Domestic demand showing newfound strength

Over the past two weeks Statistics NZ has released data that undermines the relatively pessimistic view of the December quarter that had dominated markets.  Last week the labour market data indicated that unemployment was significantly lower than anyone had anticipated.  And this week, significant revisions to electronic card sales data indicated that households have been spending more heavily on durable goods than had previously been reported.  With households starting to flex their consumption muscle at a time when population growth is at a record high, the demand pressures the Reserve Bank desires may be starting to appear.