Filtered by Subscriptions: Australia & New Zealand Economics Use setting Australia & New Zealand Economics
The Reserve Bank of New Zealand will probably strike a dovish tone after leaving interest rates on hold at 1.75% at the policy meeting on Thursday 10th August, partly due to the softer economic news and partly because it doesn’t want to give the rising …
3rd August 2017
The fall in the trade surplus from a record high of $4.6bn in December to just $0.9bn in June is not a disaster as a lot of it is due to lower prices rather than lower export volumes. But the recent rise of the dollar to US$0.80 threatens to wipe out the …
Even though the Reserve Bank of Australia today decided not to try and talk the dollar down after it left interest rates at 1.5%, we still think the dollar will eventually weaken from US$0.80 now to around US$0.70. We believe that subdued GDP growth will …
1st August 2017
After a soft patch at the beginning of this year, jobs growth has soared in Australia in recent months. What’s more, of the net new 154,000 jobs that have been created since March all of them have been full-time ones. And business surveys remain …
31st July 2017
Most people are right to believe that their inflation rate is not 1.9% as the official ABS data show. As different people spend different shares of their income on different items than the ABS assumes, their own inflation rates are different. But most …
28th July 2017
The Reserve Bank of Australia will almost certainly keep interest rates on hold at 1.5% when it meets next Tuesday 1 st August, and we expect it to retain its fairly upbeat view on the outlook for the economy when its latest forecasts are published in …
27th July 2017
The RBA will probably look through the decline in headline inflation in the second quarter, especially given that underlying price pressures were slightly stronger than it had anticipated. That said, we believe underlying inflation will remain subdued for …
26th July 2017
GDP growth was weaker than anticipated at the start of the year, but the pick-up in our New Zealand Activity Proxy (NZAP) in May is consistent with a bounce back in the second quarter. At this stage, we expect that GDP growth accelerated from 0.5% q/q in …
25th July 2017
The recent rise in the Australian dollar to a two-and-a-half year high of just under US$0.80 has been meteoric. But while the dollar may orbit around that level for a bit, we don't think it will be too long before a reassessment of the outlook for …
21st July 2017
The surge in full-time jobs in June is likely to fuel growing expectations that the RBA will begin to raise interest rates by the first half of 2018. But despite this latest improvement there is still plenty of excess capacity in the labour market, which …
20th July 2017
The weaker tone of the inflation data for the second quarter has already caused the New Zealand dollar to weaken back below US$0.73 and the dollar may yet fall below US$0.70 as the markets realise that a lack of price pressures will prevent the RBNZ from …
18th July 2017
The gap between consumer and business confidence has widened further in recent months as rising profits have made firms increasingly optimistic while subdued wage growth has kept households pessimistic. We expect this gap to narrow in the coming months, …
14th July 2017
While the Westpac measure of consumer confidence nudged up in July, it remains below the long-run average and is consistent with a further slowdown in real consumption growth ahead. … Australia Consumer Confidence …
12th July 2017
While we expect that overall consumption growth will slow further this year and remain subdued in 2018 as well, not all areas of spending are equally vulnerable. Past behaviour suggests that spending on mobile phones, rent and transport will fare best. …
10th July 2017
The rising level of household debt in Australia presents a clear risk to the economic outlook and helps in part to explain why we expect the pace of consumer spending to slow this year. What’s more, given the risk it poses to financial stability, it is a …
7th July 2017
The trade surplus bounced back in May as coal exports returned to more normal levels following a sharp fall in April as a result of disruptions caused by Cyclone Debbie. As such, at this stage it appears that net exports may have made a neutral …
6th July 2017
The Reserve Bank of Australia (RBA) left interest rates on hold at 1.5% for the tenth consecutive meeting today and retained its fairly optimistic tone on the outlook for economic growth in the accompanying statement. Nonetheless, we expect rates will …
4th July 2017
The stronger than expected rise in retail sales values in May, alongside the surge in sales in April, suggests that real consumption growth accelerated in the second quarter. That said, we doubt this will mark the start of a sustained pick-up in …
While the recent run of positive news on the health of the Australian labour market is certainly encouraging, it doesn’t alter the bigger picture that there is still plenty of spare capacity. This will prevent a sustained pick-up in wage growth from …
30th June 2017
While GDP growth in both Australia and New Zealand in the first quarter was weaker than most had anticipated, this was partly the result of temporary factors that will fade. Nonetheless, while the outlook for activity in New Zealand is promising, we …
29th June 2017
The Reserve Bank of Australia (RBA) will almost certainly keep interest rates on hold at 1.50% when it meets on Tuesday 4 th July. And while the sustained improvement in the labour market in recent months has quashed any talk of a further interest rate …
27th June 2017
GDP growth was surprisingly weak in the first quarter and the slowdown in our New Zealand Activity Proxy (NZAP) in April suggests activity was subdued at the start of the second quarter too. However, we don’t expect this weakness to persist. Strong net …
26th June 2017
If the relative performance of the economies of New Zealand and the UK/Ireland over the next few years is anything to go by, the All Blacks will beat the British & Irish Lions 2-1 in the rugby test series. In our three economic tests, New Zealand come out …
23rd June 2017
The Reserve Bank of New Zealand’s decision to leave interest rates at 1.75% today and repeat its comment that they will stay there for a “considerable period” should prompt the financial markets to further pare back their expectations that rates will rise …
21st June 2017
The first quarter of this year will probably go down in history as the point at which house price inflation peaked. Policymakers have engineered the slowdown that appears to be underway, but there’s surely a risk that it goes too far too soon. … Australia …
