Photo: 123rf.com
An unprecedented drop in heavy traffic suggests economic growth in the second quarter could be ugly reading.
The ANZ Truckometer for June shows the heavy traffic index, pointing to economic production, slumped 5.2 percent - the biggest drop ever recorded outside of Covid-19 lockdowns.
The light traffic index, which reflects household consumption and looks as much as six months ahead, fell 2.2 percent.
Heavy traffic is 0.9 percent lower than a year ago, while light traffic is up 0.4 percent.
ANZ chief economist Sharon Zollner said previously, the heavy traffic index had not matched anecdotes of weakening from the freight sector.
But she said the June data had caught up and showed there were fewer freight trucks on the road.
"If there's a lot of trucks on the road in April, May, June, then the economy probably grew during that period. But in this case, of course, it's been very weak in the month of June. So I think we can add it to the pile of of data that's suggesting that maybe GDP in the second quarter of this year was nothing flash.
"That would match up pretty well with the ANZ business outlook survey and the NZIER's quarterly survey of business opinion. The indicators are that those surveys are quite weak. So it's fair to say evidence is mounting that the economy turned south in the second three months of the year."
Zollner said the big drop in heavy traffic confirms the economic slowdown and is likely to add to the Reserve Bank's confidence in cutting rates sooner.
"The Reserve Bank acknowledged in their statement yesterday that the data has turned recently and we can add this to the pile.
"So even though they left the official cash rate unchanged, that did see the market change its expectations of when they'll be cutting, becoming more certain that they'll be cutting this year. So that in itself has lowered the wholesale rates that underlie fixed mortgage rates."
This week the Reserve Bank held the Official Cash Rate unchanged at 5.5 percent but softened its tone saying restrictive rates would lower in line with inflation.
Zollner said the financial markets have already eased as a result with cuts forecast for as early as August, with one in October a definite, and a solid chance of another in November.