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Strong inflation should mark the end of the RBNZ’s easing cycle The strong rise in headline inflation from 1.5% in Q3 to 1.9% in Q4 should be enough to prevent the RBNZ cutting rates in February. And given that we now expect a strengthening in economic …
23rd January 2020
Fall in unemployment gives RBA breathing space The fall in the unemployment rate to a nine-month low shows that monetary and fiscal stimulus is starting to work and reduces the pressure on the RBA to cut interest rates. The 28,900 rise in employment was …
Surge in retail sales unlikely to herald spending spree The strongest rise in retail sales in two years could be a sign that tax refunds and interest rate cuts are finally boosting spending. But with consumer confidence falling to fresh lows, we doubt it …
10th January 2020
Trade should provide a much-needed boost to growth in Q4 The sharp rise in the trade balance in November is consistent with the contribution from net exports to GDP growth rising sharply in the fourth quarter but the weakness in imports suggests domestic …
9th January 2020
House price growth to remain strong for now With home sales climbing to a fresh high, our sales to listings ratio now suggests that house prices will soon be rising by around 10% per annum. House price growth across the eight capital cities slowed from …
2nd January 2020
Unemployment rate to rise further The renewed drop in the unemployment rate in November reduces the pressure on the RBA to cut interest rates but we still expect the labour market to soften furthe r. The 39,900 jump in employment in November was stronger …
19th December 2019
Rebound in growth unlikely to last The rebound in GDP growth in New Zealand in the third quarter is unlikely to be sustained as soft consumer and business confidence limit the pick-up in growth. Production GDP growth surged from a downwardly revised 0.1% …
Net trade the bright spot as consumption set to remain subdued The stagnation in retail sales in October suggests that consumption growth remained sluggish in the fourth quarter. And while net exports should continue to support GDP growth, the weakness in …
5th December 2019
Growth will continue to disappoint GDP growth fell short of expectations in the third quarter and we think it will remain much weaker than most anticipate. As such, we reiterate our view that the RBA will cut interest rates in February and April and …
4th December 2019
House price growth to ease in 2020 Our sales to new listings ratio suggests that house price growth will moderate before long . Even so given the sharp increase in recent months, we now expect prices to rise by around 7% in 2020 and 5% in 2021. The 2.0% …
2nd December 2019
Private investment to fall further The renewed decline in machinery and equipment investment in the third quarter is consistent with the sharpest quarterly fall in private investment in three years. And we expect private investment to remain a drag on …
28th November 2019
Unemployment rate to rise further The sharp fall in employment will be causing concern for the RBA and we think the unemployment rate has further to rise in the coming months. The sharp 19,000 fall in employment in October was the largest decline in three …
14th November 2019
Wage growth will slow to 2.0% soon The slowdown in wage growth in the third quarter doesn’t come as a complete surprise to the RBA and we still expect the Bank to wait until February before cutting rates again. The 0.5% quarterly rise in the wage price …
13th November 2019
Net trade should support trade over coming quarters Net trade probably didn’t bolster GDP growth in the third quarter which adds to the evidence that GDP growth slowed in Q3. And weaker capital goods imports suggest that the slump in business investment …
7th November 2019
Rise in the unemployment rate not a big deal for the RBNZ The rise in the unemployment rate to 4.2% in Q3 only reverses the decline in Q2 so we doubt the RBNZ will be too worried at this stage. The 0.2% q/q increase in employment was lower than the …
5th November 2019
Consumption to remain subdued The decline in real retail sales in the third quarter suggests that consumption growth remained subdued. And with the bulk of the tax refunds already paid, the outlook for the fourth quarter isn’t great either. The 0.2% m/m …
4th November 2019
House price growth to ease in 2020 Our sales to new listings ratio suggests that house prices will continue to surge in the coming months before moderating in the new year . We expect prices to rise by 5% in 2020 and 2021. The 1.2% rise in CoreLogic’s new …
1st November 2019
Underlying inflation to ease further below RBA’s target While inflation edged up in Q3 we think the weakness in economic activity will cause it to fall again before long, prompting further easing by the RBA. Consumer prices increased by 0.5% q/q in Q3, in …
30th October 2019
Unemployment set to rise again before long The RBA will breathe a sigh of relief after the unemployment rate declined in September. But we think it won’t be long before unemployment starts to rise again, forcing the RBA to provide additional stimulus. The …
17th October 2019
Easing headline inflation not yet a concern for the RBNZ The decline in headline inflation from 1.7% in Q2 to 1.5% in Q3 is unlikely to concern the RBNZ as it was still above their forecast in August. But we think subdued activity will mean that …
16th October 2019
Tax cuts not having much of an effect so more stimulus is needed Retail sales growth remained subdued in August despite the government’s tax cuts which suggests that economic activity did not recover strongly in the second half of 2019. The 0.4% m/m rise …
