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Fall in employment unlikely to last The drop in employment in September was largely due to weakness in Victoria. As restrictions ease there, we expect the unemployment rate to fall again in the coming months. The 29,500 fall in employment in September was …
15th October 2020
Trade was probably a drag on growth in Q3 The trade balance narrowed again in August and we think that trade was probably a drag on growth in the third quarter. The fall in the trade balance from $4652mn in July to $2643mn in August was much weaker than …
6th October 2020
Housing downturn approaching its trough The housing downturn continued its run in Sydney and Melbourne in September, but prices rose again in the other six capital cities and we think nationwide prices will reach a trough by the end of this year before …
1st October 2020
Rebound in employment has further to run August’s labour market data were much stronger than most had anticipated and we think that employment will continue to rise . The 111,000 rise in employment in August was much stronger than the Bloomberg median of …
17th September 2020
Growth will rebound strongly in Q3 New Zealand’s GDP fell by 12.2% q/q in Q2 but while the second lockdown should weigh on the recovery in Q3 we still expect growth to rebound by more than 10% in Q3. The 12.2% q/q plunge in GDP was broadly in line with …
Surge in sales to reverse in August Retail sales were 12% above pre-virus levels in July but the closure of non-essential shops in Victoria will weigh heavily on spending in August. That means that sales won’t rise all that much in Q3, though a rebound in …
4th September 2020
Rebound in imports has further to run The fall in export values in July is consistent with our view that exports won’t rebound much in Q3, but the jump in import values suggests that domestic demand is now on the mend . The 4.4% m/m drop in export values …
3rd September 2020
GDP to eke out a gain in Q3 Australia’s GDP fell by more than most had anticipated in Q2 but we think it will rebound marginally in Q3 despite the tightening of restrictions in Victoria . The 7.0% q/q plunge in Q2 GDP was weaker than the Bloomberg median …
2nd September 2020
Housing slump has further to run The housing downturn deepened further in Melbourne in August and continued in Sydney but seems to be abating elsewhere. We reiterate our forecast that house prices across the eight capital cities will eventually fall by 8% …
1st September 2020
Capital expenditure holding up rather well Both machinery and equipment investment as well as construction investment fell less than we had anticipated in Q2 which suggests that the contraction in GDP wasn’t as deep as we thought . The 5.9% q/q drop in …
27th August 2020
Employment will fall again in coming months The pick-up in employment in July is likely to unwind in the coming months as the stricter lockdown in Victoria weighs on the labour market. The 114,7000 rise in employment in July was much stronger than the …
13th August 2020
Unemployment rate will rise again in Q3 The fall in the unemployment rate to 4.0% in Q2 shows that the government’s generous wage subsidy protected many jobs but we suspect that as that comes to an end, unemployment may rise somewhat Q3. The 0.4% q/q …
5th August 2020
Lockdown to weigh on recovery Retail sales and external trade both rose in the month of June but may weaken again before long as imports begin to normalise and the renewed lockdown in Victoria weighs on retail sales. The 2.7% m/m rise in retail sales …
4th August 2020
House prices will keep falling The further decline in house prices in July is likely to persist in the coming months given the renewed lockdown and disruptions to activity in Melbourne. We ultimately expect house prices to fall by 5-10%. House prices …
3rd August 2020
Inflation will return in Q3 but will be weak for years The deflation experienced in Q2 is not likely to be a lasting feature of the Australian economic landscape. But we think underlying inflation is likely to remain depressed for years to come. The 1.9% …
29th July 2020
Unemployment rate close to its peak The labour force rose faster than employment in June, pushing up the unemployment rate. However, we think that employment will soon pull ahead so unemployment probably won’t rise any further . The 218,000 rise in …
16th July 2020
Inflation to fall below RBNZ’s target this year The plunge in headline inflation to 1.5% in Q2 is just the start of the weakness in inflation which is why we expect the RBNZ to launch negative rates early next year. Prices in Q2 fell by 0.5% q/q , in line …
Consumption to surge in Q3 Retail sales rose above pre-virus levels in May and probably kept rising in June. As such, a sharp rebound in consumption in Q3 following Q2’s slump is all but guaranteed. However, services spending will probably fare worse and …
3rd July 2020
Trade may have been a drag on growth in Q2 The trade balance was broadly stable in May but given significant price effects, trade may have been another drag on GDP growth in Q2. The small rise in the trade balance from $7830mn in April to $8025mn in May …
2nd July 2020
House prices to continue their decent in the coming months The further decline in house prices in June is likely to continue in the coming months even as economic activity recovers. We expect house prices to fall by 5-10% over the coming year. House …
1st July 2020
Unemployment rate should start to fall soon Employment fell further in May but with the economy opening up again it should start to rebound in June. As such, the unemployment rate probably won’t rise any further . The 227,700 plunge in employment in May …
18th June 2020
Growth was subdued even before the virus outbreak Just one week of New Zealand’s strict lockdown to curb the spread of Covid-19, fell in the first quarter. We therefore expect the hit to GDP to be concentrated in Q2 when the bulk of the lockdown occurred. …
Consumption to rebound but exports to remain weak The slump in retail sales in April should be followed by a strong rebound as restrictions are eased. However, both exports and imports will remain weak as the border closure weighs on services trade. The …
4th June 2020
GDP to plummet in Q2 GDP was falling before the bulk of the virus restrictions were in place and is set to fall more sharply in Q2 before picking up gradually in the second half of the year. The 0.3% q/q decline in GDP was a touch less than the Bloomberg …
3rd June 2020
House prices have further to fall We think the small decline in house prices in May marks the start of a larger downturn. We expect house prices to fall by 5-10% in the coming months. House prices across the eight capital cities fell by 0.2%m/m in May, …
