Filtered by Subscriptions: Australia & New Zealand Economics Use setting Australia & New Zealand Economics
The outright fall in retail sales values in February raises fresh concerns about the health of the retail sector. Admittedly, some of the recent weakness is due to temporary factors. But there are other factors holding back spending that are likely to …
7th April 2017
The Reserve Bank of Australia (RBA) was always going to leave interest rates at 1.5% today, but there are some subtle signs that the Bank is becoming more concerned about the outlook for the labour market and underlying inflation, but less concerned about …
4th April 2017
The rebound in the trade surplus is mainly due to the reversal of the distortion caused by Chinese New Year that suppressed the surplus in January. But with commodity prices having started to edge lower and the legacy of Cyclone Debbie currently reducing …
The outright fall in retail sales values in February adds to growing evidence that real consumption growth probably eased in the first quarter, while the latest news on the housing market has remained strong. … Retail Sales & Building Approvals …
3rd April 2017
The recent damage caused by Cyclone Debbie is clearly devastating for those households and businesses in Queensland that have been most affected. And it will leave a fairly large dent in Queensland’s economy, at least in the near-term. But it won’t …
31st March 2017
Today’s announcement that the Australian Prudential Regulation Authority has introduced tighter mortgage lending rules will go some way to addressing the RBA’s concerns about the overheating housing market and the associated risks to financial stability. …
Although the Reserve Bank of Australia’s meeting on Tuesday 4th April won’t be very exciting, as the RBA will leave interest rates at 1.5% for the sixth meeting in a row, events over the next month could make May’s meeting much more interesting. By then …
28th March 2017
Although Australian banks will probably soon be hit by more stringent mortgage lending rules, they can take some comfort from an interest rate environment that will probably be fairly favourable over the next couple of years for their net interest …
24th March 2017
The rebound in GDP growth in Australia in the fourth quarter and the easing in New Zealand appear to imply that the neighbouring nations are experiencing a change of fortunes. But we doubt this is a sign of things to come. While subdued domestic demand …
23rd March 2017
The Reserve Bank of New Zealand used today’s decision to leave interest rates at 1.75% to emphasise once again that rates won’t be raised either this year or next. The financial markets are slowly getting the message, but there is still plenty of scope …
22nd March 2017
The acceleration in house price inflation in the fourth quarter of last year has undoubtedly continued into the start of this year and will remain a thorn in the side of the Reserve Bank of Australia for a while yet. But the recent rises in mortgage rates …
21st March 2017
House prices in Australia are rising at their fastest pace since 2010 and the recent surge in auction clearance rates suggests that a further pick-up is on the cards. However, most other leading indicators point to an easing in house price inflation and …
17th March 2017
While there is a consensus among economists and financial markets alike that the Reserve Bank of New Zealand will keep rates on hold at 1.75% when it meets next Thursday 23 rd March, we believe that financial markets have gone too far by pricing in the …
16th March 2017
The stronger than expected rise in the unemployment rate and the pick-up in the underutilisation rate, which is a broader measure of spare capacity, suggests that there is still plenty of slack in the labour market. As such, the labour market is unlikely …
While GDP growth in the fourth quarter of last year was weaker than most had expected, this was largely the result of temporary factors and as such we expect growth in New Zealand to bounce back early this year. … New Zealand GDP (Q4 …
15th March 2017
While the Westpac consumer confidence headline index held steady in March, the further weakening in confidence surrounding the housing market is consistent with an easing in house price inflation in the coming quarters. … Australia Consumer Confidence …
An easing in economic growth in China coupled with the downside risks to Australia posed by the potential policies of President Trump will mean that the Reserve Bank of Australia won’t follow the US Fed by raising interest rates until 2019 at the …
12th March 2017
Although we still believe that the next move in interest rates in Australia will be down, it is useful to consider what would need to happen to prompt the RBA to raise rates. Two scenarios stand out. The first is where the strong global economy and the …
10th March 2017
The statement released after the Reserve Bank of Australia today left interest rates at 1.5% remained fairly balanced, but recent speeches have made it clear that the RBA doesn’t intend to cut interest rates again. We think the combination of weaker …
7th March 2017
The 0.4% m/m rise in retail sales in January was a welcome sight following the outright fall in sales in December, but it doesn’t change the bigger picture that with wage growth likely to remain close to record lows this year the household sector won’t be …
6th March 2017
If the falls in the various measures of national income in Australia in 2015 constituted an income recession, then the surge in the fourth quarter of last year looks like a mini income boom. Whether or not this translates into a period of much stronger …
3rd March 2017
The sharp drop in the trade surplus in January suggests that net exports will provide a sizeable drag on growth in the current quarter. And while rising consumption goods imports suggest that the surge in commodity prices is boosting domestic demand, this …
2nd March 2017
Recent comments by Governor Lowe have made it pretty clear that the Reserve Bank of Australia doesn’t intend to cut interest rates further, including at its next policy meeting on Tuesday 7 th March. That’s not too surprising given the RBA remains fairly …
1st March 2017
The decent rebound in real GDP in the fourth quarter doesn’t just dash any lingering fears that Australia was in a recession, but it also boosts hopes that the surge in commodity prices will trigger a rapid recovery. … Australia GDP …
The idea that Australian employees could enjoy a period of “catch-up” wage growth is a pipe dream. It doesn’t stack up in theory and it doesn’t stack up in practice. It’s far more likely that cyclical and structural forces will keep wage growth close to …
