Filtered by Subscriptions: Australia & New Zealand Economics Use setting Australia & New Zealand Economics
While the outlook for non-mining business investment in Australia is fairly encouraging, we aren’t expecting an appreciable pick-up in total private investment growth. That’s largely because the slowing housing market means that dwellings investment is …
1st June 2018
House prices fell at a faster rate in May and the recent slump in the number of properties sold relative to the number listed suggests that prices may soon be falling by about 5% a year. And that’s before activity has been squeezed by any tightening in …
While the headline figures in the first-quarter private capital expenditure survey were only a little weaker than most had anticipated, the news on non-mining investment was particularly disappointing. … Australia Private Capital Expenditure Survey …
31st May 2018
The Reserve Bank of Australia will almost certainly keep interest rates on hold at 1.5% at its policy meeting on Tuesday 5 th June and with the outlook for inflation subdued and the Royal Commission into misconduct in the financial sector creating more …
29th May 2018
We still believe that the oil price is more likely to fall from US$80 per barrel to US$65 rather than rise to US$100 as some have suggested. But even if it did hit US$100, inflation in Australia wouldn’t rise much above 2.5% and the hit to households …
25th May 2018
While there is still a lot of uncertainty, it seems likely that the Royal Commission into misconduct in the financial sector will lead to a tightening in credit conditions in Australia. A notable tightening in credit standards would weigh heavily on the …
24th May 2018
Despite a bounce back in March, our New Zealand Activity Proxy is still pointing to a modest easing in GDP growth over the first quarter as a whole. And we expect growth will continue to struggle this year as the migration boom fades and the housing …
22nd May 2018
Credit conditions in Australia will surely tighten further as a result of the Royal Commission investigation into misconduct in the financial sector, but there is a huge amount of uncertainty about the magnitude and implications. Housing finance …
18th May 2018
Following outright falls in employment in February and March, the pace of job creation returned to a more normal rate in April. But even if this pace is sustained, we expect wage growth to remain fairly subdued for some time yet. … Australia Labour Market …
17th May 2018
With wage growth stuck in the mud at 2.1% in the first quarter and likely to stay there or thereabouts for a while yet, the prospect of an interest rate rise next year has diminished further. It also makes the fiscal projections the Treasurer published in …
16th May 2018
The income tax cuts announced in this week’s 2018/19 Federal Budget are not enough to prevent consumption growth in Australia from slowing this year, especially given taxpayers won’t see the bulk of the benefit until the second half of 2019. … Income tax …
11th May 2018
While new Governor Adrian Orr’s communication style is clearer and more conversational than his predecessors, the outlook for policy remains much the same. The RBNZ left interest rates at 1.75% and Orr repeated previous suggestions that they won’t be …
10th May 2018
While the good performance of the economy has allowed Treasurer Scott Morrison to cut income taxes and project a return to a budget surplus one year ahead of schedule in the last Budget before next year’s election, we suspect the economy will return to …
8th May 2018
The sharper than anticipated easing in real retail sales growth in the first quarter points to a notable slowdown in real consumption growth last quarter. Moreover, the stagnation in nominal retail sales in March suggests there wasn’t any momentum going …
While the income tax cuts that the Australian Treasurer is planning to announce in Tuesday’s Federal Budget will provide a small boost to the economy over the next couple of years, we doubt they will prompt the RBA to raise interest rates before late in …
4th May 2018
The Reserve Bank of Australia’s Statement on Monetary Policy provided a clearer sign that the RBA has moved on from wondering if interest rates need to rise to considering when they will rise. But the Bank also appears to be all-but ruling out a hike this …
The only thing we expect to change at the Reserve Bank of New Zealand‘s monetary policy meeting on Thursday 10 th May is the Governor, as interest rates will almost certainly stay on hold at 1.75% at Adrian Orr’s first meeting. It is possible that Orr …
3rd May 2018
While most of the other major economies have slowed in the first quarter, March’s international trade and building approvals figures suggest that the Australian economy strengthened markedly. … Australia International Trade & Building Approvals …
Inflationary pressures picked up in the first quarter in Australia, with underlying inflation rising to the bottom of the RBA’s 2-3% target for the first time in two years. In contrast, core inflation in New Zealand slipped below the RBNZ’s 1-3% target …
2nd May 2018
The recent weakening in the Australian and New Zealand dollars probably has a bit further to go and the big risks still lie on the downside. That said, a shift in interest rate differentials next year may provide some support to the Aussie and kiwi …
The labour market continued to strengthen in the first quarter, with employment posting another decent rise and the unemployment rate falling to its lowest level in almost a decade. And although wage growth held steady last quarter, the outlook is more …
The Reserve Bank of Australia held interest rates at 1.5% for the 19th meeting in a row today and continued to signal that a near-term rate hike is unlikely. Further ahead, with GDP growth likely to stay below potential and inflation to remain subdued, we …
1st May 2018
House price inflation fell below zero in April for the first time since 2012 and with demand probably only going to be more constrained by lending conditions, we suspect that it will fall further into negative territory in the coming months. … Australia …
A weakening housing market and the high level of household debt will probably prevent GDP growth in Australia from accelerating above 2.5% in the coming years, while the end of the migration boom may mean that growth in New Zealand slows from 2.9% last …
30th April 2018
We suspect that a tightening in lending standards as a result of the Royal Commission into banking misconduct will more than offset any further relaxation in APRA’s lending restrictions to leave Australia’s housing market looking pretty weak in 2019 and …
