Australia & New Zealand Economics Update Housing downturn becoming a major drag We believe that the downturn in the housing market will have a larger negative impact on the economy than most believe and have lowered our GDP forecast for 2019 to 1.5%. The upshot is that the labour... 20th March 2019 · 1 min read
Australia & New Zealand Economics Weekly Losing confidence The continued decline in business confidence in February suggests that the falls in business investment will persist into 2019. And the deterioration in consumer confidence may motivate households to... 15th March 2019 · 1 min read
Australia & New Zealand Economics Update New government can’t ignore the weaker economy Irrespective of the incoming government’s planned policy, the deterioration in the economic outlook means that fiscal policy should become stimulatory to avoid exacerbating the downturn. 14th March 2019 · 1 min read
Australia & New Zealand Economics Weekly Weak growth here to stay The RBA appears to be confident that the labour market will continue to support growth. But this week’s disappointing GDP data suggests that the economic outlook will remain subdued for some time. If... 8th March 2019 · 1 min read
Australia & New Zealand Data Response Retail Sales & International Trade (Jan.) The soft growth in retail sales in January means that weakness in consumption at the end of 2018 probably continued into 2019. Meanwhile, net trade may not support GDP as much as implied by the large... 7th March 2019 · 1 min read
Australia & New Zealand Data Response GDP (Q4) Subdued GDP growth in final quarter of 2018 sets the tone for softer growth this year. And given that the RBA has already adopted a neutral stance, we now suspect it may cut rates as soon as August. 6th March 2019 · 1 min read
Australia & New Zealand Economics Update RBA’s optimism won’t last long The RBA remained fairly confident when it left rates on hold today at 1.50% but we expect that as the data deteriorate this year the Bank will take a more dovish view. And before the end of the year... 5th March 2019 · 1 min read
Australia & New Zealand Economics Weekly Investment will be a drag on growth before long Data on investment spending released this week sent conflicting messages. We put more weight on the dismal construction work done figures and have penciled in falling business investment in the fourth... 1st March 2019 · 1 min read
Australia & New Zealand Data Response CoreLogic House Prices (Feb.) House prices in the eight capital cities have now fallen 8.9% from their peak making the current downturn the largest in Australia’s modern history, and we expect prices to fall by at least another 6%... 1st March 2019 · 1 min read
Australia & New Zealand Data Response Private Capex Survey (Q4) While the private capital expenditure survey showed a rise in capital spending in Q4, we think that private investment spending actually fell. And given the recent deterioration in business confidence... 28th February 2019 · 1 min read
Australia & New Zealand Chart Pack Some convergence in business confidence While business confidence in New Zealand seems to be recovering from the slump after 2017’s election, it has weakened in Australia. (See Chart.) That deterioration can partly be explained by softer... 27th February 2019 · 1 min read
RBA Watch Shift in RBA’s stance increases chances of rate cuts The Reserve Bank of Australia (RBA) will almost certainly leave interest rates unchanged at 1.50% at its policy meeting on Tuesday 5th March. While the Bank should reiterate its view that inflationary... 26th February 2019 · 1 min read
Australia & New Zealand Economics Weekly The bright spot in the Australian economy…for now Labour market conditions in Australia remain a bright spot for now. But we suspect that the housing downturn, weaker business confidence and a global slowdown will all weigh on employment growth and... 22nd February 2019 · 1 min read
Australia & New Zealand Economics Update The housing downturn isn’t over yet The rise in auction clearing rates in early February is probably just temporary. Housing remains overvalued and other leading indicators point to a continued decline in house prices. We therefore... 21st February 2019 · 1 min read
Australia & New Zealand Data Response Labour Market (Jan.) The strong rise in employment combined with a stable unemployment rate should give the RBA some confidence in its optimistic forecasts, but we think the labour market will worsen again soon. 21st February 2019 · 1 min read
Australia & New Zealand Data Response Wage Price Index (Q4) Broadly unchanged wage growth in the fourth quarter of 2018 suggests that the unemployment rate remains above the natural rate. We think the unemployment rate may actually rise this year meaning wage... 20th February 2019 · 1 min read
