Traffic index bodes well for economy

Photo / Christine Cornege

ANZ Bank says its Truckometer indices bode well for economic growth into the second half of the year.

The heavy traffic index reflects heavy vehicle traffic on 11 roads selected because historically they have been closely correlated with economic activity at the time, while the light traffic index is a pointer to quarterly growth six months ahead.

Last month the heavy traffic index fell 2.1 per cent, seasonally adjusted, reversing a 1.2 per cent rise in April.

Amid the monthly volatility an upward trend could still be discerned, said ANZ economist Sharon Zollner.

Statistics NZ has yet to report gross domestic product for the March quarter but the Truckometer suggested growth around the 1 per cent mark, she said. ANZ's own pick is 1.3 per cent.

"The heavy traffic index suggests annual GDP growth may experience one more decent lift towards 4 per cent but then will start to ease," Zollner said.

"But even 3 per cent annual growth would make New Zealand the envy of other nations ..."

The growth in dairy volumes, which was one factor kicking off the current expansion, had done its dash and growth in the heavy traffic index and quarterly GDP growth might slow as a result.

But she said the light traffic index rose 0.2 per cent in May, its third consecutive increase, showing there was still plenty of gas in the economy's tank. Brian Fallow