4th October 2019
Trade will only provide a modest boost to growth in Q3 The narrowing in the trade surplus in August was mostly driven by a decline in export prices so we doubt that net trade will be a drag on GDP growth in Q3. Even so, we estimate that the contribution …
3rd October 2019
House prices recovery to continue The 10% annualised rise in house prices in September is unsustainable in light of sluggish income growth. We expect prices to rise by a slower 5% in 2020 and 2021. The 1.1% m/m rise in house prices in the eight capital …
1st October 2019
Higher unemployment rate puts pressure on RBA The unemployment rate rose to 5.3% in August and we think a slowing in employment growth should drive the unemployment rate even higher, to 5.4% by the end of the year. Employment rose by a solid 34,700 in …
19th September 2019
Growth to remain soft in 2019 Following the slowing in annual GDP growth in Q2, we suspect that economic activity will remain subdued throughout 2019 as soft business conditions and weak global growth weigh on growth. Production GDP growth eased to 0.5% …
Trade won’t provide a large boost in Q3 The narrowing in the trade surplus in July was probably driven by a decline in export volumes so we doubt that net trade provided much of a boost to GDP growth in Q3. The trade balance eased from a downward revised …
5th September 2019
Growth to remain subdued The solid rise in GDP in the second quarter shows that Australia’s economy has come through the housing downturn with cuts and bruises but hasn’t faltered. Even so, we only expect a sluggish recovery . The 0.5% quarterly rise in …
4th September 2019
Consumption growth should pick up in the second half of the year The weakness in retail sales isn’t too concerning as most households wouldn’t have received their tax refunds by the end of July. We therefore still expect that GDP growth bottomed out in …
3rd September 2019
House prices will keep rising, and fast The 0.8% m/m rise in house prices in August means the housing market is now in full rebound. We expect prices to rise by 5% from their trough this year, and by 10% in 2020 supported by low interest rates and easing …
2nd September 2019
Outlook for capital spending improves The rebound in machinery and equipment investment won’t be enough to offset a slump in construction activity and private investment probably fell the most since 2016 in the second quarter. However, firms have become …
29th August 2019
Labour market to deteriorate further this year The strong rise in employment in July failed to make any inroads into the pool of unemployed workers. Employment growth is set to falter, pushing up the unemployment rate further before long. The 41,100 …
15th August 2019
Wage growth will fall to 2% next year Wage growth treaded water in the second quarter and the recent loosening of the labour market suggests it will fall to 2% before long. The 0.6% q/q rise in the wage price index in Q2 was a touch stronger than the …
14th August 2019
Net trade will continue to be the main driver of Australian growth We estimate that net trade boosted GDP growth in Q2, providing a glimmer of hope amidst the bleak domestic outlook. The trade balance surged from an upwardly revised surplus of $6173mn in …
6th August 2019
Strength in the labour market won’t last long The sharp fall in the unemployment rate is unlikely to prevent the RBNZ from cutting rates tomorrow given that labour market data are volatile and often prone to revision. What’s more, we expect the …
Consumption growth remained weak second quarter The weakness in real retail sales in Q2 suggests consumption growth remained sluggish in the second quarter. That’s one reason why we expect GDP growth to slow from 2.8% in 2018 to just 1.5% this year. …
2nd August 2019
Housing downturn may be bottoming out House prices appear to be bottoming with an average increase in prices across the eight capital cities in July. We expect prices will remain around this level for the rest of 2019 before rising by 3% in 2020 and 5% in …
1st August 2019
Underlying inflation to fall further below RBA’s target Underlying inflation remained subdued in the second quarter and we think increasing spare capacity in the Australian economy means it will fall further below the RBA’s 2-3% target over the next year. …
31st July 2019
Labour market to deteriorate further this year We think the slowdown in employment growth has further to run and suspect that the deterioration in the labour market will cause the unemployment rate to rise before the year is out. Employment was almost …
18th July 2019
Underlying inflation won’t pick up much from here We doubt the strength in inflation in Q2 will be maintained for long and we expect underlying inflation to remain below the mid-point of the RBNZ’s 1-3% target band for the foreseeable future. That’s why …
16th July 2019
Consumption growth to remain soft in the second quarter The weakness in retail sales so far in Q2 suggests consumption growth remained sluggish in the second quarter. Sluggish consumption is one reason why we expect GDP growth to slow from 2.8% in 2018 to …
4th July 2019
Record trade surplus provides a little support to net exports in Q2 The record trade surplus in May was supported by the recent surge in iron ore prices so will not completely flow through to stronger net exports in Q2. Even so, we expect net trade to …
3rd July 2019
Prices may rise in 2020 We expect the pace of house price declines will continue to gradually ease this year with house prices reaching a trough by the end of the year. We suspect house prices may start to rise again thereafter, by 3% in 2020 and 5% in …
1st July 2019