27th April 2018
Despite underlying inflation coming in slightly stronger than the Reserve Bank of Australia expected in the first quarter, the RBA will almost certainly leave interest rates at 1.5% at its next policy meeting on Tuesday 1 st May. And it may revise down …
24th April 2018
Even though in the first quarter underlying inflation essentially rose back within the RBA’s 2-3% target range for the first time in two years, we doubt this means that the RBA will raise interest rates this year. … Australia Consumer Prices …
The sharp drop in our New Zealand Activity Proxy in February is probably overstating the slowdown in GDP growth in the first quarter. Nonetheless, it does appear that the economy started 2018 on a fairly soft footing. … New Zealand Activity Proxy …
23rd April 2018
Looking past the temporary dip in inflation in the first quarter, which was partly driven by government decisions, there have been some encouraging signs about the outlook for inflation in New Zealand. But while capacity pressures do appear to be growing, …
20th April 2018
While the modest increase in employment in March was a notable break from the exceptionally large rises recorded over the past year, we are wary about sounding the alarm just yet given most leading indicators remain consistent with decent rates of …
19th April 2018
The fall back in CPI inflation towards the bottom of the RBNZ’s 1-3% target range in the first quarter was partly due to government decisions rather than economic forces, but it nonetheless highlights that price pressures probably won’t prompt the RBNZ to …
The Reserve Bank of Australia’s apparent downward revision to its previously published 3.0% GDP growth forecast for 2018 shows once again that the RBA has been too hopeful. We suspect it will also ultimately conclude that growth in 2019 won’t be as strong …
13th April 2018
Households remained fairly optimistic in April, despite the escalation in trade tensions between the US and China, with the Westpac measure of consumer confidence remaining above average for the fifth month in a row. But while consumer confidence is …
11th April 2018
The recent fall in the demand for housing relative to the supply is consistent with house prices continuing to decline in the coming months. While prices may only edge lower this year and next, higher interest rates will probably mean they fall more …
10th April 2018
The recent rise in banks’ short-term funding costs would probably need to triple before banks could justify raising their mortgage rates by 0.25%, which would be equivalent to a hike in the official interest rate. In any case, the heat the biggest banks …
9th April 2018
There have been some encouraging data on the health of consumer spending in Australia recently, and with the labour market remaining strong and consumer confidence relatively high there are certainly reasons for optimism further ahead. On balance, …
6th April 2018
As Australia is more exposed than most other advanced economies to a further escalation of trade tensions between the US and China, the fall in its international trade surplus in February is particularly inconsequential. Even so, net exports may have made …
5th April 2018
While February’s retail sales and building approvals data sent mixed signals on the health of the overall economy, it is most likely that both consumption and dwellings investment will be weaker than most anticipate this year. … Retail Sales & Building …
4th April 2018
The Reserve Bank of Australia has become more worried about trade tariffs and rising global bank funding costs. Coming on top of the weakness of the housing market and wage growth, it is becoming even more likely that the RBA will keep interest rates at …
3rd April 2018
The Australian government’s plan to cut the corporate tax rate from 30% to 25% by 2026/27 wouldn’t be a boon for the economy for two reasons. First, the tax rate would need to be cut much further to make Australia much more competitive than its peers. …
29th March 2018
Both the Australian and New Zealand economies failed to regain any momentum at the end of 2017 with GDP rising by a slower than expected 0.6% q/q in New Zealand and just 0.4% q/q in Australia. Admittedly, some of this weakness can be explained by …
28th March 2018
The Reserve Bank of Australia will almost certainly leave interest rates on hold at 1.5% at its policy meeting on Tuesday 3rd April and it’s likely to reiterate that rate hikes remain some way off by once again saying that progress in returning inflation …
27th March 2018
The fairly modest rise in our New Zealand Activity Proxy in January suggests that the economy failed to gain much momentum at the start of the year. Looking ahead, we continue to expect GDP growth to stay close to 3.0% this year, although the risks are …
26th March 2018
Incoming RBNZ Governor Adrian Orr today signed a Policy Targets Agreement that included a new reference to employment. Admittedly, this probably won’t significantly alter the outlook for monetary policy. But the bigger risk is that the new Governor …
25th March 2018
Following a surprisingly strong 2017, the Australian labour market has started 2018 on a firm footing and business surveys suggest that employment growth will continue to climb in the coming months. But the softening in GDP growth last year is consistent …
23rd March 2018
Australia does not have a problem creating jobs, as employment continued to grow at its fastest rate in a decade in February. But there is still a lot of slack in the market that will need to be used up before wage growth rises significantly. … Australia …
22nd March 2018
Reserve Bank of New Zealand Governor Grant Spencer finished his six-month term without any fireworks by leaving interest rates at 1.75% for the 16 th month and reiterating that rates are unlikely to rise until the second half of 20 The new Governor Adrian …
21st March 2018
We believe the probable rise in US rates on Wednesday will mark the start of the first prolonged period since the late 1990s where interest rates in America are higher than in Australia and New Zealand. This will cap the rise in bond yields in Australia …
While the recent rises in building approvals are encouraging, we doubt they are a sign that the drag on GDP growth from dwellings investment is already over. Indeed, we expect that dwellings investment will be a persistent drag on growth in 2018 and 2019. …
20th March 2018
The 1.0% q/q rise in ABS house prices in the fourth quarter overstates the health of the market at the end of last year and the more up-to-date CoreLogic data show that prices stagnated in the first two months of this year. As such, the housing market …
