Filtered by Subscriptions: Australia & New Zealand Economics Use setting Australia & New Zealand Economics
While the forecasts published in the RBA’s latest Statement on Monetary Policy have hardly changed since the August edition, the tone is much more balanced and could probably even be described as upbeat. In other words, the RBA is increasingly thinking …
4th November 2016
The outright fall in real retail sales in the third quarter is consistent with a further slowdown in real consumption growth. That said, the better-than-expected rise in nominal sales in September means there is at least some momentum in consumer spending …
We expect that the Reserve Bank of New Zealand will follow through on its commitment for further policy easing by cutting interest rates from 2.00% to 1.75% at its policy meeting on Thursday 10 th November, particularly if the outcome of Tuesday’s US …
3rd November 2016
The recent leap in coal prices explains a lot of the sharp narrowing in the trade deficit to a 20-month low in September. If coal prices stay at current levels the deficit could even be wiped out sometime next year, but that’s a very big “if”. … …
While employment growth was stronger than expected in the third quarter, wage growth remained worryingly weak. This will do little to allay the RBNZ’s concerns about the inflation outlook and as a consequence does not change our view that the RBNZ will …
2nd November 2016
The decision by the Reserve Bank of Australia to leave interest rates at 1.5% today may fuel some speculation that the next move in rates will be up, although not for a long time. That possibility shouldn’t be ignored, but we’re not convinced that the low …
1st November 2016
Both headline and underlying inflation in Australia will probably rise over the next year and, by boosting economic growth and reducing spare capacity, the recent leap in commodity prices raises the chances of underlying inflation returning to the 2-3% …
28th October 2016
While the third quarter inflation data suggest that there is an outside chance that the Reserve Bank of Australia will cut interest rates from 1.50% to 1.25% at its policy meeting on Tuesday 1 st November, we expect that the Bank will leave rates on hold. …
27th October 2016
Ignore the larger-than-expected rise in headline CPI inflation in the third quarter, what really matters is that underlying inflation was weaker than the RBA expected. It probably wasn’t weak enough to prompt the Bank to cut interest rates from 1.5% at …
26th October 2016
The recent rise in the prices of some key commodity exports will go some way to boosting the national income of both Australia and New Zealand. The surge in the price of coal to a three-and-a-half-year high will boost the coffers of Australian coal …
25th October 2016
While the Reserve Bank of Australia would do well to ignore the recent falls in employment, it will be getting more concerned that the rising share of employees working part-time will keep wage growth lower for longer. That would mean the RBA’s low …
21st October 2016
The RBA may not be too worried by the further decline in employment in September since the data are subject to a couple of distortions and since the unemployment rate fell to 5.6% from 5.7%. But the labour market is edging closer to the “deterioration” …
20th October 2016
The fall in CPI inflation to 0.2% in the third quarter from 0.4% in the second quarter is in line with the RBNZ’s forecast and means the Bank will follow through on its suggestion that interest rates will need to be cut from 2.00% to 1.75% at the November …
18th October 2016
While the recent leap in bond yields in Australia has been larger than the rise in the US, we still believe that over the next couple of years bonds in Australia will outperform those in the US. Yields in Australia will rise, but they will stay low by …
14th October 2016
The further rise in the Westpac measure of consumer confidence in October suggests that the rebound in retail sales in August will be sustained in the coming months. That said, the survey does indicate that house price inflation will soon slow. … Consumer …
12th October 2016
The inflation figures for the third quarter would need to be much weaker than the Reserve Bank of Australia expects in order to prompt a cut in interest rates to 1.25% at November’s policy meeting. While we don’t think inflation was weak enough in the …
11th October 2016
The recent run of better-than-expected economic news means that GDP growth in Australia probably held up fairly well in the third quarter. However, given that there are still notable headwinds, it seems more likely that the economy will weaken, rather …
7th October 2016
The sharp narrowing in the trade deficit in August rounds off a good week of data for the Australian economy and suggests that GDP growth in the third quarter may have been stronger than the 0.5% q/q rise recorded in the second quarter. … Australia …
6th October 2016
The better-than-expected rise in retail sales in August will go some way to allaying growing concerns, such as those highlighted by the RBA yesterday, that the easing in consumption growth in the second quarter marked the start of a significant slowdown. …
5th October 2016
By leaving interest rates at 1.5% and the policy statement mostly unchanged at his first meeting as Governor, Philip Lowe showed he is cut from much the same cloth as his predecessor. But while Lowe may be a little less worried by low inflation than Glenn …
4th October 2016
The economic outlook for Australia and New Zealand wouldn’t significantly worsen if Donald Trump became US President. Neither economy is particularly exposed to the threat of higher trade barriers. And while a fallout in global financial markets could …
30th September 2016
The growth rates enjoyed by Australia and New Zealand in the second quarter continue to be the envy of most advanced nations. The 3.3% and 3.6% respective rises in GDP over the last year were much faster than the average gain for the US, euro-zone and …
29th September 2016
The Reserve Bank of Australia’s (RBA) next policy meeting on Tuesday 4 th October will be the first led by the new Governor, Philip Lowe, but that’s the only thing we expect to change. Interest rates will almost certainly be left on hold at 1.5% and it’s …
28th September 2016
The structural decline of the manufacturing sector means that the long-awaited transition from mining investment towards non-mining business investment may never happen to the extent that most people expect. But since the rate of decline in mining …
26th September 2016
Recent events have made our forecast that both the Australian and New Zealand dollars will weaken to around US$0.65 next year look aggressive. But while the risks to those forecasts lie on the upside, we still think that a narrowing in expected interest …
