The bountiful New Zealand wholesale trade figures released yesterday are another indication of economic growth without inflation, which may leave the Reserve Bank with no option but to cut interest rates.
The majority of economists are now forecasting the Reserve Bank to cut its official cash rate on Thursday to 2.5%.
Wholesale trade rose in the third quarter as a jump in fruit exports drove the biggest quarterly gain in sales of grocery, liquor and tobacco in more than 20 years.
Seasonally adjusted sales rose 3.1% in the three months ended September 30, accelerating from a 0.1% increase in June, according to Statistics New Zealand.
Grocery, liquor and tobacco sales rose 5.3% in their biggest quarterly gain since the series began in March 1995, driven by an 8.8% increase in fruit exports.
Previous government data showed merchandise exports of fruit jumped 48% to $732 million in the September quarter from a year earlier, while more recent figures show fruit sales to foreign nations were up 29% to $2.28billion in the year ended October 31.
Wholesale trade covers intermediary transactions between manufacturers and consumers, which feeds into the national accounts and is used by economists to predict wider economic activity.
Statistics NZ changed its methodology in collecting data for the September survey to use more administrative data and reduce its reliance on surveys, while also ending its split of raw materials and finished goods in measuring total stocks.
BNZ senior economist Craig Ebert said the growth in wholesale trade was about twice as much as the rebound expected.
However, it was not enough to bump up the BNZ's third-quarter economic growth forecast, more shoring up the 0.5% already expected, rather than leaving it on the cusp of 0.4%.
Today's quarterly manufacturing survey sales and inventory figures were likely to infer a 0.8% increase in the industry's output.
Manufactured food processing in the quarter was likely to be a combination of a fall in dairy but a surge in meat, balancing out to be about flat, he said.
Also today, the Crown's financial accounts would help judge whether the recently good run, due to better-than-expected tax revenue, had continued.
ASB chief economist Nick Tuffley said the final piece of the Federal Reserve rate hike puzzle was released on Friday night.
US non-farm payrolls, which gave an indication of the health of America's labour market, came in above expectations for the second time in a row.
"With the market now pricing in a 74% chance of a US Fed rate hike next week, it looks like the moment has finally come for Fed chairwoman Janet Yellen to make her move.''
The Reserve Bank could no longer rely on US rate hikes to lower the New Zealand dollar and must take ac tion to meet its inflation target, he said.
"This is the moment the Reserve Bank has been waiting, hoping and wishing for in its Christmas present list. The Reserve Bank has long anticipated the eventual start of the Fed rate hikes would lower the New Zealand dollar. However, the celebrations may be short-lived. Unfortunately for the Reserve Bank, rather than watch the New Zealand dollar tumble, it has got even higher - even as markets have become more convinced of Fed action.''
Week ahead data
Today: Crown financial accounts; economic survey of manufacturing.
Thursday: Reserve Bank Monetary Policy Statement; ANZ consumer confidence index; electronic card transactions.
Friday: BusinessNZ PMI index; food price index.
