24 Aug 2023

Primary sector slowing, 'Truckometer' data shows

1:43 pm on 24 August 2023
A logging truck on the roads near Kaitaia.

Sharon Zollner said the fall in trucking activity pointed to a primary sector under stress. Photo: 123RF

Heavy traffic activity is threatening to fall into recessionary territory, with weak activity across logging, construction and retail.

ANZ Bank has reported a second consecutive monthly drop in its Truckometer heavy traffic index.

Chief economist Sharon Zollner said the fall in trucking activity pointed to a primary sector under stress and a pullback in retail spending.

"We've seen two reasonably chunky falls now in both June and July in the truck traffic," Zollner said.

"Traditionally that has been an indicator of weak activity across logging, construction and retail because firms don't need to restock so much. It does tend to be pretty correlative with the GDP data."

The ANZ Truckometer heavy traffic index dropped 3 percent in June, on top of a 1 percent fall last month.

The light traffic index, an indicator of consumer activity, lifted 0.6 percent, matching last month's slight increase of 0.3 percent.

The latest drop in the heavy traffic activity also reflected weak momentum in the Chinese economy, with decreasing demand for logs.

"The primary export sector is under particular pressure at the moment," Zollner said.

"Agricultural production, and thus transport needs, are mostly determined by the weather (particularly rainfall) in the short run, with demand determining the prices."

Zollner said the mild upward trend in light traffic came at a time when interest rates had increased rapidly, forcing consumers to shut their wallets.

"Light traffic lifted in July, and has only a mild upward trend despite strong growth in the population," she said.

"This is consistent with discretionary spending being under pressure as tighter monetary policy bites."

The latest data supported the anecdotal evidence of an economy under stress, she said.

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