Filtered by Subscriptions: Australia & New Zealand Economics Use setting Australia & New Zealand Economics
While leaving interest rates at 1.75% at the policy meeting on Thursday 9 th August, the Reserve Bank of New Zealand will probably acknowledge the recent softening in activity by revising down the GDP growth forecasts published in the accompanying …
2nd August 2018
The recent fall in the Australian dollar may mean that over the next year the external sector will give the economy a bigger helping hand. But in the second quarter, it looks as though net exports didn’t add anything to growth. And a further escalation of …
The acceleration in the housing downturn in July should make the RBA and some other analysts sit up and take notice. What’s more, the worst is yet to come. Our relatively bearish forecast that prices will gradually fall by 12% from peak to trough is …
1st August 2018
Although the labour market remains fairly healthy and employment is still within the RBNZ’s measures of the “maximum sustainable level”, the rise in the unemployment rate in the second quarter coupled with the recent plunge in business confidence …
The combined message from the Reserve Bank of Australia’s policy announcement on Tuesday 7 th August and the publication of the Statement on Monetary Policy on Friday 10 th will probably be that even though this will be the 24th month that interest rates …
31st July 2018
Our New Zealand Activity Proxy suggests that the economy lost further momentum in June and that GDP may now be growing by just 2.0% a year. Most worrying are the signs that the slump in business confidence is filtering through into weaker business …
The end of Australia’s housing boom and New Zealand’s migration boom mean that economic growth in both countries will probably fall short of expectations over the next couple of years. Australia may struggle to grow by much more than 2.5% a year while GDP …
30th July 2018
The fall in underlying inflation in the second quarter in Australia revealed this week has made us more confident in our non-consensus call that underlying inflation will stay below the RBA’s 2-3% target range for another two-and-a-half years yet. In …
27th July 2018
The rise in headline inflation to back within the RBA’s 2-3% target range for only the first time in 15 months was only possible because of a leap in petrol prices. There is hardly any price pressure elsewhere and, with underlying inflation having fallen …
25th July 2018
The financial markets are probably right to assume that the release of June’s bumper labour market figures has increased the chances that the Reserve Bank of Australia will raise interest rates a bit earlier than otherwise. But there’s unlikely to be …
20th July 2018
The labour market is improving quicker than the RBA expected, but it is probably the case that the unemployment rate would have to fall below 5.0%, other measures of spare capacity would have to improve more and wages growth would have to show more signs …
19th July 2018
The small strengthening in underlying price pressures in the second quarter is unlikely to make the RBNZ any keener to raise interest rates when it is becoming clearer that economic growth is slowing. We doubt that rates will rise until mid-2020, which …
17th July 2018
Housing finance commitments have started to edge up again and suggest that house prices won’t fall much further for now. Households are taking the weaker housing market in their stride and APRA Chairman Byres thinks that any further tightening in credit …
13th July 2018
Our relatively bearish view that GDP growth will slow from 2.8% last year to 2.0% next year has always been based on the idea that the end of the migration and housing booms would weaken consumption and dwellings investment. The latest evidence suggests …
11th July 2018
While the aging of the population will continue to exert a sizeable downward influence on the participation rate in the coming years, this will probably be more than offset by further rises in the participation rates of female workers and older workers. A …
9th July 2018
As well as fretting about the rise in global trade barriers, policymakers in Australia are also becoming more worried about housing. And rightly so. After all, some of the most reliable leading indicators suggest that the soft landing in the housing …
6th July 2018
A large chunk of the boost to consumption from the income tax cuts and the rise in the minimum wage, both of which came into effect on 1st July, is being offset by the leap in petrol prices. Moreover, with income growth subdued and house prices falling, …
5th July 2018
It looks as though a rebound in consumption growth will broadly offset a weakening in the external sector in the second quarter to keep the Australian economy cruising along nicely in the second quarter. … Retail Sales & International Trade …
4th July 2018
Growing concerns about the global trade dispute and the deepening domestic housing downturn mean that the Reserve Bank of Australia will probably leave interest rates at 1.5%, as it did at today’s meeting for the 23rd month, until late next year. While a …