24th February 2017
While there is some tentative evidence that non-mining business investment is rising, it certainly isn’t rising as fast as widely hoped. This doesn’t surprise us as we’ve been saying for a long time that excess capacity and the structural decline in the …
23rd February 2017
The notable improvement in a number of leading activity indicators in the past month or so is consistent with a sizeable pick-up in GDP growth in Australia. But we remain cautious about the prospects of sharp rebound. For one, although the drag from …
22nd February 2017
You’d be forgiven for thinking that given the Federal government’s desire for fiscal restraint, Australia is unlikely to follow Trump’s lead on public infrastructure. But State governments are actually already embarking on an investment spending spree of …
17th February 2017
There is definitely a role for the Reserve Bank of Australia to manage expectations by signalling where it thinks the economy is heading. But by sounding more optimistic than its own forecasts, there’s a danger that the RBA has moved from signal to spin. …
16th February 2017
January’s labour market figures highlight that jobs growth has sustained its recent momentum, but the now-familiar problem of the new jobs being mostly part-time ones rather than full-time ones also reared its ugly head again. This will prevent wage …
The rebound in the Westpac measure of consumer confidence in February and the surge in the NAB measure of business confidence in January suggests that any lingering concerns over the outright fall in GDP in the third quarter of last year have well and …
15th February 2017
In February’s Statement on Monetary Policy the Reserve Bank of Australia drew particular attention to the recent pick up in mortgage lending to investors. Given its concerns, if investor lending remains elevated this may prove to be a barrier to further …
10th February 2017
The new forecasts published in February’s Statement of Monetary Policy show that the RBA is largely expecting Australia’s slow growth and low underlying inflation problems to be solved over the next couple of years. In that sense, the RBA is almost …
While leaving interest rates on hold at 1.75% today, the Reserve Bank of New Zealand suggested that the next move in interest rates is more likely to be up than down. But since we largely agree with the Bank that rates are unlikely to rise until 2019, …
8th February 2017
We wouldn’t rule it out completely, but it is looking less likely that Australia fell into its first recession since 1991 at the end of last year. However, a sustained period of stronger growth is not on the cards either. Instead, 2017 will probably be …
7th February 2017
We believe that the Reserve Bank of Australia is being too complacent in expecting GDP growth to be close to 3% over the next couple of years and underlying inflation to rise to 2.0%. So while the RBA today left interest rates at 1.5%, we suspect it may …
The rise in real retail sales in the fourth quarter suggests that real consumption growth rebounded, but the outright fall in nominal sales in December reveals a worrying lack of momentum heading into 2017. … Australia Retail Sales …
6th February 2017
The roots of the swing in Australia’s international trade balance from a record deficit at the end of 2015 to a record surplus in December 2016 lie firmly in the huge rise in commodity prices rather than a big rise in the volume of exports being shipped …
3rd February 2017
The Reserve Bank of New Zealand will undoubtedly keep rates on hold at 1.75% at its meeting on Thursday 9 th February, but in the accompanying Monetary Policy Statement we suspect it will revise up its inflation projections. That said, while the financial …
2nd February 2017
The surge in the trade surplus to a record high in December shows that the rise in commodity prices is boosting the economy and it has dramatically reduced the chances that Australia fell into a recession late last year. That’s despite other news that has …
The Reserve Bank of Australia will almost certainly leave interest rates on hold at 1.5% at its policy meeting on Tuesday 7 th February, but its new forecasts to be published in the Statement on Monetary Policy on Friday 10 th may provide a hint that …
1st February 2017
While employment growth remained decent in the fourth quarter, a sharp increase in the labour force meant that the unemployment rate jumped back above 5.0%. This won’t worry the RBNZ too much, but the chances of it raising interest rates this year are …
31st January 2017
Australia will make almost no progress this year with GDP growth once again coming in closer to 2.0% than 3.0%. With growth in New Zealand set to accelerate from around 3.0% to 3.5%, the divergence in the economic fortunes of the two neighbours will …
30th January 2017
While the fourth-quarter inflation figures received most of the attention in the last week, growth in the Westpac leading index reached a three-year high and it is consistent with a sharp rebound in GDP growth in Australia in the coming months. We expect …
27th January 2017
The sharp rise in both headline and core CPI inflation in the fourth quarter is enough to prevent the RBNZ from cutting interest rates further, but it’s not enough to prompt it to raise interest rates this year. … New Zealand Consumer Prices …
25th January 2017
The rebound in headline inflation in the fourth quarter of last year has been baked in the cake for some time, so the real news is that underlying inflation hardly budged at all. A continuation of this trend may yet prompt the RBA to cut interest rates to …
Signs that inflation in both Australia and New Zealand has passed its low point may give the Australian and New Zealand dollars a bit of a boost when the data for the fourth quarter are released this Wednesday and Thursday. But while the rise in petrol …
20th January 2017
The Australian economy has started to reap some benefits from the rise in key commodity prices towards the end of last year. Most obviously, the trade balance has swung into surplus for the first since time 2014. That’s a good indication that nominal GDP …
19th January 2017
While the labour market improved in December from the weakness of the third quarter, it remained worryingly fragile. This is one reason to expect 2017 to be another disappointing year for the overall economy. … Australia Labour Market …
The Westpac measure of consumer confidence remained essentially unchanged in January, which was a disappointing result given that local equity prices have recently risen rapidly. That said, confidence is still at a level consistent with the annual rate of …
18th January 2017
