Filtered by Subscriptions: Australia & New Zealand Economics Use setting Australia & New Zealand Economics
The sharp narrowing in the trade deficit in August rounds off a good week of data for the Australian economy and suggests that GDP growth in the third quarter may have been stronger than the 0.5% q/q rise recorded in the second quarter. … Australia …
6th October 2016
The better-than-expected rise in retail sales in August will go some way to allaying growing concerns, such as those highlighted by the RBA yesterday, that the easing in consumption growth in the second quarter marked the start of a significant slowdown. …
5th October 2016
By leaving interest rates at 1.5% and the policy statement mostly unchanged at his first meeting as Governor, Philip Lowe showed he is cut from much the same cloth as his predecessor. But while Lowe may be a little less worried by low inflation than Glenn …
4th October 2016
The economic outlook for Australia and New Zealand wouldn’t significantly worsen if Donald Trump became US President. Neither economy is particularly exposed to the threat of higher trade barriers. And while a fallout in global financial markets could …
30th September 2016
The growth rates enjoyed by Australia and New Zealand in the second quarter continue to be the envy of most advanced nations. The 3.3% and 3.6% respective rises in GDP over the last year were much faster than the average gain for the US, euro-zone and …
29th September 2016
The Reserve Bank of Australia’s (RBA) next policy meeting on Tuesday 4 th October will be the first led by the new Governor, Philip Lowe, but that’s the only thing we expect to change. Interest rates will almost certainly be left on hold at 1.5% and it’s …
28th September 2016
The structural decline of the manufacturing sector means that the long-awaited transition from mining investment towards non-mining business investment may never happen to the extent that most people expect. But since the rate of decline in mining …
26th September 2016
Recent events have made our forecast that both the Australian and New Zealand dollars will weaken to around US$0.65 next year look aggressive. But while the risks to those forecasts lie on the upside, we still think that a narrowing in expected interest …
23rd September 2016
Although the Reserve Bank of New Zealand left interest rates on hold at 2.0% today, it hinted that in order to weaken the dollar and boost inflation, it will soon cut rates to a new record low of 1.75%. We think stubbornly low inflation will force the …
22nd September 2016
The ABS measure of house prices supports other evidence showing that the housing market has found a new lease of life. That said, the market is not as strong as widely believed and it’s more likely to weaken over the next few years than strengthen …
20th September 2016
Philip Lowe’s first job as RBA Governor has been to emphasise the medium-term nature of the 2-3% inflation target and highlight how the RBA juggles this with its often conflicting objective of financial stability. These tweaks to the RBA’s framework just …
19th September 2016
The impressive performance of New Zealand’s economy in the second quarter has contributed to the strengthening in the New Zealand dollar towards parity with the Australian dollar. Our economic forecasts for both countries suggest that the kiwi dollar may …
16th September 2016
While the chance of a September interest rate cut was never particularly high, a stronger than expected rise in GDP in the second quarter all but confirmed that the Reserve Bank of New Zealand will leave interest rates on hold at 2.00% at the policy …
15th September 2016
After adjusting the data to strip out the temporary boost from the Census, we estimate that employment fell by around 14,000 in August. While we aren’t too concerned about the outlook for employment, it seems clear that the labour market is not going to …
By contributing to a surge in housing-related activity, record low interest rates provided the foundations for the impressive pick-up in GDP growth in the second quarter. This probably won’t prevent the RBNZ from cutting interest rates further, from 2.0% …
September’s Westpac measure of consumer confidence shows that the rise in August was sustained. This should help to calm concerns about the health of the household sector following the slowdown in consumption growth in the second quarter and the …
14th September 2016
The Reserve Banks of Australia and New Zealand are likely to ignore suggestions that they should lower their inflation targets since that would drive inflation even lower. Targeting nominal GDP growth instead isn’t much more appealing either, partly as it …
An unusual surge in public demand drove the decent rise in GDP in Australia in the second quarter. However, with this support from the public sector unlikely to be sustained and few signs that other areas of the economy are picking up the slack, we …
9th September 2016
Even though the international trade deficit narrowed in July, net exports are still on course to remain a drag on real GDP growth in the third quarter. The external sector could really do with the Australian dollar falling further rather than rising …
8th September 2016
The return of the Australian economy in the second quarter to the growth rates seen before the end of the mining boom relieves some of the pressure on the RBA to cut interest rates again, at least in the next few months. … Australia GDP …
7th September 2016
The policy statement released alongside the Reserve Bank of Australia’s decision to leave interest rates at 1.5% today provides no hint that another rate cut is around the corner. If the inflation data for the third quarter are very weak, the RBA’s hand …
6th September 2016
Auction clearance rates are a timely and useful barometer of housing activity, but since they capture less than a third of all sales they don’t provide a full picture. While Australia’s housing market does appear to have strengthened in recent months, …
2nd September 2016
July’s weaker-than-expected retail sales figures mean that even if spending were to gather momentum in the remainder of the third quarter, real consumption growth will struggle to match the probable 0.6% q/q rise in the second quarter. … Australia Retail …
1st September 2016
The private capital expenditure survey for the second quarter shows that the investment transition is taking place slowly. Together with the stagnation in retail sales in July, we believe that GDP rose by just 0.3% q/q in the second quarter and that a …
Glenn Stevens is unlikely to end his decade as Governor of the Reserve Bank of Australia with a bang, as interest rates will almost certainly be left at 1.5% at his last policy meeting on Tuesday 6th September. And while the RBA doesn’t appear to be in a …