3rd July 2018
The Reserve Bank of Australia probably isn’t too concerned by the further small fall in house prices in June. But the clear risk is that rising mortgage rates and tighter credit conditions prompt prices to fall at a much faster pace over the next year or …
2nd July 2018
The recent rebound in short-term funding costs is not big enough to prompt all banks to raise their mortgages rates by more than a few basis points. But the risk that funding costs rise further is one more reason why the Reserve Bank of Australia is …
29th June 2018
The changes to the Reserve Bank of New Zealand’s (RBNZ) policy statement after it left interest rates at 1.75% today are more cosmetic than substantive. But the Bank has acknowledged the growing downside risks to both the global and domestic economies. …
27th June 2018
The Australian and New Zealand dollars have weakened to US$0.74 and US$0.68 respectively as rising trade tensions between the US and China have reduced the appetite for riskier currencies. Looking ahead, the Aussie and kiwi dollars may weaken further. Our …
An apparent wilting desire to raise interest rates means that the Reserve Bank of Australia will leave interest rates at 1.5% at the policy meeting on Tuesday 3rd July and probably won’t raise rates until late in 2019. If anything, the chances have …
26th June 2018
The lacklustre rise in our NZAP in April suggests that after slowing in the first quarter the economy failed to regain much momentum in the second. We expect growth will continue to slow from here. … New Zealand Activity Proxy …
25th June 2018
The combination of the escalation in global trade tensions and some dovish developments at home have dragged down the Australian dollar to a one-year low of US$0.74. We suspect it will weaken further to US$0.72 by the end of the year. And if the US-China …
22nd June 2018
The Reserve Bank of New Zealand will almost certainly leave interest rates on hold at 1.75% at its policy meeting on Thursday 28 th June and Governor Orr may well repeat that rates will stay at this level for “some time to come”. But with GDP growth …
21st June 2018
GDP growth is by no means falling off a cliff, but the end of the migration and housing booms have already caused a marked slowdown and they probably mean growth will ease to just 2.0% next year. Against that backdrop, the RBNZ is unlikely to raise …
The escalating trade spat between the US and China could potentially boost the Australian economy in the near-term. But any reduction in global trade would be bad news for Australia in the long-term. Just how bad would partly depend on how well …
20th June 2018
Governor Lowe outlined in a speech earlier this week that before interest rates are raised from their record low of 1.5% the RBA will want to have “reasonable confidence that inflation is picking up to be consistent with the medium-term target and that …
15th June 2018
While the unemployment rate edged down in May, the underutilisation rate held steady suggesting that there is still plenty of slack in the labour market. And in his speech yesterday, Governor Philip Lowe suggested the RBA is increasingly focusing on …
14th June 2018
The most likely consequence of the rapid build-up of household debt over the past decade is a number of years of softer GDP growth and lower interest rates than widely expected. But the risk of a more painful consequence, namely a recession or a financial …
13th June 2018
While the modest rise in the Westpac measure of consumer confidence in June is encouraging, we remain cautious about the outlook for consumption growth. … Australia Consumer Confidence …
In order to grow by 3.1% in the year to the first quarter, the Australian economy returned to the old habit of relying on resources. This won’t be possible in the second quarter nor in the coming years when Australia’s resources exports will peak. And …
8th June 2018
After having been a big factor behind the strong rise in GDP in the first quarter, April’s international trade data suggest that net exports won’t be as supportive in the second quarter. So just one day after the release of the 1.0% q/q rise in GDP, the …
7th June 2018
Australia stands out as one of the few advanced economies that strengthened at the start of the year. But with households struggling even before the Royal Commission has prompted tighter credit conditions, the first quarter might be as good as it gets. So …
6th June 2018
While leaving interest rates at the record low of 1.5% again today, the Reserve Bank of Australia hinted that it is not too worried about the economic implications of the Royal Commission investigation into the banks. We are more concerned and believe …
5th June 2018
After stalling in March, the stronger than anticipated rise in retail sales in April was welcome news. Nevertheless, with household budgets still under pressure, we continue to expect consumption growth to weaken this year. … Australia Retail Sales …
4th June 2018
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
