Vehicle sales show upward trend
The IJG Business Climate Index which is compiled by the Institute for Public Policy Research (IPPR) declined 5.5 index points in March. The March decline was driven by various factors. Firstly, commodity prices for meat, fish and metals declined. The meat price decline is seen to be seasonal, and the price is expected to increase through the latter part of 2014, on account of supply constraints following the drought of 2013.
Metal prices continued to soften in March as a result of weakening demand for ferrous metals from China. Despite expectations that Japan will restart its nuclear reactors in the second quarter of 2014, the demand for uranium remains weak.
The value of building plans completed declined almost five fold. Vehicle sales on the other hand rose to record levels, increasing to a total of 1,859 vehicles sold, from the previous record of 1,728 vehicles sold in February.
The investment, export and leading indicators all declined in March, relative to February, but remain up on a quarter-to-quarter basis. The consumption index expanded notably, on account of a 28 percent increase in passenger vehicle sales, as well as strong growth in private sector credit extension. The leading indicator decline was almost entirely on account of a decline in value of building plans passed which is not expected to continue in the coming months.
The factors behind the March decline in the index are largely temporary.
However, slowing metal prices on account of weaker demand from China remain a concern.
At least for now, this decline has been partially offset by a relatively weak NAD against the USD. Going forward, uranium prices are expected to increase, while ferrous metal prices are expected to stabilise, thus making the outlook more positive.