Filtered by Subscriptions: Australia & New Zealand Economics Use setting Australia & New Zealand Economics
The recent stagnation in employment is probably just payback from the unjustified strength late last year rather than a sign that fears over the global economy have prompted businesses to postpone hiring. When taken together with the fall back in the …
17th March 2016
The surprisingly strong rise in GDP in the fourth quarter of last year won’t prevent the RBNZ from cutting interest rates from 2.25% to 2.00% in the coming months, although it does make it a little less likely that rates will fall below 2.00%. … New …
The recent interest rate cut in New Zealand and the dovish comments by the RBNZ now mean it is easy to imagine a scenario where interest rates in New Zealand fall below those in Australia. That would result in the New Zealand dollar weakening further …
11th March 2016
Today’s 0.25% cut in interest rates in New Zealand, to 2.25% from 2.50%, will have been a surprise to most analysts and the financial markets. But as early as July last year we forecast that rates would be cut to 2.0% this year and in the RBNZ Watch we …
10th March 2016
The relatively small fall in the Westpac measure of consumer confidence in March should be considered a fairly good result when set against the extent of the weakness in the financial markets earlier in the year. With the markets and commodity prices now …
9th March 2016
The strengthening in the Australian dollar to an eight-month high of US$0.74 has left it at a level that poses a serious threat to the economic outlook. This may prompt the RBA to resume its campaign to talk the dollar down and, if that fails, force it to …
7th March 2016
Even though it has faced a very testing set of circumstances, Australia has continued to outperform most of its peers and hasn’t done too bad by its own standards either. A lot of the credit needs to go to households, who picked up the baton of growth …
4th March 2016
Retail sales in January were slightly weaker than expected and suggest that consumption growth may have softened at the start of the year. Nonetheless, there is little evidence that the turmoil in financial markets is prompting households to keep their …
Although we suspect that the Reserve Bank of New Zealand will want to keep its powder dry for a little longer, there’s a real chance it will surprise the markets and cut interest rates by 0.25% at the policy meeting on Thursday 10th March. If it does …
3rd March 2016
The unexpectedly large narrowing in the international trade deficit in January suggests that the resurgence in the Australian economy in the second half of last year may have continued at the start of the year. … Australia International Trade …
The news that the economy grew by 0.6% q/q late last year will reassure the RBA that it has been right to resist calls to cut interest rates further. That said, it might not be long before the RBA becomes concerned about the outlook for growth this year. …
2nd March 2016
The Reserve Bank of Australia today once again decided to leave interest rates at 2.0%, but we don’t think it will be long before a weakening in the economic outlook and a further fall in underlying inflation forces it to cut rates to 1.5%. When other …
1st March 2016
While it is a bit dramatic to suggest that a global currency war is underway, the falls in interest rate expectations in overseas markets relative to those at home explains why the Australian dollar has strengthened to a six-week high of US$0.72. The RBA …
26th February 2016
Although the fourth quarter Australia private capital expenditure data were stronger than expected, the disappointing estimates of future capital expenditure will be concerning for the Reserve Bank of Australia. … Australia Private Capital Expenditure …
25th February 2016
The turmoil in financial markets, the stagnation in employment growth and the recent rises in bank lending rates to businesses are unlikely to have spooked the Reserve Bank of Australia by enough to prompt it to cut interest rates at the policy meeting on …
24th February 2016
The slump in equity prices since the turn of the year is unlikely to be followed by a similar slump in economic growth in Australia, especially now that equity prices are rebounding. Over the past 20 years the equity market has been a poor predictor of …
23rd February 2016
With equity prices still more than 10% below last year’s highs, employment having contracted for two months in a row and leading economic indices slumping, a visitor from Mars would be forgiven for thinking that the Australian economy is in recession. The …
19th February 2016
The further fall in employment in January is probably just a continuation of the data moving back to reality after the unbelievable strength late last year rather than a sign that the concerns over the global economy are giving Australian employers the …
18th February 2016
The resilience of both business and consumer confidence in Australia suggests that the latest sharp falls in equity prices are unlikely to lead to much weaker investment or consumption. This is mainly because the large drop in petrol prices has left …
12th February 2016
The rise in the Westpac measure of consumer confidence in February is particularly impressive given how far equity prices have fallen. It suggests that the strong labour market and fall in petrol prices is allowing households to shrug off the woes of the …
10th February 2016
Our full analysis of the prospects for the Australian and New Zealand economies is contained in our Australia & New Zealand Economic Outlook (sent to clients on 27th January), but in this note we highlight our most important non-consensus calls and …
The record level of net migration appears to explain around half of the rise in real consumption in New Zealand in the past two years. If net migration slows steadily as is widely expected, then this support should fade only gradually. But there’s a risk …
9th February 2016
At least some of the startling fall in the unemployment rate in New Zealand in the fourth quarter of last year, from 6.0% to 5.3%, appears genuine. As such, we no longer think that the unemployment rate will climb to a peak of 6.3%. While this reduces the …
5th February 2016
The Reserve Bank of Australia’s February Statement on Monetary Policy confirms that the chances of a near-term reduction in interest rates remains slim. Nonetheless, there are a number of factors that could yet alter the outlook and prompt the RBA to cut …
December’s weaker than expected retail sales figures suggest that retailers had a disappointing Christmas period and that consumer spending has lost some momentum. As a result, we’ve revised down our estimate for fourth-quarter consumption growth and now …