20th June 2017
The utility bills of Australian households won’t rise by as much as the eye-watering 20% figure that has been catching the headlines as not all retailers have raised prices by that much and as prices in some states won’t rise at all. Nonetheless, the …
16th June 2017
Although the first-quarter GDP growth figures were notably weaker than the RBNZ had expected, the Bank will almost certainly keep the official cash rate (OCR) on hold at 1.75% at its monetary policy meeting on Thursday 22 nd June. Looking ahead, we expect …
The much stronger than anticipated rise in employment in May and the fall in the unemployment rate to a four-year low will go some way to quashing growing talk of the chance of another interest rate cut by the RBA later this year. Nonetheless, there still …
15th June 2017
The weaker-than-expected rise in GDP in the first quarter means that GDP growth this year is likely to be closer to 3.0% than our previous forecast of 3.5%. While that would still be a fairly decent result, with core inflation set to remain subdued we …
The further fall in the Westpac measure of consumer confidence in June to its lowest level since April 2016 will add to growing concerns about the outlook for consumer spending. On past form, confidence is now consistent with annual consumption growth …
14th June 2017
The share of the national income going to Australian households is at an eight-year low and is within a whisker of a 50-year low. What’s more, households in Australia currently get a smaller share of the income pie than households in most other advanced …
9th June 2017
The plunge in the international trade surplus to a six-month low of $0.6bn in April won’t last long as it was almost entirely due to the fall in coal exports caused by Cyclone Debbie, most of which has subsequently been reversed. As such, the trade …
8th June 2017
Contrary to what you may have heard, the rise in GDP in the first quarter does not mean that Australia now holds the record for the longest period in modern history without a recession. It’s true that Australia has gone without a recession for longer than …
7th June 2017
The small 0.3% q/q rise in GDP in the first quarter won’t worry the RBA too much as some of it was due to the temporary influence of the severe weather. Nonetheless, we believe that GDP growth will be weaker than the RBA expects both this year and next, …
Even though the economy may have contracted in the first quarter, the Reserve Bank of Australia left interest rates at 1.5% today and retained its optimistic view on the economic outlook. We suspect the RBA would be willing to look through a temporary …
6th June 2017
There is growing evidence that the household sector has begun to falter and, given the worryingly weak outlook for income growth, the situation is unlikely to turnaround any time soon. Indeed, we expect that consumption growth will slow from 2.7% last …
5th June 2017
Most of the recent gloomy headlines on Australia’s housing market are simply because people are mistaking the normal soft patch after the Easter school holidays for something more worrying. When you adjust for such seasonal swings, house prices actually …
2nd June 2017
The private capital expenditure survey for the first quarter showed that mining investment is becoming a smaller drag on GDP growth, while the leap in retail sales in April overstates the health of households. We estimate that GDP rose by just 0.2% q/q in …
1st June 2017
While there is growing evidence that consumption growth has begun to falter, this won’t be enough to prompt the Reserve Bank of Australia (RBA) to cut interest rates from 1.5% when it meets on Tuesday 6 th June. That said, we expect that slow economic …
30th May 2017
The latest evidence suggests that the Australian economy entered a soft patch in the first half of the year, with the quarterly rate of GDP growth perhaps averaging only 0.3%. As some of this weakness is due to the severe weather, growth will be stronger …
26th May 2017
The economy appears to be in a new phase where mining investment is no longer as big a drag on growth but net exports, consumption and dwellings investment are providing less support. The risk is that a fragile housing market results in consumption and …
25th May 2017
There is growing evidence that the household sector in Australia is beginning to struggle as subdued income growth weighs on spending. The sharp slowdown in the growth of retail sales volumes in the first quarter is consistent with a notable easing in …
24th May 2017
The further pick-up in our New Zealand Activity Proxy in March means it is now consistent with the 0.4% q/q increase in real GDP in the fourth quarter being followed by a much more respectable rise of at least 1.0% q/q in the first quarter. … New Zealand …
22nd May 2017
Wage growth in Australia has only been significantly lower than it is now during the Great Depression and immediately after World War II. While we do expect wage growth to rise from here, it won’t climb far above 2%. This will restrain income growth and …
19th May 2017
The labour market is not weak enough to prompt the RBA to cut interest rates again, but nor is it strong enough to trigger a large enough rise in wages and spending that would prompt the RBA to raise rates. We doubt that rates will rise until late 2019. … …
18th May 2017
Record low wage growth suggests that underlying inflation will stay below the RBA’s target range for another year or two yet and it goes some way to explaining why households aren’t particularly happy. … Wages (Q1) & Consumer Confidence …
17th May 2017
Australian Treasurer Scott Morrison made a big song and dance about new infrastructure spending in the Federal Budget. But while he shouldn’t be considered a public enemy as some new infrastructure spending is better than none, the package announced on …
12th May 2017
The Reserve Bank of New Zealand’s decision to leave interest rates at 1.75% today and signal that it doesn’t expect to raise rates until late 2019 supports our view that the financial markets have got ahead of themselves by pricing in rate hikes for early …
11th May 2017
Despite all the headlines suggesting that the Treasurer has embarked on an infrastructure spending spree, the fiscal figures appear to show that the economy is not going to be significantly stronger as a result. In fact, a small easing in the size of the …
9th May 2017
The latest retail sales data were much weaker than most had anticipated and will add to growing concerns about the health of the household sector. In particular, the sizeable slowdown in real retail sales growth in the first quarter suggests that real …
