Early indications of retail spending in December were disappointing, with households unwilling to spend in the face of economic uncertainty and falling house prices. Similarly, NZIER’s Quarterly Survey of Business Opinion indicated that firms’ margins remain tight, and even though sales activity is beginning to improve it remains at a low level.

With economic activity and inflationary pressures weak, the Reserve Bank will feel comfortable leaving the official cash rate at its current low level of 3%. Once signs of economic strength begin to return, the Bank will increase the official cash rate. However, this is not expected to occur until June at the earliest.

The full report – including information on house sales, house prices, dwelling consents, non-residential building, interest rates and net migration – can be downloaded via the link here.