"Despite the seemingly contradictory job numbers, the Berl basket of indicators is now unambiguously signalling a morose New Zealand economy.
"Of the 50 measures captured in our basket, only 18 are in positive territory when compared to their year earlier levels."
With 32 indicators in negative territory, the net balance of -14 put the basket of indicators at its lowest point since August 2005, he said.
In addition to the household labour force survey numbers, which showed an easing in the labour market, other indicators pushing the Berl index into the red were retail sales figures, producer price index numbers and Business New Zealand's performance in manufacturing index (PMI).
"Indeed, the PMI figures for April were sombre reading. It is clear the manufacturing sector continues to struggle."
Adding to the misery of the past couple of weeks had been the producer price index figures, which were just as horrible as the PMI data, Dr Nana said.
A large proportion of the surge in input prices could be explained by the combination of oil and electricity prices.
Although the cost inflation was very concerning, Dr Nana could not see how job losses in New Zealand would bring global oil prices under control.
The details underlying the headline retail sales numbers were worthy of further exploration, he said.
Taking retail price inflation into account, the volume of retail sales in the first three months of 2008 was 0.1% below the previous corresponding period.
That was the first year-on-year reduction in retail sales recorded since the June 1998 quarter.
Excluding motor vehicle, fuel and related sales, retail sales in the March quarter were only 0.9% above a year earlier, the lowest annual growth since the 0.1% recorded in the September 1998 quarter.
"All of this does indeed suggest a retail crunch," Dr Nana said.
As widely reported, the slowdown was also being felt in the housing market. The most noticeable example of that was in house sales and average days on the market rather than a reduction in house prices.
Scapegoats were being sought, he said.
Some claimed that media coverage had encouraged potential buyers to postpone purchasing. Many blamed the Reserve Bank for overly high interest rates.
Others blamed reckless borrowing by buyers who believed prices would go up forever and some blamed the banks for lending to those who probably should not have been given loans in the first place.
Some banks blamed the international credit crunch for forcing them to raise rates even higher.
"But, as is often the case, the gloomy stories do seem a tad overdone. Although sales are down, prices remain above where they were a year ago. And, despite the absence of an official cash rate cut, mortgage rates are already beginning to ease.
"Some continue to forecast house price declines in the order of 10% to 30%. While some decreases may well occur, such forecasts may be overly influenced by the hype rather than by analysis," Dr Nana said.
- Electronic card retail spending fell in April, weighed down by weaker consumable and durable goods sales, data showed yesterday, the latest sign consumers are tightening their belts.
Electronic card transactions, which included debit, credit and charge cards used at the point of sale, showed retail spending declined a seasonally adjusted 0.3% last month, following a revised flat reading in March, Statistics New Zealand (SNZ) said.
Electronic transactions for core retail groups, which excludes motor vehicle-related industries, fell a seasonally adjusted 0.9% from March, when they fell 0.1%.
Overall, seasonally adjusted electronic card spending, which includes transactions in industries other than retail, rose 1.4% following a 1% decline in March, SNZ said.
The Reserve Bank said last month there were significant down-side risks to the economy, but it needed to keep rates on hold for some time because of persistent inflation concerns.
Following a series of surprisingly weak data, including jobs and retail numbers for the first quarter, most analysts expect the central bank to start cutting interest rates by September.
SNZ had said earlier the card spending data should not be used as an indicator of monthly retail sales, because it was incomplete and did not include cash and cheque transactions.
However, analysts see electronic transactions as a good pointer on consumer spending.
