Category: Business

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The economy in ten pics

Source: BNZ statements

  • RBNZ kickstarts the easing cycle
  • Greenlights a slow ‘n’ steady downtrend
  • Helps the 2025 economic outlook, but near-term growth picture still troubled
  • With labour market to weaken further
  • Housing market in focus

 

View PDF here

 

Chart 1: So it begins

There was nothing in the Reserve Bank’s (RBNZ) announcement to greatly challenge our view of the world. The Official Cash Rate (OCR) was lowered 25bps to 5.25% as we expected. The interest rate brake is still on, just less so than before.

The most important aspect of the meeting in our view was the confirmation that the OCR will move a lot lower over the coming 18 months.

It needs to. Our rough estimate of the ‘real’ (inflation-adjusted) cash rate has increased in recent months, even with this week’s cut. And it’s a long way down for the OCR to the RBNZ’s estimate of the long-run neutral rate around 3%.

Chart 2: Chop

The RBNZ’s updated forecasts were a shadow of their former selves. GDP growth, inflation and OCR forecasts got a chop while unemployment rate expectations were lifted ½% or so to a 5½% peak.

This brings the RBNZ’s view of the economy down to, or even a touch weaker than, where we’ve been seeing things. Importantly, CPI inflation is now seen well inside the 1-3% target range in Q3 (2.3%y/y from 3.0% in May). As of yesterday, we concur.

It means there’s a higher hurdle for incoming data to surprise the RBNZ on the downside. That doesn’t rule out a larger 50bps OCR cut being deployed at some point, but it does lean against the possibility in the short term.

Chart 3: Joining the rate race

Having been something of an outlier for a while, NZ is now back in the policy easing peloton. Most developed markets anticipate sizeable interest rate cuts over the coming 12 months.

Markets price a better than even chance of a 50bp start to the US Federal Reserve’s easing cycle next month which, if delivered, may embolden global rate cut pricing further.

Of those markets covered opposite, implied policy easing to February 2025 is most aggressive for the US (-185bps), NZ (-150bps), and Canada (-130bps), with Australia (-65bps) and Japan (+10bps) at the other end of the field.

Chart 4: US sniffles

Global financial markets have recovered much of their poise following the steep equity market declines of early last week. Sentiment is not what it was though. Investors are suddenly alert to any number of global fragilities.

Most of the ‘blame’ for the wobble has been pinned on cooling tech/AI exuberance and US growth concerns. The outsized reaction last week may reflect the additional, creeping reliance on the US to drive the global expansion this year. The old ‘US catches a cold’ adage is still relevant.

Chart 5: Jobs growth stalled

The number of people employed nudged up 0.4% in the June quarter, according to official figures released last week. We’d pencilled in a small decline. Unemployment still rose to 4.6% as expected.

Q2’s employment kick is unlikely to be repeated this quarter, and it also doesn’t change the broader narrative of jobs growth effectively stalling around mid-2023.

Amongst the sectoral detail, it’s clear that the construction sector has been at the vanguard of the changing employment market.

Chart 6: Relocating for work

The lift in NZ’s unemployment rate in Q2 maintained a ½ percentage point gap to the (4.1%) Aussie equivalent.

It doesn’t sound large, but that gap is the widest since 2013. Not coincidentally, net migration outflows to Australia are also running at the strongest level since 2013. People move to where the jobs are.

Our forecasts imply both trends have got a ways to run. A climb in the NZ unemployment rate to a 5.5% peak in early 2025 against a lower (4.6%) peak in Australia would, on past form, be consistent with an acceleration in net outflows.

Chart 7: Green f(lags)

Wage inflation peaked in NZ about a year ago. We saw another notch in the downtrend last week. The private sector Labour Cost Index eased to 3.6%y/y in June, down from 3.8% the prior quarter and the 4.5% peak.

More of the same easing is expected over the coming 12 months. It’s something that should help drain still-elevated domestic services inflation pressure. So, it’s not that high interest rates have been ineffective on non-tradables inflation, it’s that the impacts take time to turn up. The lags are real!

Chart 8: No retail respite

The trend in NZ retail card spending abruptly turned in early 2023, and it’s been downhill ever since. July’s 0.1%m/m contraction was the 6th consecutive monthly decline. Discretionary categories remain the hardest hit.

The weakness is even more pronounced once buoyant population growth is accounted for. Our estimate of the average monthly spend per (working age) person is 8% below March 2023 levels. It’s a deeper and longer contraction than during the 2008 GFC.

We’re hopeful the downtrend soon stabilises. Tax and interest rate cuts are supports, but falling population growth and job security are not.

Chart 9: Housing market in focus

The release of July REINZ housing market numbers has been shunted out to Tuesday, thus missing the cut for this edition of TEITC.

