Filtered by Subscriptions: Australia & New Zealand Economics Use setting Australia & New Zealand Economics
The record level of net migration appears to explain around half of the rise in real consumption in New Zealand in the past two years. If net migration slows steadily as is widely expected, then this support should fade only gradually. But there’s a risk …
9th February 2016
At least some of the startling fall in the unemployment rate in New Zealand in the fourth quarter of last year, from 6.0% to 5.3%, appears genuine. As such, we no longer think that the unemployment rate will climb to a peak of 6.3%. While this reduces the …
5th February 2016
The Reserve Bank of Australia’s February Statement on Monetary Policy confirms that the chances of a near-term reduction in interest rates remains slim. Nonetheless, there are a number of factors that could yet alter the outlook and prompt the RBA to cut …
December’s weaker than expected retail sales figures suggest that retailers had a disappointing Christmas period and that consumer spending has lost some momentum. As a result, we’ve revised down our estimate for fourth-quarter consumption growth and now …
The sharp falls in equity prices since the turn of the year are unlikely to prompt households or businesses to rein in their spending. In fact, when set against some measures of domestic activity, it looks as though equity prices may have fallen too far. …
4th February 2016
December’s international trade and building approvals data cast doubt on the RBA’s view that there are “reasonable prospects for continued growth in the economy”. This is especially the case when overseas demand could yet weaken further and when the …
3rd February 2016
The astonishing plunge in the unemployment rate in the fourth quarter of last year, to a six-year low of 5.3% from 6.0% in the third quarter, decreases the chances that the RBNZ will reduce interest rates further. … New Zealand Labour Market …
While the Reserve Bank of Australia acknowledged the threat posed by a weaker global economy when it left interest rates on hold at 2.0% today, we don’t think it went far enough. With the outlook for underlying inflation at home also softening, we …
2nd February 2016
It’s odd that the financial markets placed so much emphasis on the rise in Australia’s tradables inflation rate in the fourth quarter of last year when this was more than offset by a fall in non-tradables inflation. What’s more, there are good reasons to …
29th January 2016
The Reserve Bank of New Zealand’s hint that the weakening outlook for inflation means that interest rates may have to be reduced this year from the current rate of 2.5% supports our long-held view that rates will fall to 2.0%. The New Zealand dollar has …
28th January 2016
We continue to believe that GDP growth in both Australia and New Zealand won’t accelerate at all this year from last year’s disappointing rates of around 2.3%. A further weakening in the outlook for underlying inflation will also play a major role in …
27th January 2016
The rise in headline inflation in the fourth quarter of last year, to 1.7% from 1.5%, hides the more important easing in underlying inflation. On one measure, underlying inflation is now below the RBA’s 2-3% target range. We believe that further falls in …
The recent turmoil in financial markets will have brought a sudden end to Governor Stevens ’“chilled” Christmas period. But this won’t be enough to prompt the Reserve Bank of Australia (RBA) to cut interest rates at the policy meeting onTuesday 2nd …
25th January 2016
The higher starting point means that inflation in Australia is unlikely to fall close to zero, as it has done in New Zealand. That said, underlying or “core” inflation in Australia may soon follow in the footsteps of core inflation in New Zealand by …
22nd January 2016
While recent events have increased the chances that interest rates will be cut from 2.5% now to 2.0%, as we have been expecting for some time, we think that the Reserve Bank of New Zealand will hold fire at the policy meeting on Thursday 28th January. …
21st January 2016
The fall in CPI inflation to just 0.1% in the fourth quarter of last year, from 0.4% in the third quarter, could prove to be a game-changer for the RBNZ as it leaves the economy uncomfortably close to outright deflation. This may not quite be enough to …
20th January 2016
The latest falls in equity and commodity prices have not dealt a big blow to the Australian economy, especially when lower petrol prices are boosting households’ real incomes. Nonetheless, should equity and commodity prices continue to decline, then the …
15th January 2016
The recent improvement in Australia’s labour market was maintained in December, which should go some way to relieving the current downward pressure on equity prices and the Australian dollar. … Australia Labour Market …
14th January 2016
While we remain more concerned than most about the Australian economy, we don’t think that the recent sharp falls in equity prices will filter through into much weaker economic growth. … Equity price falls won’t lead to a much weaker …
11th January 2016
The first week of the new year has set the tone for what we think will be another disappointing year for Australia. While we are not too concerned by the latest developments in China, there is a clear risk that global events will be a bigger drag on …
8th January 2016
The 0.4% m/m rise in retail sales values in November shows that consumer spending maintained its momentum in the run up to the crucial Christmas shopping period. And it probably means that consumption growth remained healthy in the fourth quarter. … …
November’s international trade and building approvals figures show that two important supports of the economy softened towards the end of last year. This reinforces our view that GDP growth in the fourth quarter won’t live up to the high bar of 0.9% q/q …
7th January 2016
A surge in LNG exports means that, despite a slowdown in the growth of iron ore exports, resources exports will probably continue to offset some of the ongoing falls in mining investment. That said, there’s a danger that LNG exports won’t live up to …
6th January 2016
Australia and New Zealand both staged impressive rebounds in the third quarter, with GDP rising by 0.9% q/q in each economy on the back of a large boost from net exports. However, neither economy will be able to sustain this strength for long. Currency …
22nd December 2015
Our decent forecasting performance in 2015 means we are not too worried by some of our forecasts for 2016 being very different to the consensus. Our big success this year was accurately forecasting the sharp weakening in both the Australian and New …
