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Comments on: November NBNZ Business Outlook: Pessimism runs wild http://www.tvhe.co.nz/2008/12/08/november-nbnz-business-outlook-pessimism-runs-wild/ The Visible Hand in Economics Mon, 08 Dec 2008 23:03:46 +0000 hourly 1 https://wordpress.org/?v=6.9.4 By: Matt Nolan http://www.tvhe.co.nz/2008/12/08/november-nbnz-business-outlook-pessimism-runs-wild/#comment-3950 Mon, 08 Dec 2008 23:03:46 +0000 http://tvhe.wordpress.com/?p=2146#comment-3950 “I pay far more attention to the own selling prices indicator in this survey. Firms have a much better handle on their own pricing than on pricing in the broader economy”

Agreed. However, the disadvantage of the selling price indicator is that it is discrete and incredibly short term – it is selling us that some proportion of firms aim to lift prices in a three month horizon. Now, if these are all input firms you can bet that it will flow into inflation later on 🙂

Furthermore, because of the short horizon a fall could indicate that firms are expecting a short, sharp decline – and will look to get back into price increases later in the year.

“I think the 1-yr ahead inflation expectation is meaningless….it is a coincident indicator at best”

Agreed but … the NBNZ inflation expectations series has been remarkably stable over time – even as headline inflation has swung wildly. With the knock to fuel prices I would have expected a decline in this figure (like the 2-year ahead survey of expectations measure) – but instead it kept rising!

]]> By: DG http://www.tvhe.co.nz/2008/12/08/november-nbnz-business-outlook-pessimism-runs-wild/#comment-3953 Mon, 08 Dec 2008 05:38:15 +0000 http://tvhe.wordpress.com/?p=2146#comment-3953 I pay far more attention to the own selling prices indicator in this survey. Firms have a much better handle on their own pricing than on pricing in the broader economy. I think the 1-yr ahead inflation expectation is meaningless….it is a coincident indicator at best. With measured inflation at 5.1% I’m not surprised to see 1-yr inflation expectations holding up. They will fall as measured inflation falls.

]]> By: Matt Nolan http://www.tvhe.co.nz/2008/12/08/november-nbnz-business-outlook-pessimism-runs-wild/#comment-3952 Mon, 08 Dec 2008 03:30:31 +0000 http://tvhe.wordpress.com/?p=2146#comment-3952 “That bugged me too, though I suspect that trying to explain all of the monthly variations in this survey is the quickest path to madness”

Very true – it must be tough for them having to write about it every month 🙂

I would note that this survey number has been elevated for a while though – the measure of inflation expectations is stuck above 3.5%

“But I wonder if businesses are seeing some imported inflation, as per this article?”

They could well be – and it makes complete sense. However, I would have expected the sharp fall in petrol prices to dominate their outlook at the current moment – very interesting.

]]> By: Miguel Sanchez http://www.tvhe.co.nz/2008/12/08/november-nbnz-business-outlook-pessimism-runs-wild/#comment-3951 Mon, 08 Dec 2008 03:21:40 +0000 http://tvhe.wordpress.com/?p=2146#comment-3951 That bugged me too, though I suspect that trying to explain all of the monthly variations in this survey is the quickest path to madness. But I wonder if businesses are seeing some imported inflation, as per this article?

http://www.businessday.co.nz/personal_finance/4783707

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