But, it’s fair to say, housing stats will be watched more closely than usual as folk scour for green shoots in a sector likely to be one of the earlier responders to (recent and expected) falls in retail interest rates. There are stirrings in some of the anecdote and surveys, but we think the prognosis is more stabilisation than acceleration, for now.

In the least, we’d expect a hearty bounce-back in July sales activity following the outsized, Matariki holiday-related, drop in June. That’s what we saw from this week’s Barfoot & Thompson figures covering a share of the Auckland market.

Chart 10: Food for thought

Food prices lifted 0.4%m/m (seasonally adjusted) in July. Prices have been flattish for the past year, but they’re still up 24% on 2020 levels.

As you’d expect, there’s been a fair bit of variation amongst the components over that time. If you’re partial to an omelette and/or yogurt for breakfast you will be feeling the pinch a lot more than some. At least your morning brew is still, relatively speaking, cost effective.

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Disclaimer: This publication has been produced by Bank of New Zealand (BNZ). This publication accurately reflects the personal views of the author about the subject matters discussed, and is based upon sources reasonably believed to be reliable and accurate. The views of the author do not necessarily reflect the views of BNZ. No part of the compensation of the author was, is, or will be, directly or indirectly, related to any specific recommendations or views expressed. The information in this publication is solely for information purposes and is not intended to be financial advice. If you need help, please contact BNZ or your financial adviser. Any statements as to past performance do not represent future performance, and no statements as to future matters are guaranteed to be accurate or reliable. To the maximum extent permissible by law, neither BNZ nor any person involved in this publication accepts any liability for any loss or damage whatsoever which may directly or indirectly result from any, opinion, information, representation or omission, whether negligent or otherwise, contained in this publication.

The post The economy in ten pics appeared first on BNZ Debrief.

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The New Portégé X40-M

Source: Press Release Service – Press Release/Statement:

Headline: The New Portégé X40-M

Dynabook ANZ, the laptop experts, today announced the launch of the Portégé X40-M, the latest addition to the range, designed to meet the needs of businesses of today.

The post The New Portégé X40-M first appeared on PR.co.nz.

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Changes to company law proposed

Source: Companies Office – Press Release/Statement:

Headline: Changes to company law proposed

Cabinet has agreed to update company law in New Zealand. These changes are expected to take place in two phases.

Key aspects of the first phase of changes include:

  • Modernising, simplifying and digitising the Companies Act to reduce compliance costs for companies and the Registrar.
  • Creating identification numbers for directors and general partners. This will make it easier to associate individuals with companies or limited partnerships and link those individuals’ corporate activities.
  • Allowing company directors and shareholders to record an address for service on the Companies Register, rather than their residential address. This will help address privacy and safety concerns.

The Law Commission will carry out work on the second phase of changes. This work will include a review of:

  • directors’ duties,
  • directors’ liability,
  • offences and penalties, and
  • more effective enforcement.

Published on , last updated on .

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Reserve Bank Forecasts a year of recession and higher unemployment

Source: Council of Trade Unions – CTU

The Reserve Bank is forecasting a year of recession and higher unemployment, which is bad news for workers, said CTU Economist Craig Renney.

“In cutting the Official Cash Rate by 0.25% to 5.25% today, the Reserve Bank cited a broad range of indicators suggesting the economy is contracting faster than anticipated. Business investment is due to fall for the next 18 months. Government spending falls for next 15 months, as does residential investment,” said Renney.

“There is a synchronised fall in demand across the economy. Its time to change track. Unemployment is now forecast to rise to 5.4% in June 2025. The previous forecast peak was 5.1% – nearly 10,000 additional people unemployed in just a short period of time. Given the rest of the data in this announcement, this might yet prove an optimistic estimate of where unemployment ends up. Average wages are forecast to rise in real terms by just 0.2% over the next year (instead of 1.7% in the year to June 2023). This is a really worrying set of forecasts.

“It’s now possible to see why the Bank chose to cut. But it looks like the damage has been done – and government policy is making this worse. Inflation is expected to be in the target band inside the next 6 weeks – but cuts to government investment continue for more than a year.

“It’s time to change track. While the fall in interest rates will be provide relief for some, there is a bleak future ahead for working people and the economy unless we change economic direction,” said Renney.

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Cyclone Gabrielle experience motivates EIT educator to be even more positive | EIT Hawke’s Bay and Tairāwhiti

Source: Eastern Institute of Technology – Tairāwhiti

4 mins ago

Geoffrey Mather is EIT’s new Head of Computing.

A near-death experience during Cyclone Gabrielle has motivated Geoffrey Mather to be even more positive than before.

Geoffrey, who has recently been appointed EIT’s new Head of the School of Computing, says the Cyclone forced him to  reimagine his life and not “sweat the small stuff”.

“I don’t worry about a thing now, instead I just get on and do the best I can with what I’ve got.”

