KEY POINTS:
Manufacturing bounced back strongly in October according to a survey released yesterday - the fourth piece of economic data this week pointing to an economy on the rebound.
"Things seem to be coming together for a good end to the year," said Deutsche Bank chief economist Darren Gibbs.
"Consumer confidence has been improving very, very sharply, as has business confidence, the currency is off its highs - although it's still relatively high - and people have become very comfortable with the current level of interest rates."
Also, petrol prices are well below their high around the middle of the year.
Yesterday's Performance of Manufacturing Index stood at a four-month high of 56.4, up from 51.0 in September. A reading above 50 points indicates manufacturing is generally expanding, while below 50 indicates it is contracting.
Business New Zealand, which commissions the monthly survey, said it "showed a healthy level of [manufacturing] activity approaching Christmas, despite the increasing value of the New Zealand dollar and a downturn in numbers employed in the sector".
The survey comes on the same day as Real Estate Institute figures showing houses sold more quickly in October than September - 29 days compared to 31 - and the median house price rose 3.5 per cent to $324,000.
ANZ bank said the data would concern the Reserve Bank, but was unlikely to prompt Governor Alan Bollard to raise interest rates next month.
"This could be the early signs of a re-acceleration in housing market activity," ANZ said.
"The material slowdown in the housing market the Reserve Bank wants to see is a long way off."
The data follows strong retail sales and producer prices data earlier in the week.
Adjusted for inflation, retail sales rose 1 per cent in the September quarter, bouncing back from a 0.4 per cent decline the previous quarter, thanks to lower petrol prices giving consumers more cash to spend. Also, producer input prices - costs to businesses - rose more quickly than expected.
Deutsche Bank's Gibbs pondered whether the data represented a temporary blip or the start of a new upswing.
That the full impact of the Reserve Bank's interest rate hikes over the past couple of years had not yet been felt because of fixed-rate mortgages suggested a blip, said Gibbs.
"On the other hand, the fall in petrol prices has put a lot of money into people's pockets," he said.
"That's a one-off. It won't happen every month. What you might find is that the economy does bounce back a bit and then the gains slow."
