Filtered by Subscriptions: Australia & New Zealand Economics Use setting Australia & New Zealand Economics
House prices may soon start to fall again House price growth kept slowing in November and, with affordability the most stretched since the early 1990s, that slowdown has further to run. In seasonally-adjusted terms, house prices across Australia’s eight …
30th November 2023
House price rally will slow in earnest With house prices now at a record high and affordability constraints becoming increasingly binding, Australia’s housing rebound will soon run out of steam. In seasonally-adjusted terms, house prices across …
1st November 2023
House price gains will slow further over coming months The housing rebound will continue to lose momentum over coming months as affordability is increasingly stretched, but policy easing by the RBA should provide a renewed boost to prices next year. …
2nd October 2023
Housing recovery remains in high gear Australian house prices rose at a blistering pace in August, as demand continued to outstrip supply. Although the property market is likely to remain tight in the near term, we think house price growth will moderate …
1st September 2023
Housing rebound continues unabated Australia’s house-price rebound went full steam ahead in July. At the margin, that should strengthen the case for the RBA to lift its cash rate by a further 25bp at its meeting later today. Nonetheless, with resurgent …
1st August 2023
Australia’s house-price rebound showed no signs of slowing in June. However, with the RBA set to swing its rate hammer a few more times, we’re sticking with our view that the upturn will prove fleeting. House prices rose by 1.1% m/m in seasonally-adjusted …
3rd July 2023
Tight labour market will prompt more monetary tightening With the labour market still firing on all cylinders, we’re happy with our forecast that the Reserve Bank of Australia will lift the cash rate all the way to 4.85% by September. The 75,900 rise in …
15th June 2023
Recession will drive RBNZ to cut rates by Q4 The contraction in Q1 GDP means that a recession is now well under way in New Zealand. Accordingly, we’re sticking with our forecast that the RBNZ will shift gears and start cutting rates before year-end. The …
Net trade to boost GDP in Q2 The narrowing of the trade surplus in April was driven in large part by a deterioration in the terms of trade. We think net exports will actually provide a modest boost to GDP growth this quarter. The decline in the trade …
8th June 2023
RBA could be forced to keep hiking into economic downturn Real GDP growth slowed sharply last quarter as household spending ground to a standstill. However, with productivity falling for a fourth consecutive quarter, unit labour costs grew apace. …
7th June 2023
House prices gain traction With house prices having risen for the third month in a row, there is a growing risk to our view that the housing downturn has further to run. Nonetheless, with rising interest rates set to squeeze affordability even more, we …
1st June 2023
Renewed acceleration will prompt further RBA tightening While the pick-up in inflation in April mostly reflects base effects from the excise duty cut a year ago, trimmed mean CPI picked up as well. With inflation set to overshoot the RBA’s forecasts this …
31st May 2023
Sluggish consumption adds to case for RBA pause Coupled with rising unemployment and lukewarm wage growth , the weakness in retail sales in April supports our view that the Reserve Bank of Australia is done hiking interest rates . Retail sales values were …
26th May 2023
The weakness in April’s jobs data suggest that the labour demand is starting to cool. Admittedly, there continue to be some pockets of resilience in the labour market. However, with wage growth remaining sluggish, we think it’s more likely than not that …
18th May 2023
Sluggish wage growth suggests RBA is done tightening The Q1 wage price index showed that quarterly wage gains were a bit softer than the RBA had anticipated which supports our view that the Bank won’t raise interest rates any further. The 0.8% q/q rise in …
17th May 2023
Net exports won’t have boosted GDP in Q1 The widening of the trade surplus in recent months belies the negligible contribution that net exports will have made to Q1 GDP. Indeed, we think the weakness in import values last quarter primary reflected …
4th May 2023
Weakness in consumption growth While retail sales values rose at a decent pace in March, we estimate that sales volumes fell the most since 2021’s lockdowns last quarter and that weakness has further to run. That in turn should prevent the Reserve Bank of …
3rd May 2023
Labour market continues to run red hot New Zealand’s labour market remained extremely tight last quarter, presenting upside risks to our forecast for a 25bp rate hike later this month. The 0.8% q/q rise in employment was stronger than most had …
House price rebound will prove fleeting The ongoing rebound in house prices is living on borrowed time. With affordability extremely stretched and the economy poised for a sharp downturn, we’re sticking to our forecast that house prices will fall another …
2nd May 2023
RBA will deliver a final 25bp rate hike next week While inflation is moderating slightly faster than the RBA had anticipated, price gains remain far too strong to be consistent with the Bank’s 2-3% inflation target and we’re sticking to our forecast of a …
26th April 2023
Inflation is coming off the boil Although inflation in Q1 was below what the RBNZ had expected, we don’t expect the Bank to take its foot off the brakes just yet. Indeed, with non-tradables prices continuing to rise at a rapid clip, the RBNZ is likely to …
20th April 2023
Resilient labour market will prompt RBA to hike rates further in May The strength in March’s labour market data will probably prompt the Reserve Bank of Australia to deliver a final 25bp rate hike next month, but unemployment will rise before long . The …
13th April 2023
Falling international trade points to weaker growth The widening of the trade surplus in February largely reflects the fact that imports of goods and services fell at a much faster rate than exports. Therefore, even though net trade will make a positive …
6th April 2023
Housing downturn has further to run With housing affordability the most stretched it’s been since the global financial crisis, we don’t think the uptick in house prices in March will be sustained. We’re sticking to our forecast that house prices will fall …
3rd April 2023