18th December 2015
The recent resurgence in activity in both Australia and New Zealand is not the start of a sustained period of strong GDP growth. While the near-term outlook has improved, GDP growth in both economies won’t accelerate in 2016 from about 2.3% in 2015. The …
17th December 2015
The impressive rebound in GDP growth in the third quarter does not mean that New Zealand is out of the woods. With the full hit from the plunge in dairy prices still to be felt, growth will be weaker in the fourth quarter and during most of next year too. …
The decision by the Treasurer to use the Mid-Year Economic and Fiscal Outlook (MYEFO) to draw attention to the deterioration in the fiscal position triggered by the weak economic backdrop is one that could come back to haunt him. While it conveniently …
15th December 2015
A variety of forward-looking indicators suggests that house price inflation has well and truly peaked and that a sizeable slowdown lies ahead. House price inflation could even grind to a complete halt. … Four charts on what’s next for house price …
14th December 2015
In the upcoming fiscal update, the Australian Treasurer is going to have to admit that the cumulative budget deficit over the next four years is going to be some $30bn bigger than expected in May’s Budget. The elusive budget surplus is therefore drifting …
11th December 2015
November’s labour market data are either a major mirage or a minor miracle. We think that the truth lies somewhere in between, with conditions improving but not quite as much as the figures suggest. … Australia Labour Market …
10th December 2015
After cutting interest rates today from 2.75% back to the record low of 2.50% seen during the Global Financial Crisis, the Reserve Bank of New Zealand sent a strong signal that it doesn’t think rates need to fall further. We think it will be proved wrong, …
Despite the modest fall back in the Westpac measure of consumer confidence in December, from 101.7 in November to 100.8, we don’t expect this to be the beginning of a downward trend as the buoyant labour market and falling petrol prices should continue to …
9th December 2015
The Australian economy has continued to perform reasonably well given the very testing set of circumstances and has comfortably outperformed other commodity producers. But we don’t expect GDP growth to accelerate by much next year, if at all, as net …
4th December 2015
The acceleration in retail sales growth in October is very timely for retailers, who will be rubbing their hands at the idea that households are becoming more willing to open their wallets ahead of the crucial Christmas shopping season. … Australia …
The Reserve Bank of New Zealand will probably cut interest rates by 0.25%, from 2.75% to 2.50%, at the policy meeting on Thursday 10th December. What’s more, and despite the release of some positive economic news since the Board last met, we believe that …
3rd December 2015
The Australian economy isn’t as strong as the surge in GDP in the third quarter suggests, as a large boost to growth from net exports hides the worrying contraction in domestic demand. While GDP growth in 2015 as a whole will now be better than we had …
2nd December 2015
Even though the Reserve Bank of Australia has now left interest rates on hold at 2.0% for seven meetings and appears to be going cold on the idea of further cuts, we still think that a weakening in the outlook for both activity and inflation will prompt …
1st December 2015
The latest data on net exports and government spending/investment suggest that GDP growth in the third quarter was a little bit stronger than we thought at around 0.9% q/q. This supports the widespread view that the RBA will leave rates at 2.0% at the …
Even though the recent comment by the Reserve Bank of Australia Governor that everyone should “chill out” was clearly said in jest, it looks a little misplaced when we have since found out that capital expenditure is falling off a cliff. The absence of …
27th November 2015
The plunge in private capital expenditure in the third quarter suggests that GDP growthwas a little weaker than we had been expecting and, more worryingly, that non-mininginvestment is not filling the hole left behind by the end of the mining boom. … …
26th November 2015
Economic activity in both Australia and New Zealand appears to have been pretty robust in the third quarter, with the latest data pointing to gain in GDP of around 0.7% q/q and 1.0% q/q respectively. That would be much improved from the 0.2% and 0.4% …
The flow of positive economic news since the last Reserve Bank of Australia (RBA) meeting makes it a sure bet that the RBA will leave rates on hold at 2.0% for the seventh consecutive month when the Board meets on Tuesday 1 st December. The likelihood of …
24th November 2015
If the recent improvement in Australia’s labour market is sustained, then wage growth will soon accelerate from its current 17-year low. An increase in productivity growth at the same time would keep inflation low, thereby ensuring that real wages and …
20th November 2015
Although GDP growth probably rebounded in the third quarter, New Zealand’s economy isn’t in the clear just yet as the full impact of the collapse in the dairy price is still working its way through the system. This will prevent a sustained rebound until …
19th November 2015
The Reserve Bank of Australia will have been pleased to see more evidence that the housing market is cooling at the same time that the outlook for business investment is improving. If recent trends continue then it won’t be long before, for the first time …
13th November 2015
The strength of Australia’s labour market in October builds on other evidence that suggests the economy has made some big leaps forward in recent months. It diminishes the chances of further rate cuts, at least in the near-term. … Australia Labour Market …
12th November 2015
The further rise in consumer confidence in November, to a six-month high, suggests that households are playing a part in the recent “firming” in activity. … Consumer Confidence …
11th November 2015
By highlighting the recent “firming” in activity at the same time as emphasising that there is scope to cut interest rates further, the Reserve Bank of Australia has managed to support confidence without strengthening the dollar. A renewed weakening in …
6th November 2015
September's retail sales and international trade figures support the RBA's view that economic conditions have recently "firmed". They suggest that GDP growth may have rebounded from the dismal 0.2% q/q in the second quarter to a much more respectable 0.7% …
4th November 2015