1st June 2020
Capital investment to plunge over the coming year We estimate that private investment was broadly flat in Q1, but firms’ expectations of future capital expenditure point to a sharp downturn in investment in the coming months. Today’s private capital …
28th May 2020
Unemployment rate set to approach 10% The small rise in the unemployment rate in April masks a sharp fall in employment and we still expect the unemployment rate to rise further over the coming months . The 594,000 fall in employment in April was broadly …
14th May 2020
Wage growth set to slow sharply The stability in wage growth in Q1 tells us little about the impact of the virus outbreak on the labour market and a sharp slowdown over the coming quarters is likely . The cutoff date for the Q1 wage price index survey was …
13th May 2020
Surge in exports won’t last long The massive rebound in exports in March is hardly surprising given the impact of a cyclone in February but we think weakness in global demand will weigh on export growth in the coming months. The rise in the trade balance …
7th May 2020
Consumption to slump in Q2 A large share of the surge in retail sales values in Q1 reflected soaring prices and sales volumes only rose modestly. With spending on many services plummeting, consumption probably fell in Q1. And with the lockdowns starting …
6th May 2020
Unemployment rate will surge in Q2 The small rise in the unemployment rate to 4.2% in New Zealand in Q2 largely predates the impact of Covid-19 on the New Zealand economy. We expect the unemployment rate to surge in Q2 as the lockdown weighs on the labour …
Underlying inflation to fall towards 0% soon Inflation was accelerating ahead of the virus outbreak but the surge in spare capacity should push underlying inflation below 1% over the coming quarters . The 0.3% q/q rise in consumer prices in Q1 was in line …
29th April 2020
Inflation to fall back below RBNZ’s target before long The rise in headline inflation from 1.9% in Q3 to 2.5% in Q4 will be of cold comfort to the RBNZ given the virus outbreak may cause inflation to slow below 1% before long. Quarterly inflation of 0.8% …
20th April 2020
Unemployment rate may reach 12% before long The coronavirus didn’t have a noticeable impact on the March labour market data but upcoming releases will show a sharp deterioration. The unemployment rate will probably be in double-digits before long. The …
16th April 2020
Both exports and imports to dive further The small decline in the trade balance in February was the result of a sharp decline in exports being offset by a sharp decline in imports consistent with our view that domestic demand was set to struggle even …
7th April 2020
Consumption will fall in Q1 and plunge in Q2 T he 0.5% rise in retail sales in February precedes the significant spread of the virus in Australia and we think consumption will fall sharply the coming months . The 0.5% m/m rise in retail sales values in …
3rd April 2020
House prices may decline before long We think the continued rebound in house prices will come to an end before long as the virus outbreak reduces the volume of home sales and weighs on household incomes. House prices across the eight capital cities rose …
1st April 2020
Unemployment rate will surge this year Today’s data show that the coronavirus did not have a significant impact on the Australian domestic economy in February. Even so, we think the draconian restrictions put in place will result in economic activity …
19th March 2020
Growth was subdued even before the virus outbreak The decline in GDP growth in New Zealand in the fourth quarter shows that the economy was struggling even before the Covid-19 outbreak which will surely drag the New Zealand economy into recession in the …
18th March 2020
Worst is yet to come for retail sector Retail sales fell for the second consecutive month in January. And given that this happened before the coronavirus started to spread in Australia in earnest, the outlook for consumption remains weak. The 0.3% m/m …
6th March 2020
Worst is yet to come for trade The small decline in the trade surplus in January masks larger weakness in both export and import values. And we think the coronavirus outbreak means that exports have further to fall in the coming months . The trade surplus …
5th March 2020
GDP growth will weaken further in 2020 GDP growth remained subdued at the end of last year, and given the fallout from the coronavirus outbreak we expect the economy to deteriorate further in 2020. The 0.5% quarterly rise in GDP was a touch faster …
4th March 2020
House prices may rise by 10% this year The rally in house prices continued in February and all the leading indicators suggest that prices will keep rising at a rapid pace. However, affordability is deteriorating rapidly and we expect price growth to slow …
2nd March 2020
Drag from private investment will fade by the middle of this year We estimate that investment fell sharply, by 1.5% q/q in Q4. But firms’ expectations of a pick-up in nominal capital expenditure in the next financial year suggest the drag from private …
27th February 2020
Unemployment rate may rise to 5.5% The jump in the unemployment rate in January probably isn’t enough by itself to convince the RBA to cut rates. But we think the weakness in the underlying economy will keep pushing the unemployment rate higher in the …
20th February 2020
Wage growth set to slow further Wage growth remained subdued in the fourth quarter and we expect it to weaken further over the coming quarters. That should eventually convince the RBA to cut interest rates to 0.25%. The 0.5% quarterly rise in the wage …
19th February 2020
GDP growth in Q1 probably remained subdued The pick-up in real retail sales provides some hope that consumption growth may have turned a corner. Even so, we still think GDP growth remained subdued at the end of 2019. Retail sales values fell by 0.5% m/m …
6th February 2020
Lower unemployment rate should keep RBNZ on hold The decline in the unemployment rate to 4.0% in New Zealand all but ensures that the RBNZ will keep rates on hold in February. And given that we forecast employment growth to rise in 2020 , we think the …
4th February 2020
House price growth may be approaching a peak House prices continued to surge in January. But our sales to new listings ratio suggests that price growth may be approaching a peak. That’s consistent with our forecast for price growth to moderate this year. …
3rd February 2020
Underlying inflation should fall further below target in 2020 The pick-up in headline inflation in Q4 should be the final nail in the coffin for hopes of a February rate cut. Even so, weak economic activity should force the bank to cut rates again before …
29th January 2020