23rd September 2016
Although the Reserve Bank of New Zealand left interest rates on hold at 2.0% today, it hinted that in order to weaken the dollar and boost inflation, it will soon cut rates to a new record low of 1.75%. We think stubbornly low inflation will force the …
22nd September 2016
The ABS measure of house prices supports other evidence showing that the housing market has found a new lease of life. That said, the market is not as strong as widely believed and it’s more likely to weaken over the next few years than strengthen …
20th September 2016
Philip Lowe’s first job as RBA Governor has been to emphasise the medium-term nature of the 2-3% inflation target and highlight how the RBA juggles this with its often conflicting objective of financial stability. These tweaks to the RBA’s framework just …
19th September 2016
The impressive performance of New Zealand’s economy in the second quarter has contributed to the strengthening in the New Zealand dollar towards parity with the Australian dollar. Our economic forecasts for both countries suggest that the kiwi dollar may …
16th September 2016
While the chance of a September interest rate cut was never particularly high, a stronger than expected rise in GDP in the second quarter all but confirmed that the Reserve Bank of New Zealand will leave interest rates on hold at 2.00% at the policy …
15th September 2016
After adjusting the data to strip out the temporary boost from the Census, we estimate that employment fell by around 14,000 in August. While we aren’t too concerned about the outlook for employment, it seems clear that the labour market is not going to …
By contributing to a surge in housing-related activity, record low interest rates provided the foundations for the impressive pick-up in GDP growth in the second quarter. This probably won’t prevent the RBNZ from cutting interest rates further, from 2.0% …
September’s Westpac measure of consumer confidence shows that the rise in August was sustained. This should help to calm concerns about the health of the household sector following the slowdown in consumption growth in the second quarter and the …
14th September 2016
The Reserve Banks of Australia and New Zealand are likely to ignore suggestions that they should lower their inflation targets since that would drive inflation even lower. Targeting nominal GDP growth instead isn’t much more appealing either, partly as it …
An unusual surge in public demand drove the decent rise in GDP in Australia in the second quarter. However, with this support from the public sector unlikely to be sustained and few signs that other areas of the economy are picking up the slack, we …
9th September 2016
Even though the international trade deficit narrowed in July, net exports are still on course to remain a drag on real GDP growth in the third quarter. The external sector could really do with the Australian dollar falling further rather than rising …
8th September 2016
The return of the Australian economy in the second quarter to the growth rates seen before the end of the mining boom relieves some of the pressure on the RBA to cut interest rates again, at least in the next few months. … Australia GDP …
7th September 2016
The policy statement released alongside the Reserve Bank of Australia’s decision to leave interest rates at 1.5% today provides no hint that another rate cut is around the corner. If the inflation data for the third quarter are very weak, the RBA’s hand …
6th September 2016
Auction clearance rates are a timely and useful barometer of housing activity, but since they capture less than a third of all sales they don’t provide a full picture. While Australia’s housing market does appear to have strengthened in recent months, …
2nd September 2016
July’s weaker-than-expected retail sales figures mean that even if spending were to gather momentum in the remainder of the third quarter, real consumption growth will struggle to match the probable 0.6% q/q rise in the second quarter. … Australia Retail …
1st September 2016
The private capital expenditure survey for the second quarter shows that the investment transition is taking place slowly. Together with the stagnation in retail sales in July, we believe that GDP rose by just 0.3% q/q in the second quarter and that a …
Glenn Stevens is unlikely to end his decade as Governor of the Reserve Bank of Australia with a bang, as interest rates will almost certainly be left at 1.5% at his last policy meeting on Tuesday 6th September. And while the RBA doesn’t appear to be in a …
30th August 2016
Last week’s news that consumer confidence in Australia surged to a three year high provided an encouraging signal about the health of the household sector. However, while we expect consumption growth to remain decent we doubt it will be strong enough to …
26th August 2016
While the recent fall in the cash rate to record lows in Australia and New Zealand should help to support household spending, the effect on other areas of the economy may be more limited. For one, we doubt the interest rate cut will do much to boost the …
24th August 2016
While the latest data showed that employment growth has surged in Australia and New Zealand and the unemployment rate has edged down in both economies recently, this won’t be enough to generate inflationary pressures in either labour market. … Why wage …
19th August 2016
July’s labour market figures were much better than expected and forward looking indicators suggest the labour market should continue to remain healthy. However, given that part-time positions accounted for all of the new jobs created in July there is …
18th August 2016
The delayed release of the second quarter labour market figures showed a surprise surge in employment growth. The unemployment rate also fell slightly, but we expect it to edge down only slowly this year which should keep inflationary pressures weak in …
17th August 2016
We don’t currently believe that the RBA or RBNZ will have to resort to unconventional monetary policy to boost inflation, but one lesson of the past decade is that we should be prepared for the unexpected. In this Economics Weekly we consider what would …
12th August 2016
Not only did the Reserve Bank of New Zealand today cut interest rates by 0.25% to a new record low of 2.00%, but it also suggested that rates will soon be cut again to 1.75%. In order to weaken the dollar and boost underlying inflation, we expect the RBNZ …
11th August 2016
While the modest rise in the Westpac measure of consumer confidence in August suggests that the effect of interest rate cuts on confidence may be weakening, the rise was still enough to suggest that annual real consumption growth will stay between 2.5% …
10th August 2016
