Filtered by Subscriptions: Australia & New Zealand Economics Use setting Australia & New Zealand Economics
Rapid worsening in affordability will continue to push down prices House prices continued to fall at a rapid rate in November and with housing affordability now the most stretched since the early 1990s, that downturn has much further to run. The 1.1% m/m …
30th November 2022
Inflation still set to rise further in Q4 We wouldn’t read too much into the drop in the Monthly CPI Indicator in October because the figures don’t cover the entire CPI basket, but the data suggest that inflation is about to peak. Headline inflation …
RBA will keep hiking for now despite consumption slowdown Following a strong eight consecutive rises since the start of the year, the decline in retail sales in October isn’t a disaster. A fall in sales volumes across Q4 now looks very likely but we …
28th November 2022
Unemployment rate to rise sharply next year Australia’s labour market held up well in October, consistent with our expectations for a near-term acceleration in wage growth and a further 100bps of rate hikes by the RBA. But we think employment will start …
17th November 2022
Wage growth will peak at 3.5% by mid-2023 Wage growth climbed above 3% in Q3 for the first time since 2013 and we expect it to climb further to 3.5% by the middle of next year. The 1.0% q/q rise in hourly wages excluding bonuses was above the analyst …
16th November 2022
Rebound in trade surplus won’t prevent drag from net trade in Q3 While the trade surplus bounced back in September, we’ve pencilled in a drag from net trade to Q3 GDP growth as export volumes probably didn’t rise fast enough to offset a surge in imports. …
3rd November 2022
Labour market strength adds to case for 75bp hike New Zealand’s labour market remained very tight last quarter and coupled with the continued strength in inflation. the RBNZ will probably hike by 75bp in a couple of weeks. The 1.3% q/q rise in employment …
1st November 2022
Largest price declines behind us but housing downturn not over yet The worst of the housing downturn is probably behind us but we still expect prices to fall by another 10% following the 1.1% m/m drop in October. While the 1.1% m/m drop in house prices …
Sales volumes running out of steam While retail sales kept rising for the ninth consecutive month in September, growth in volumes is slowing sharply and will remain subdued over coming quarters as real incomes fall and the savings rate returns to normal …
31st October 2022
Inflation will approach 8% by year-end Inflation was stronger than expected last quarter and will rise further in Q4. That’s consistent with our forecast that the Reserve Bank of Australia will hike rates more aggressively than most anticipate. The 1.8% …
26th October 2022
Unemployment rate will remain low for now Australia’s labour market is starting to sputter but with unemployment set to remain low, the RBA will continue to hike interest rates. The number of employed people rose by just 900 last month, well below the …
20th October 2022
Strong inflation will prompt further rapid tightening The much stronger than expected rise in consumer prices in Q3 will encourage the Reserve Bank of New Zealand to hike rates by another 50bp at its November meeting and poses upside risks to our view …
17th October 2022
Export revenue will fall further The further fall in the trade surplus in August largely reflects a plunge in export prices and net trade should still provide a small boost to Q3 GDP. But with commodity prices now clearly down from their peak, export …
6th October 2022
Worsening affordability weighing on housing market Australia’s house prices have now fallen by 5% since the start of the current downturn and rapidly worsening affordability suggests they will fall by another 10%. The 1.4% m/m drop in house prices across …
3rd October 2022
To early to declare victory on inflation The inaugural release of Australia’s Monthly CPI Indicator showed that inflation eased a bit in August, though we still expect it to approach 8% in Q4. Meanwhile, the first drop in job vacancies since last year’s …
29th September 2022
Resilience in consumption will prompt RBA to keep tightening aggressively The eight consecutive rise in retail sales in August will convince the RBA to hike rates by another 50bp at next week’s meeting. And with the savings rate still well above pre-virus …
28th September 2022
Unemployment rate will yet fall a bit further While the first rise in Australia’s unemployment rate since last year’s Delta lockdown should be followed by a renewed fall, it will encourage the Reserve Bank of Australia to slow the pace of tightening to …
15th September 2022
GDP growth will slow sharply as higher interest rates bite Despite a large rise in Q2, New Zealand’s GDP remains well below its pre-virus trend and that shortfall will widen as the surge in interest rates weighs on activity. The 1.7% q/q rise in …
Trade surplus has peaked The record fall in Australia’s trade balance partly reflects bad weather that held back coal exports, but the recent fall in the iron ore price hasn’t …
8th September 2022
GDP growth will slow over coming quarters The 0.9% q/q rise in Australia’s Q2 GDP was broadly in line with the RBA’s expectations and won’t move the needle in terms of the size of the next rate hike. That result was a touch below the analyst consensus of …
7th September 2022
Capital spending will rebound over coming quarters The continued rise in machinery and equipment investment in Q2 won’t offset a plunge in construction investment, but firms’ optimistic capital plans suggest this will prove short-lived. Today’s capital …
1st September 2022
Plunge in affordability to result in further strong price falls House prices are falling at the fastest pace in four decades. While leading indicators of housing market activity remain consistent with a mild downturn, rapidly worsening affordability due …
Reopening boom to last for a while yet Not only did retail sales rise for the seventh consecutive month in July, the strong size of the increase strongly suggests that the Reserve Bank of Australia will hike rates by another 50bp next month. The 1.3% m/m …
29th August 2022
Labour market hasn’t turned for the worse just yet We wouldn’t read too much into the first drop in employment since last year’s lockdowns. Indeed, the continued tightening of the labour market should encourage the RBA to press ahead with another 50bp …
18th August 2022
Wage growth will reach 3.5% by mid-2023 Wage growth surpassed its pre-virus peak in Q2 and will jump above 3% this quarter due to a surge in the minimum wage and a tightening labour market. The 0.7% q/q rise in hourly wages excluding bonuses was a touch …
