New economic index being published by Treasury shows that activity plummeted 19% in April compared with a year earlier but then bounced back in May

A new index measuring economic activity has been released aimed a providing "a more granular and timelier signal of movements in the New Zealand economy".

The index has been constructed by staff at the Treasury, Statistics New Zealand and the Reserve Bank of New Zealand.

The timeliness of New Zealand's economic data has been an ongoing topic of discussion. The quarterly GDP figures produced by Stats NZ for example generally come out towards the end of the following quarter. 

The GDP figures for the June quarter 2020, which will show the full horror of the devastation to the economy caused by the lockdown in April, are not due to be released till September 17, just two days before the election.

The NZ Activity Index (NZAC) will be published by Treasury each month.

Those compiling it stress that it is not an interim estimate of GDP - but it summarises eight monthly indicators of economic activity covering consumer spending, unemployment, job vacancies, traffic volumes, electricity generation, economic outlook and manufacturing expectations. It will be updated around 14 days after the end of each month.

What the first edition of the index shows is that activity in April 2020 was 19% down on the same month last year and, even though activity bounced back in May, it still remained 6.5% down on May 2019. The May rebound was driven largely by sharp bounces in electronic card spending and light and heavy traffic movements (all up more than 80% on activity in April). Other contributing indicators, such as electricity grid demand, the BNZ-BusinessNZ Performance of Manufacturing Index (PMI) and the ANZ activity outlook, also saw "an encouraging uptick" in May - as did labour market indicators.

"While the NZAC is not an official statistic, it is a composite index that seeks to track New Zealand’s economic activity each month. Methodology and data sources will continue to be refined," Treasury said.

Stats NZ General Manager of Economic and Environmental Insights Richard Evans said the index was "an exciting new collaboration" providing further timely insight for government, policy makers, economists and the general public into the impacts of Covid on New Zealand’s economy and how its recovery is tracking.

Treasury chief economic Advisor Tim Ng said the NZAC index was a weighted average of the eight underlying indicators and "provides a more comprehensive measure than each individual indicator by itself".

"We have aimed to strike a good balance between including enough key indicators to ensure a good quality index, and maintaining timely publication."

The data that goes into making the monthly index will be hosted on the Stats NZ Covid-19 data portal, making it available for everyone to download and use, while the new NZAC Index will be published each month on the Treasury website alongside its other economic commentary products.