will see retail spending growth accelerate through 2010.
Articles
Articles
What price peak oil?
(15/05/2008)
Sea Change – what does it mean for transport
(7/03/2008)
Commodity prices: what does the Baltic Dry Index tell us?
(6/03/2008)
Paying for the privilege of fuel consumption
(9/07/2007)
Fuel Tax Efficiency
(14/05/2007)
(15/05/2008)
Sea Change – what does it mean for transport
(7/03/2008)
Commodity prices: what does the Baltic Dry Index tell us?
(6/03/2008)
Paying for the privilege of fuel consumption
(9/07/2007)
Fuel Tax Efficiency
(14/05/2007)
Re-tapping the car markets potential 29/09/2009Total car sales during the first quarter of 2009 were down
40% from a year earlier, representing a difficult time for anyone trying to
make a living in the automotive industry. But the question on many people’s
minds is whether car sales will regain their former glory once the economy
improves. This article provides five-year estimates for the three drivers of
car sales – replacement demand, ownership rate, and household formation. Car
sales appear to be well below fundamentals at present, and are poised to rise
significantly when the economy improves.
Road Trip down Memory Lane 17/08/2009New Zealanders have a passion for cars. With the exception of the US, our love affair with the automobile has led to New Zealand having more cars per head of population than anywhere in the world. The car industry is very different to how it once was back in the late 1980s. The significant changes to regulations around importing vehicles have influenced New Zealanders’ consumption of cars.
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