17th August 2022
Jump in services imports limiting boost from net trade The surge in Australia’s trade surplus to yet another record-high in June suggests that net exports will boost Q2 GDP growth by around 1%-pt though that tailwind will fade before long . The trade …
4th August 2022
Rising unemployment suggests RBNZ will soon stop hiking The first rise in New Zealand's unemployment rate since mid-2020 suggests that the RBNZ's hiking cycle is nearing its end. Indeed, we expect the RBNZ to start cutting interest rates next year . …
3rd August 2022
House prices will continue to fall sharply Allowing for seasonal swings, house prices in July fell as much as they did at the height of the 2017-2019 downturn. With soaring mortgage rates weighing on affordability, prices will continue to fall sharply …
1st August 2022
Consumption will remain resilient The sixth consecutive rise in retail sales in June underlines that households are weathering the headwinds from falling house prices, soaring inflation and surging mortgage payments well and we reiterate our long-held …
28th July 2022
Inflation to peak around 7% While inflation picked up in Q2, it wasn’t as strong as we had expected. That suggests that the RBA may opt for another 50bp rate hike at next week’s meeting rather than the 75bp we had been anticipating. The 1.8% q/q rise in …
27th July 2022
Inflation has probably peaked The stronger-than-expected rise in consumer prices in Q2 adds some upside risks to our forecast that the Reserve Bank of New Zealand will lift rates to 3.5%, but we still think that weaker economic activity will force the …
18th July 2022
Unemployment rate may fall to 3% before long The sharp fall in the unemployment rate in June is consistent with our view that the Reserve Bank of Australia will need to tighten monetary policy more aggressively than most anticipate. The 88,400 jump in …
14th July 2022
Huge boost from net trade won’t last The surge in the trade surplus in May suggests that net exports provided an even bigger boost to Q2 GDP growth than we had anticipated. But that boost should fade as the border reopening lifts outward tourism . The …
7th July 2022
Housing downturn only warming up The monthly decline in house prices in June was the largest since 2019 but is unlikely to be the sharpest decline in the current downturn. We think house prices will eventually fall by 15% from their April peak, which will …
1st July 2022
Consumption growth will remain strong this year The strong rise in retail sales in May highlights the strength in the Australian economy and is consistent with our view that the RBA will continue to hike rates aggressively in the months ahead. The 0.9% …
29th June 2022
Strong employment growth will keep RBA on track The strong rise in employment in May will keep pressure on the RBA to continue its aggressive hiking cycle in the months ahead. The 60,600 rise in employment was well above the Bloomberg analyst consensus of …
16th June 2022
Activity to rebound in Q2 The fall in GDP at the start of the year was due to the disruption to activity from the Omicron outbreak. Growth will have rebounded strongly in the current quarter, but we suspect falling house prices and high interest rates …
Border reopening to boost services imports before long While the rise in export values in April was mostly due to rising commodity prices, the further fall in import values suggests that net trade will turn into a boost to GDP growth in Q2 after a huge …
2nd June 2022
GDP growth to accelerate in Q2 The solid rise in Q1 GDP supports our view that the economy will hold up better in the face of rising interest rates and falling real incomes than most anticipate . The 0.8% q/q increase in output was stronger than the …
1st June 2022
Housing downturn just beginning The monthly decline in house prices in May is the start of a significant housing downturn as the RBA’s hiking cycle continues. There’s a risk that this prompts the RBA to end its hiking cycle early, but our central forecast …
Consumption to defy falling real incomes and rising interest rates The fourth consecutive rise in retail sales values in April underlines that consumers are not throwing in the towel in the face of falling real incomes and rising interest rates . The 0.9% …
27th May 2022
Investment to rebound in earnest in the years ahead We estimate that private investment fell by 1.3% q/q in Q1, but firms’ expectations of future capital expenditure suggest investment will strengthen before long. Today’s private capital expenditure …
26th May 2022
Mediocre labour market data will encourage RBA to stick to 25bp hikes While the unemployment rate held steady at a 48-year low in April, the slowdown in employment growth and the sluggishness of wage growth will probably convince the RBA to hike rates by …
19th May 2022
Consistent wage growth to keep the RBA on track The unchanged pace of quarterly wage growth in Q1 should ensure the RBA won’t accelerate its hiking cycle just yet. But with the labour market still tightening and inflation still rising, we think wage …
18th May 2022
Trade was a big drag on growth in Q1 The rise in the trade balance in March won’t be enough to prevent trade from being a significant drag on growth in Q1. In the months ahead higher export prices due to the war in Ukraine should lift the trade surplus …
5th May 2022
Weak confidence won’t hold back consumption recovery Retail sales defied the weakness in consumer confidence in March and with the household savings rate still high, we expect consumption to keep expanding at a strong pace . The 1.6% m/m rise in retail …
4th May 2022
Tight labour market sets stage for another 50bp hike by RBNZ The continued tightness in the New Zealand labour market despite the omicron outbreak provides further evidence that the economy is still running hot. That’s why we expect the RBNZ to hike rates …
Inflation to surpass 6% Inflation surged in Q1 and is on track to surpass 6% later this year, exceeding the levels reached around the GST hike in 2000. With trimmed mean inflation already higher than at the start of previous tightening cycles, the Reserve …
27th April 2022
Inflation is now around its peak The 1.8% q/q rise in consumer prices in Q1 was broadly in line with the RBNZ’s expectations, which reduces the likelihood of another 50 basis point hike in the OCR in May. But we still think high inflation throughout 2022 …
21st April 2022
Unemployment rate to fall further before long The unemployment rate remaining at its joint lowest rate since the 1970s should be enough to keep the RBA on track to begin hiking rates in June. The 17,900 rise in employment was lower than the Bloomberg …
14th April 2022