The sharp falls in equity prices since the turn of the year are unlikely to prompt households or businesses to rein in their spending. In fact, when set against some measures of domestic activity, it looks as though equity prices may have fallen too far. …
4th February 2016
December’s international trade and building approvals data cast doubt on the RBA’s view that there are “reasonable prospects for continued growth in the economy”. This is especially the case when overseas demand could yet weaken further and when the …
3rd February 2016
The astonishing plunge in the unemployment rate in the fourth quarter of last year, to a six-year low of 5.3% from 6.0% in the third quarter, decreases the chances that the RBNZ will reduce interest rates further. … New Zealand Labour Market …
While the Reserve Bank of Australia acknowledged the threat posed by a weaker global economy when it left interest rates on hold at 2.0% today, we don’t think it went far enough. With the outlook for underlying inflation at home also softening, we …
2nd February 2016
It’s odd that the financial markets placed so much emphasis on the rise in Australia’s tradables inflation rate in the fourth quarter of last year when this was more than offset by a fall in non-tradables inflation. What’s more, there are good reasons to …
29th January 2016
The Reserve Bank of New Zealand’s hint that the weakening outlook for inflation means that interest rates may have to be reduced this year from the current rate of 2.5% supports our long-held view that rates will fall to 2.0%. The New Zealand dollar has …
28th January 2016
We continue to believe that GDP growth in both Australia and New Zealand won’t accelerate at all this year from last year’s disappointing rates of around 2.3%. A further weakening in the outlook for underlying inflation will also play a major role in …
27th January 2016
The rise in headline inflation in the fourth quarter of last year, to 1.7% from 1.5%, hides the more important easing in underlying inflation. On one measure, underlying inflation is now below the RBA’s 2-3% target range. We believe that further falls in …
The recent turmoil in financial markets will have brought a sudden end to Governor Stevens ’“chilled” Christmas period. But this won’t be enough to prompt the Reserve Bank of Australia (RBA) to cut interest rates at the policy meeting onTuesday 2nd …
25th January 2016
The higher starting point means that inflation in Australia is unlikely to fall close to zero, as it has done in New Zealand. That said, underlying or “core” inflation in Australia may soon follow in the footsteps of core inflation in New Zealand by …
22nd January 2016
While recent events have increased the chances that interest rates will be cut from 2.5% now to 2.0%, as we have been expecting for some time, we think that the Reserve Bank of New Zealand will hold fire at the policy meeting on Thursday 28th January. …
21st January 2016
The fall in CPI inflation to just 0.1% in the fourth quarter of last year, from 0.4% in the third quarter, could prove to be a game-changer for the RBNZ as it leaves the economy uncomfortably close to outright deflation. This may not quite be enough to …
20th January 2016
The latest falls in equity and commodity prices have not dealt a big blow to the Australian economy, especially when lower petrol prices are boosting households’ real incomes. Nonetheless, should equity and commodity prices continue to decline, then the …
15th January 2016
The recent improvement in Australia’s labour market was maintained in December, which should go some way to relieving the current downward pressure on equity prices and the Australian dollar. … Australia Labour Market …
14th January 2016
While we remain more concerned than most about the Australian economy, we don’t think that the recent sharp falls in equity prices will filter through into much weaker economic growth. … Equity price falls won’t lead to a much weaker …
11th January 2016
The first week of the new year has set the tone for what we think will be another disappointing year for Australia. While we are not too concerned by the latest developments in China, there is a clear risk that global events will be a bigger drag on …
8th January 2016
The 0.4% m/m rise in retail sales values in November shows that consumer spending maintained its momentum in the run up to the crucial Christmas shopping period. And it probably means that consumption growth remained healthy in the fourth quarter. … …
November’s international trade and building approvals figures show that two important supports of the economy softened towards the end of last year. This reinforces our view that GDP growth in the fourth quarter won’t live up to the high bar of 0.9% q/q …
7th January 2016
A surge in LNG exports means that, despite a slowdown in the growth of iron ore exports, resources exports will probably continue to offset some of the ongoing falls in mining investment. That said, there’s a danger that LNG exports won’t live up to …
6th January 2016
Australia and New Zealand both staged impressive rebounds in the third quarter, with GDP rising by 0.9% q/q in each economy on the back of a large boost from net exports. However, neither economy will be able to sustain this strength for long. Currency …
22nd December 2015
Our decent forecasting performance in 2015 means we are not too worried by some of our forecasts for 2016 being very different to the consensus. Our big success this year was accurately forecasting the sharp weakening in both the Australian and New …
18th December 2015
The recent resurgence in activity in both Australia and New Zealand is not the start of a sustained period of strong GDP growth. While the near-term outlook has improved, GDP growth in both economies won’t accelerate in 2016 from about 2.3% in 2015. The …
17th December 2015
The impressive rebound in GDP growth in the third quarter does not mean that New Zealand is out of the woods. With the full hit from the plunge in dairy prices still to be felt, growth will be weaker in the fourth quarter and during most of next year too. …
The decision by the Treasurer to use the Mid-Year Economic and Fiscal Outlook (MYEFO) to draw attention to the deterioration in the fiscal position triggered by the weak economic backdrop is one that could come back to haunt him. While it conveniently …
15th December 2015
A variety of forward-looking indicators suggests that house price inflation has well and truly peaked and that a sizeable slowdown lies ahead. House price inflation could even grind to a complete halt. … Four charts on what’s next for house price …
14th December 2015