Sharp slowdown in inflation will prompt RBA pause next week The further sharp fall in inflation coupled with the softness of consumption will probably prompt the Reserve Bank of Australia to pause its tightening cycle next week, though we still expect one …
29th March 2023
Softness in retail sales raises risk of RBA pause The tepid rise in retail sales in February all but locks in a contraction in sales volumes in Q1. We think that a stronger rise in services spending will help keep private consumption buoyant this quarter. …
28th March 2023
Red-hot labour market will prompt further RBA tightening February’s strong labour force figures will prompt the Reserve Bank of Australia to press ahead with another 25bp hike at its April meeting despite mounting signs of strain in the global banking …
16th March 2023
Economy is tipping into recession With the New Zealand economy in for more pain on the heels of the Q4 GDP decline, we expect the RBNZ to start cutting rates towards the end of the year. The -0.6% q/q drop in production GDP was weaker than most had …
15th March 2023
Net exports should support GDP growth in Q1 Although the rise in export earnings lagged growth in the import bill in January, we still think net trade will provide a decent boost to GDP growth this quarter. The decline in the trade surplus in January, …
7th March 2023
Stretched affordability will continue to push down prices Although the decline in house prices slowed markedly in February, we’re not convinced the worst is over. As such, we expect house prices to fall by another 6% before the year is up. The 0.2% m/m …
1st March 2023
Slowdown in inflation won’t prevent RBA from lifting rates to 4.1% GDP growth softened last quarter and inflation slowed sharply in January. But with inflation still very high, that won’t prevent the RBA from hiking the cash rate to a peak of 4.1% in May …
Goods spending will fall for second consecutive quarter While retail sales bounced back in January, the rebound probably won’t be enough to prevent a contraction in sales volumes across the first quarter . The 1.9% m/m rise in retail sales in January was …
28th February 2023
Investment prospects remain weak despite Q4 jump Private investment picked up firmly last quarter and although firms expect capital spending to remain relatively healthy, their projections are consistent with a slowdown in real terms this financial year. …
23rd February 2023
Wage growth will peak at just below 4% With the risk of a wage-price spiral contained, we expect the RBA to start cutting interest rates by year-end. The 0.8% q/q rise in hourly wages excluding bonuses was below the analyst consensus of 1% and our own …
22nd February 2023
Labour market will continue to slacken The weakness in January’s labour market data shows that rapid rate hikes are starting to cool activity, but with inflation still far too high that won’t prevent the RBA from tightening policy for a while yet. The …
16th February 2023
Boost from net trade should ensure decent rise in Q4 GDP Export volumes probably edged up last quarter while import volumes plunged so net trade should provide a boost to Q4 GDP growth. The decline in the trade surplus in December, from $13.5bn to …
7th February 2023
Further rise in services spending will prevent fall in Q4 consumption Retail sales volumes declined last quarter on the back of a weaker-than-expected end to 2022. A solid increase in services spending means overall consumption should still have risen at …
31st January 2023
Stubbornly high inflation will prompt further RBA rate hikes Inflation rose further last quarter and remains far too high for the RBA’s liking. Accordingly, we’re sticking to our non-consensus forecast that the Bank will lift the cash rate to 3.85% by …
25th January 2023
Some nuggets of comfort for the RBNZ The Q4 CPI data revealed a smaller rise in non-tradeable prices than the RBNZ had expected but, with those prices still rising at a worrying pace, it is not clear that this alone will be enough for the Bank to drop …
24th January 2023
Unemployment rate will soon start to rise in earnest The labour market struggled in December and the unemployment rate has started to rise. With economy activity set to slow sharply, t won’t be long before unemployment increases in earnest . The 14,600 …
19th January 2023
Net trade to provide sizeable boost to Q4 GDP growth The trade balance widened to a five-month high in November even though import prices outpaced export prices last quarter, which suggests that net trade provided a sizeable boost to Q4 GDP growth. The …
12th January 2023
Stubbornly high inflation will prompt further RBA rate hikes While falling job vacancies point to rising unemployment, the resilience in retail sales coupled with stubbornly high inflation will prompt the RBA to press ahead with another 25bp rate hike …
11th January 2023
Household spending may have fallen in Q4 already The slowdown in household spending in November largely reflects base effects from the ending of lockdowns in 2021. Even so, the data suggest that household spending may have started to fall last quarter. …
10th January 2023
Breakneck housing downturn has much further to run Australia’s house prices have never fallen so fast in such a short period of time and the risks to our forecast of a 15% peak-to-trough fall are shifting to the downside. The 1.2% m/m fall in house prices …
3rd January 2023
Labour market strength won’t last much longer With employment jumping in November, the labour market is still tightening, The upshot is that the RBA will hike rates more sharply than most anticipate over the coming months. The 64,000 rise in employment in …
15th December 2022
Growth burst will turn into slump next year The huge jump in Q3 GDP will prompt the Reserve Bank of New Zealand to press ahead with another 75bp hike in February, adding to our conviction that a recession lies ahead . The 2.0% q/q jump in production GDP …
14th December 2022
Net trade to boost GDP growth a bit in Q4 The October trade data point to a huge boost from net trade to Q4 GDP growth but we suspect that a further fall in exports will moderate that contribution. The decline in the trade surplus, from $12.4bn in …
8th December 2022
Economy will come to a standstill next year The decent rise in Q3 GDP probably marks the last hurrah for Australia’s economy as tighter monetary policy and falling real incomes weigh on spending . The 0.6% q/q increase in Q3 GDP was a touch weaker than …
7th December 2022
Strength in capital spending won’t last Private investment rebounded last quarter and while firms’ projections at face value point to a further pick-up over the remainder of the financial year, the figures are consistent with a slowdown in real terms . …
1st December 2022