WRAPUP 1-Grim NZ data points to lengthy pause on rates

* NZ govt warns not to expect positive surprises

* Rates seen on hold well into next year

By Mantik Kusjanto

WELLINGTON, Oct 14 (BestGrowthStock) – New Zealand retail sales
were weaker than expected in August, reinforcing views of a
shaky economic recovery which almost certainly means interest
rates won’t rise for some months yet.

Interest rate futures (0#NBB:: ) rallied as the market pushed
out the timing of any further hike by the Reserve Bank of New
Zealand (RBNZ).

Reflecting the tepid recovery, Finance Minister Bill
English warned not to expect any positive surprises on economic
growth or tax revenues in the coming year as households learn
to spend less and save more.

“This recovery will remain quite different to what we have
seen in New Zealand in the past. It will not be fuelled by debt
and consumption,” English told a media briefing on the
government’s annual accounts.

He also said the country was counting on a pick-up in
exports which would be helped if China allowed the yuan to rise
further. [ID:nWEL004187]

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

For a breakdown of retail sales, see [ID:nWEL004186]

To read the instant view on retail sales [ID:nSGE69500H]

To read a story on the housing market [ID:nWEL004185]
To ready a story on government account [ID:nWEL004187]
For a graphic on retail and official cash rates
http://link.reuters.com/hyg48p

For a graphic on housing and official cash rates

http://link.reuters.com/jyg48p
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Latest data showed seasonally adjusted retail sales were
flat on the previous month, compared with a forecast rise of
0.4 percent in a Reuters poll.

Sales, excluding autos, dropped a sharp 0.6 percent, when
analysts had been hoping for a 0.3 percent rise. That came on
top of data showing further subdued house sales and property
prices.

“It’s clear that the RBNZ will be on hold for a little
while, probably well into next year,” said Helen Kevans, an
economist at JPMorgan. “We’re looking at a March hike right
now, but if the data like retail and housing continue to
disappoint like today, we’d consider reviewing that forecast.”

The New Zealand dollar (NZD=: ) initially dropped more than a
quarter of a cent to $0.7568 after the retail data.

But it later bounced back to $0.7623 after Singapore’s
central bank widened the trading band of its currency, allowing
it to rise a little faster against an ailing U.S. dollar.
BUMPY

New Zealand’s economic activity has been bumpy, with
consumers and businesses cautious in recent months amid weak
wage growth and rising unemployment.

The Reserve Bank of New Zealand left its cash rate
unchanged at 3.0 percent last month and downgraded its economic
outlook, saying future rate rises would come at a slower pace
than earlier expected. [ID:nSGE68F00F]

Financial markets have slashed their expectations over the
scale and speed of hikes, with analysts now seeing little
chance of a move before March, if then. [NZ/POLL]

After the retail data, markets are pricing in 52 basis
points of tightening over the next 12 months, from 57 basis
points on Wednesday and down from 70 a month ago.
(CSRBNZ1Y=CSAU: ).

Surveys have shown consumers confident but cautious. The
housing market has also cooled. Data showed a 0.8 percent rise
in house sales in September, while prices were unchanged. The
house price index was slightly lower. [ID:nWEL004185]

“The picture from taking the housing data and the retail
says that this is not an economy that’s crying out for higher
interest rates,” said Goldman Sachs Economist Bernard Doyle.

(Additional reporting by Wayne Cole; Editing by Nick
Macfie)

WRAPUP 1-Grim NZ data points to lengthy pause on rates