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New Zealand Producer Price Inputs Gain 0.3% On Quarter In Q2

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Producer price inputs in New Zealand climbed 0.3 percent on quarter in the second quarter of 2019, Statistics New Zealand said on Monday - following the 0.9 percent drop in the three months prior.

Producer price outputs advanced 0.5 percent on quarter after sliding 0.5 percent in the previous three months.

On a yearly basis, PPI inputs were up 2.4 percent and outputs climbed 2.2 percent.

Capital goods prices gained 0.9 percent on quarter and 3.1 percent on year, while prices paid by farmers fell 0.1 percent on quarter and rose 2.5 percent on year.

Salary and wages rose 0.7 percent on quarter and 2.1 percent on year, while prices paid by consumers gained 0.6 percent on quarter and 1.7 percent on year.

Dairy product manufacturers received higher prices for products such as butter, cheese, and milk powder in the June 2019 quarter. Together, output prices for this group of products increased 8.7 percent from the previous quarter, the biggest rise in over two years. Prices rose by 16 percent in the March 2017 quarter.

"The rise in prices dairy product manufacturers receive is consistent with global dairy auction prices increasing in late 2018 and early 2019," prices, accommodation, and construction statistics manager Melissa McKenzie said. "It can take time for prices set at global dairy auctions to flow through to producers' prices, and there can be a further lag before consumers see price changes."

Dairy cattle farmers saw a relatively small change in the prices received for their raw milk, increasing by 0.5 percent for the June 2019 quarter. However, at the same time their input costs have decreased by 0.3 percent.

The farm expenses price index also shows a small decrease for dairy farm input prices (down 0.2 percent) for the June 2019 quarter. Some of the major input costs for dairy farmers have decreased with fertilizer down 1.2 percent, livestock feed (including maize, hay, and silage harvesting) down 4.4 percent, and interest rates down 1.3 percent.

Also on Monday, the latest survey from Business NZ showed that the services sector in New Zealand continued to expand in July, and at a faster rate, with a Performance of Services Index score of 54.7.

That's up from 53.0 in June and it moves further above the boom-or-bust line of 50 that separates expansion from contraction.

Individually, sales, employment, new orders and inventories continued to expand, while supplier deliveries remained in contraction.

"One should be cautious in reading too much into one month's data, but the positive result is good to see and especially in the context of weakness appearing in a few other leading indicators," BNZ Senior Economist Doug Steel said.

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