Geoffrey, who was the Assistant Head of the Schools of Business and Computing at the time, was living semi-rurally near the Napier Golf Club at Waiohiki. He says that he was fast asleep at about 5.30 am on the day the Cyclone hit last February.

“I was woken by this torrent of water and my mobile’s torchlight showed that there was about 2 foot of water in my bedroom.”

Wherever he went in the house there was rising water and Geoffrey realised that he needed to get out.

Attempts to break windows proved futile, so he made his way to the kitchen where there was a high window that he could climb out of.

“I pushed the window out and jumped into the torrent of water that by this time was running around my place.”

As he tried to make it to safety he came across his landlord and together they were able to make it to higher ground, eventually ending up at a neighbour’s house.

“About this time, I sent a message to John West, my boss, and it’s quite funny on reflection, but it said something like, ‘Hi John, I don’t think I’m going to be able to get into work today’.”

Having escaped with his pyjamas and his mobile phone only, it was the start of a period of rebuilding for Geoffrey and he credits John West and EIT for their understanding, support and compassion.

“When I did come back to work, I initially came back part-time, and also got some counselling through EAP, which I am also very grateful for.”

Since coming back to work, Geoffrey has been acting Head of School for Tourism and Hospitality, Computing and English Language.

He says this has helped him master the art of multi-tasking and ironically given him focus, but he has also benefitted from the counselling and has even created a podcast about his experience.

“My podcast is called Cyclone Gabrielle Smash-up. It’s six episodes and it’s just me sharing. The first episode is a slightly longer account of what happened on that fateful day.”

”I would like to find a way to create a platform where people can share from their experience what they went through, because something I have learned since Cyclone Gabrielle is that whether someone was impacted or not, everyone has a story.”

“I think it can be empowering, insightful, rewarding, not just for the person who’s sharing the story, but those who are receiving it. And I would like to create a way for those sorts of stories to be shared.”

Now living in Taradale, Geoffrey is looking forward to getting into his new role.

“I am excited by where computing and the school could go in the coming years. That excites me. And I’m eager to help make that a reality and propel the school forward.”

He says that his vision is for it to become EIT’s showcase and to deepen the connections and synergies between teams and communities.

“And not just in the Hawke’s Bay, Tairāwhiti and Auckland regions where we deliver programmes, but also internationally. And at the moment, we have a large project in China with Zhejiang Yuexiu University. And another reason why I look forward to working alongside the School of Computing whānau is before joining EIT, I worked in China for 12 and a half years.”

“I think I therefore have an interesting lens within which to grow and support our China-based programme.”

Geoffrey also looks forward to being reunited with his Malaysian-born partner Kenny.  They met 20 years ago in Shanghai and have been living a long-distance relationship for most of that time.  Post the Cyclone, they applied for a Partner Visa for Kenny and are now awaiting Immigration New Zealand’s decision.

John West, EIT’s Executive Dean: Faculty of Commerce and Technology, says: “EIT was delighted to have appointed Geoffrey when he started in April 2022. His subsequent appointment to Head of School reflects EITs commitment to empowering and growing managers.”

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ANZ announces partnership with Brisbane Festival

Source: ANZ statements

The partnership demonstrates our shared dedication to community and artistic celebration and is one of ANZ’s commitments to invest in projects that Queenslanders believe in.

Brisbane Festival will play host to the ANZ Festival Garden – an all-ages inner-city wonderland of food, live music and entertainment set among the South Bank Parklands. 

General Manager, Marketing at ANZ, Sian Chadwick said: “At ANZ, our purpose is to shape a world where people and communities thrive and we know the state of Queensland is thriving. Brisbane Festival is a terrific example of this – it is a showcase and celebration of the very best art and culture from around the state and the world.”

“For the 2024 festival, we will deliver an important piece of the event experience – ANZ Festival Garden, which will be a hub of creativity and culinary delights and a wonderful place to bring so many Queenslanders together,” she said.

Brisbane Festival Artistic Director Louise Bezzina said: “Partnering with ANZ allows us to provide a special place for patrons to gather. The support enhances our offer of interactive experiences, making the ANZ Festival Garden a vibrant central hub of the festival.”

Brisbane Festival is an initiative of the Queensland Government and Brisbane City Council.  The full program is available at brisbanefestival.com.au

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First Security prison escort and court custodial officers begin industrial action – E tū

Source: Etu Union

E tū members at First Security who work as prison escort and court custodial officers began industrial action yesterday, after the company’s refusal to improve an inadequate offer.

Prison escorts and court custodial officers (PECCs) are responsible for transporting and supervising prisoners between prisons, courts, hospitals, and other locations. They also provide security and custodial services at courts, ensuring the safety of judges, staff, witnesses, and the public.

First Security is offering a pay rise to $30 for the base rate, which is still lower than what other agencies pay, and are refusing the members’ reasonable claims for improvements to sick leave, annual leave, and overtime payments.

