Anyone trying to read the tea leaves on our economy at the moment maybe getting a headache. 
 
Those trying to understand the Official Cash Rate (OCR) announcement this week can be forgiven for wondering what tea pot the Reserve Bank Governor is consulting.
 
While holding the OCR at 5.5%, the Reserve Bank warned that rates may need to stay higher for longer. This suggests RBNZ is worried about our economy is overheating.
 
Business owners, however, know the economy is undercooked. The economic slowdown is real, and it is to be seen everywhere. Many members are quietly talking about how things are tracking down, how there is just enough work, but it has been a major drop. With 93% of goods going on the back of the truck, road freight is a reliable weathervane for how the real economy is performing.
 
There is a silver lining to the slow down. National Road Carrier’s March Quarterly Transport Cost Index was released this week, and shows transport sector cost pressures have continued to ease, as activity weakens. Diesel has dropped 3.5% compared to the December quarter, financing costs are dropping, and significantly, labour costs increased by the lowest quarterly amount in over three years, just 0.4%.

This cooling shows that inflation is heading in the right direction. But it may not be soon enough for businesses suffering very real cash flow challenges. The difficulty is fixed costs remain, and have to be spread over much lower activity. 
 
For transport operators struggling to make week to week payments, please don’t battle alone, contact NRC for help on 0800 686 777. We have a team of experts who know transport costs inside out and can help you manage through the lean times.
 
In the meantime, let’s hope the Reserve Bank sees the slowdown in the real economy before it’s too late.
 
Justin Tighe-Umbers, CEO, National Road Carriers Assn