Indicators point to slowing New Zealand economy

New Zealand's economic growth seems to have slowed in the second half of the year, with business and consumer confidence weakening, the New Zealand Treasury announced Monday, fueling claims that the country's manufacturing sector is in demise. The Treasury's Monthly Economic Indicators for October said no single reason for the decline in sentiment was clear, but it was likely to stem from a combination of factors, including ongoing concerns about the global situation, the high New Zealand dollar, and uncertainty over the rebuilding of earthquake-battered Christchurch and the surrounding Canterbury region. Pricing pressures were soft in the September quarter, with annual headline inflation falling below 1 percent for the first time since 1999, it said. "Inflationary pressures are expected to pick up over the next few years as the (New Zealand dollar) depreciates, unemployment falls and spare capacity is absorbed. The Canterbury rebuild may also add some pricing pressures, as supply becomes more of a constraint," said the document. Both the services and manufacturing sectors appeared to be slowing, with the Performance of Manufacturing Index pointing to a third straight month of contraction in October, it said. "While the series can be volatile on a monthly basis, it is now showing a negative trend across 2012," it said. The main opposition Labour Party seized on the point to renew its claim of a manufacturing crisis after a recent spate of layoffs and closures. Labour Economic Development spokesperson David Cunliffe said it contradicted government denials of problems in the sector. "By highlighting the overall negative trend in manufacturing this year Treasury is echoing the views of thousands of people across the country who have lost their jobs in manufacturing," Cunliffe said in a statement. "(Prime Minister) John Key has refused to listen to the jobless struggling to get by, the business owners forced to shut down their factories, and opposition parties calling for a cross-party inquiry. Maybe he will listen to the Treasury." Meanwhile, the results of a survey from the BNZ bank Monday showed confidence in the country's economy at a 16-month high. The survey found a lift in confidence in the state of the economy in a year's time to 38 percent optimistic, up from 20 percent optimistic in October and the highest result since July 2011. "In residential real estate a property shortage remains the dominant theme, and many businesses in other sectors are increasingly confident that the Christchurch rebuild is imminent and that their activity levels will firm," said a statement from the BNZ.