The first step of their industrial action is an overtime ban, meaning workers will only do their minimum required hours and not accept further work. As workers do more than 10 hours a day on average, this is expected to have a significant impact on their operations.

Three E tū delegates have said why they’re taking action.

“Our staff are undervalued. All we want is decent conditions and pay, and to be treated fairly,” says Tai Henry.

“We know our job conditions are worse than at other agencies where people are doing similar work to us. But we get worse pay and longer hours. It’s not right. It’s not fair.”

Delegate Tarras Andrews shares the sentiment.

“We’re frustrated. All we’re asking is to have parity with other workers in this industry and come close to the same level,” Tarras says.

Delegate Piilua Sio says the company isn’t giving the workers the respect they deserve.

“First Security is slapping us in the face and not taking us seriously,” Piilua says.

E tū Director Georgie Dansey says First Security needs to step up and value their workers properly.

“The workers at First Security working in prison escort and court custodial services do a very important and skilled job. They work long hours and deserve adequate pay and conditions for the work they do.

“Our members at First Security are frustrated that workers employed elsewhere, doing the same job, have better pay and conditions than they do. We are asking for a decent pay offer, as well as adequate overtime rates that reflect conditions that other workers in the industry have.

“Our members are disappointed at the recent offer which undervalues their work and the value they bring to First Security. Although reluctant to take industrial action, it is a necessary step to ensure that workers in the industry are supported by their employer to do their job.”

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Consumer confidence: bounce

Source: ANZ statements

• Consumer confidence rose 2.6pts last week to 83.9pts. The four-week moving average rose 1.4pts to 83.2pts.

• ‘Weekly inflation expectations’ were steady at 5.1% while the four-week moving average was unchanged at 5.1%.

• ‘Current financial conditions’ (over last year) increased7.1pts, while‘ future financial conditions’ (next 12 months) lifted 3.1pts.

• ‘Short-term economic confidence’ (next 12 months) rose 0.3pts while ‘medium-term economic confidence’ (next five years) was up 1.2pts.

• The ‘time to buy a major household item’ subindex increased 1.3pts.

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Top EIT researcher wins award from international organisation | EIT Hawke’s Bay and Tairāwhiti

Source: Eastern Institute of Technology – Tairāwhiti

7 mins ago

EIT Associate Professor Pii-Tuulia Nikula, has been awarded a prestigious Associate Editor of the Year award.

A top EIT researcher, Associate Professor Pii-Tuulia Nikula, has been awarded a prestigious Associate Editor of the Year award by the Higher Education Research and Development Society of Australasia (HERDSA).

Pii-Tuulia is well known for her research on management, policy, and sustainability issues in international education, higher education, and the private sector.

Last year she co-edited two books – Student Recruitment Agents in International Higher Education and Sustainable Education Abroad: Striving for Change.

Pii-Tuulia is also an active peer-reviewer and holds editorial roles in international journals. She has contributed to the work of Higher Education Research and Development since 2019, initially as part of the College of Reviewers, and then, as an Associate Editor from 2020 onwards.

The Higher Education Research and Development Society of Australasia announced last month that Pii-Tuulia is one of two recipients of the Associate Editor of the Year Award for 2023. The other winner was Sylvie Lomer of the University of Manchester in the UK.

The award was established to recognise the outstanding contribution made by the Associate Editors of HERD. Contributions of associate editors are assessed according to the following criteria: Timeliness, Commitment, Decision making, Quality of communication with authors and with the HERD editorial team.

Pii-Tuulia said that she was honoured to be recognised for her work by such an esteemed organisation.

“Over the years, I’ve had the opportunity to work with numerous HERD authors, reviewers, and editorial board members, all passionate about making contributions to the field of higher education.”

“I am pleased to be able to play a role in ensuring these articles are published and contributing to the continuing success of HERD as a leading academic forum that informs and challenges researchers, administrators, and policy-makers concerned with the past, present and future of higher education.”

At EIT, Pii-Tuulia teaches courses in sustainable organisations and research methods.

Gareth Allison, EIT’s Head of the School of Business, congratulated Pii-Tuulia on the award.

“Pii-Tuulia is one of our most prolific and active researchers and this award is a testament to the high regard with which she is held in the industry.”

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DigitalxMarketing Provider for AoG Creative and Media Services

Source: Press Release Service – Press Release/Statement:

Headline: DigitalxMarketing Provider for AoG Creative and Media Services

DigitalxMarketing is proud to announce its appointment as a provider for New Zealand’s All-of-Government (AoG) Creative and Media Services panel. This prestigious appointment underscores DigitalxMarketing’s commitment to delivering exceptional digital marketing solutions and creative strategies to drive success for its clients.

The post DigitalxMarketing Provider for AoG Creative and Media Services first appeared on PR.co.nz.

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