NZ Economic Update: Rates, Trade, Housing & Markets – March 2026

New Zealand’s economic landscape presented a mixed picture on Friday, with shifts in mortgage rates, trade deficits and housing affordability alongside modest growth in the labour market. While mortgage rates remained unchanged, a notable increase in term deposit rates from Mutual Credit Finance offered savers a slight boost. Simultaneously, the country’s trade deficit widened considerably, and early indicators suggest a slowdown in agricultural spending and consumer credit.

Trade Deficit Widens, Raising Concerns

Statistics New Zealand reported a merchandise trade deficit of $257 million in February, a significant deterioration from the $445 million surplus recorded in the same month last year. The data reveals a modest 0.4% increase in exports year-on-year, contrasted by a substantial 11.8% rise in imports. This widening gap is particularly concerning given the potential for increased global trade disruptions, as highlighted in the report. The February deficit, while larger than the $319 million recorded in February 2024, still represents an improvement over that month.

Digging deeper, the trade relationships with New Zealand’s key partners are showing strain. Deficits with Australia, Japan, and Korea have worsened compared to February of the previous year. While a surplus with the United States has been maintained, the surplus with China has been halved. These five countries collectively account for nearly 60% of New Zealand’s total exports, making these shifts particularly impactful. This concentration of trade relationships underscores New Zealand’s vulnerability to economic fluctuations in these key markets.

Housing Market Shows Signs of Cooling, Landlords’ Leverage Diminishes

On a more positive note, the rental market appears to be easing. Trade Me Property reported a 3.1% year-on-year decrease in median rents in February, suggesting increased affordability for tenants, even those with pets. This trend indicates a potential shift in the balance of power between landlords and renters, offering some relief in a traditionally tight market. The easing of rental pressures could also have broader implications for household finances and consumer spending.

Agricultural Spending Slows, Reflecting Farmer Caution

A decline in tractor registrations offers another signal of cautious spending within the agricultural sector. Only 130 tractors were registered in February, a 13% decrease from the same month last year and the lowest February level since 2010. This suggests that despite potentially strong farm incomes, farmers are hesitant to invest in new equipment, possibly anticipating economic headwinds or seeking to consolidate existing resources. The average February typically sees 173 tractors sold, making the current figure a notable outlier.

Modest Labour Market Recovery, Middle East Conflict a Dampener

The labour market continues to show signs of recovery, albeit at a slow pace. BNZ’s analysis of SEEK job ads indicates a modest increase in ad numbers, with the latest three months (December – February) showing a 3.9% increase compared to the previous three months. This aligns with a slight lift in filled jobs in January, suggesting a gradual strengthening of employment opportunities. Though, BNZ notes that the ongoing conflict in the Middle East is more likely to dampen, rather than halt, employment growth. Their report suggests a cautious outlook, acknowledging the potential for external factors to impact the domestic labour market.

Financial Indicators: Credit Card Spending, Swap Rates, and Currency Movements

Consumer spending, as measured by domestic billings on locally issued credit cards, softened slightly in February, rising by only 2.1% year-on-year. This increase is largely attributable to inflation, suggesting that real billings may have actually eased. Interestingly, despite this modest growth, users are not significantly increasing their reliance on credit card debt facilities, with approximately half of card balances being paid off in full each month – a figure close to a series low. This indicates a degree of financial prudence among consumers, despite inflationary pressures.

Wholesale swap rates are expected to rise, reflecting growing uncertainty in the market. The 90-day bank bill rate decreased slightly to 2.51% on Thursday, but broader market trends suggest an upward trajectory. The New Zealand dollar strengthened against the US dollar, reaching just over 58.8 US cents, and also gained ground against the Australian dollar, reaching 83 Australian cents. Against the Euro, the Kiwi dollar rose to 50.9 euro cents, resulting in a TWI-5 (Trade Weighted Index) of 62.5, a net increase of 50 basis points from the previous day.

Bond Market Activity and Electricity Price Anomaly

A $450 million New Zealand Government bond tender saw strong demand, with 125 bids totaling $1.4 million. The May 2041 long bond proved particularly popular, attracting 42 bids. The 5.01% yield on this bond is the highest since May 2025, reflecting increased investor expectations for future interest rates.

An unexplained surge in wholesale electricity prices in Auckland presented a puzzling anomaly on Friday, despite warm autumn temperatures. The cause of this price spike remains unclear, prompting questions about supply and demand dynamics within the electricity market. Data from em6 may offer some clues, but a definitive explanation is currently lacking.

Equity and Commodity Markets: Mixed Performance

The New Zealand stock market (NZX50) experienced a decline of 0.5% on Friday, heading for a 1.5% weekly drop and a 1.2% decrease from six months ago. However, the index remains up 1.2% from a year ago. Market heavyweight Fisher & Paykel Healthcare contributed to the decline, falling another 1.7% on Friday. Global equity markets also presented a mixed picture, with the ASX200 down 0.3%, Tokyo down 3.4%, Hong Kong down 0.5%, and Shanghai down 0.1%. Wall Street ended Thursday down 0.3% on the S&P500.

Oil prices fell, with American oil (WTI) dropping to just under $93 per barrel and Brent crude falling to just under $106 per barrel. This decline may be linked to shifting geopolitical dynamics in the Persian Gulf. The price of carbon on the secondary market also decreased, falling $2.50 to $39 per NZU. Gold prices continued their downward trend, dropping $170 to $4676 per ounce, while silver fell $2 to $74 per ounce.

Bitcoin Volatility and Upcoming Economic Calendar Events

Bitcoin experienced moderate volatility, falling 1.0% to US$70,353. Investors are closely monitoring the cryptocurrency market for further fluctuations. Looking ahead, readers can stay informed about upcoming economic events by consulting the economic calendar on interest.co.nz.

The confluence of these economic indicators paints a complex picture of New Zealand’s current economic state. While some sectors, like housing affordability, show signs of improvement, broader concerns remain regarding trade imbalances, agricultural spending, and global economic uncertainties. Monitoring these trends will be crucial in the coming weeks and months.