NZ: Slowing growth – TD Securities

TD Securities analysts note that New Zealand’s Q2 GDP came in as per their and the RBNZ’s August MPS expectations at 0.5%/qtr vs mkt at +0.4%, placing annual growth at 2.1%, the slowest rate of growth since Q4 2013.

Key Quotes

“In terms of breakdown, the bounce in services we anticipated materialised, +0.7% in Q2 from +0.3% in Q1, with 8 of 11 industries showing growth offsetting weakness in manufacturing and construction in Q2.”

“Given GDP was in line with the RBNZ’s forecasts, the fact that the Bank over delivered even its own Aug MPS forecasts in cutting 50bps last month and the NZD is the worst performing G10 currency since the Aug MPS date (-2.8%), there is no compelling reason for the RBNZ to cut next week. That said we do expect the Bank to deliver one more cut in Nov this year.”