30th August 2016
Last week’s news that consumer confidence in Australia surged to a three year high provided an encouraging signal about the health of the household sector. However, while we expect consumption growth to remain decent we doubt it will be strong enough to …
26th August 2016
While the recent fall in the cash rate to record lows in Australia and New Zealand should help to support household spending, the effect on other areas of the economy may be more limited. For one, we doubt the interest rate cut will do much to boost the …
24th August 2016
While the latest data showed that employment growth has surged in Australia and New Zealand and the unemployment rate has edged down in both economies recently, this won’t be enough to generate inflationary pressures in either labour market. … Why wage …
19th August 2016
July’s labour market figures were much better than expected and forward looking indicators suggest the labour market should continue to remain healthy. However, given that part-time positions accounted for all of the new jobs created in July there is …
18th August 2016
The delayed release of the second quarter labour market figures showed a surprise surge in employment growth. The unemployment rate also fell slightly, but we expect it to edge down only slowly this year which should keep inflationary pressures weak in …
17th August 2016
We don’t currently believe that the RBA or RBNZ will have to resort to unconventional monetary policy to boost inflation, but one lesson of the past decade is that we should be prepared for the unexpected. In this Economics Weekly we consider what would …
12th August 2016
Not only did the Reserve Bank of New Zealand today cut interest rates by 0.25% to a new record low of 2.00%, but it also suggested that rates will soon be cut again to 1.75%. In order to weaken the dollar and boost underlying inflation, we expect the RBNZ …
11th August 2016
While the modest rise in the Westpac measure of consumer confidence in August suggests that the effect of interest rate cuts on confidence may be weakening, the rise was still enough to suggest that annual real consumption growth will stay between 2.5% …
10th August 2016
The Reserve Bank of Australia hasn’t done itself any favours by providing no real hints that interest rates will fall below 1.5%, as the resulting strengthening in the dollar will make it even harder for it to raise inflation back to the 2-3% target. The …
5th August 2016
The Reserve Bank of Australia used its new Statement on Monetary Policy to suggest that it hasn’t got much appetite for cutting interest rates below 1.5%, although its own inflation forecasts suggest it might have to. We suspect that the RBA’s hand will …
The weaker-than-expected rise in real retail sales in the second quarter points to a slowdown in consumption growth and adds to the mounting evidence that GDP growth weakened significantly, perhaps to less than 0.5% q/q, last quarter. … Australia Retail …
4th August 2016
When the Reserve Bank of New Zealand meets on Thursday 11 th August, we expect it to cut interest rates from 2.25% to 2.00% and to confirm that it is willing to reduce rates further. A stubbornly high exchange rate, low inflation expectations and subdued …
The slimmed-down labour market release suggests that employment growth weakened a little in the second quarter. The RBNZ will be more worried, however, to see that there is still no sign of inflationary pressure in the labour market. This makes it even …
3rd August 2016
If it is going to weaken the Australian dollar to help solve its low inflation problem, the Reserve Bank of Australia may have to follow today’s 0.25% interest rate cut to a new record low of 1.5% with more cuts to 1.0% sometime next year. The dollar may …
2nd August 2016
The weak outlook for inflation is enough on its own to prompt the RBA to cut interest rates to 1.5% at the policy meeting later today, but mounting evidence that economic growth lost a lot of momentum in the second quarter should seal the deal. … …
We believe that a new era of stubbornly low underlying inflation will prompt policymakers to cut interest rates in Australia from 1.75% now to 1.00% next year and to reduce rates in New Zealand from 2.25% to 1.50%. The problem is that hardly any inflation …
1st August 2016
Australia’s inflation data for the second quarter provided something for everyone, but the bigger picture is that there is very little price pressure anywhere in the economy. This is why we believe the RBA will cut interest rates to 1.5% on Tuesday and …
29th July 2016
While the second-quarter inflation figures were somewhat mixed, we still expect that the most likely outcome at the Reserve Bank of Australia’s policy meeting on Tuesday 2nd August is an interest rate cut from 1.75% to 1.50%. The Statement on Monetary …
28th July 2016
The CPI inflation data for the second quarter makes next Tuesday’s RBA policy meeting a closer call than had looked likely, but we still think the RBA will pull the trigger and cut interest rates to 1.5%. In fact, continued low inflation may mean that …
27th July 2016
The recent experience of the Reserve Bank of New Zealand provides two lessons for the Reserve Bank of Australia. First, don’t dither when it comes to making decisions otherwise you’ll be punished by a stronger currency. Second, getting interest rates low …
22nd July 2016
The early evidence suggests that businesses and households in Australia have not been ruffled by the UK’s vote to leave the EU and Australia’s close Federal election result. Admittedly, consumer confidence did fall in July. But that decline was small and …
21st July 2016
The Reserve Bank of New Zealand used its unusual inter-meeting “economic update” to all-but guarantee that it will cut rates from 2.25% to 2.00% at the meeting on 11 August and that it wants the dollar to weaken substantially. To achieve the latter, we …
Today’s announcement by the Reserve Bank of New Zealand that it intends to tighten existing loan-to-value restrictions will not only go some way to addressing the risks to financial stability posed by the booming housing market, but will also allow the …
19th July 2016
The weak tone of the CPI inflation data for the second quarter probably means that at Thursday’s unusual inter-meeting economic update the RBNZ will hint that it intends to use tighter lending restrictions to control the housing market and further …
18th July 2016
Most of the rise in the share of people working part-time is due to long-term factors that have improved the flexibility of Australia’s labour market. However, some of it is due to weak economic conditions that are preventing people from working longer. …
15th July 2016
