BNZ/SEEK Employment Report
The jump we saw in September’s job advertising has been somewhat nipped in the bud by October’s result.
MPS Preview: Nervous Nellie Edges Steady Eddie
For next week’s RBNZ Monetary Policy Statement, the OCR committee will probably feel the case for another rate cut is finely balanced – in the least not obvious. After much toing and froing, however, it will probably err on the side of a 25 basis point cut. This is even though we think there is no overwhelming basis for it, at this juncture.
Labour Market Revealing Its Inflationary Teeth
This morning’s labour market data were broadly in line with market expectations. However, the results might have the Reserve Bank wondering if the jobs market is more inflationary than it has judged.
Is The Business Struggle Finding a Floor?
The revelation in today’s survey was really how retailers were beginning to stand out in their negativity, while other sectors, by and large, were showing signs of finding a footing, even recovering a bit.
2.0% CPI inflation Won’t Deter RBNZ Doves
The big question that hangs in the air after today’s CPI release is: what will it take for the RBNZ to concede that inflation is near enough to target for it to relax a tad? Sure, the annual increase in the CPI (as reported today) is a mere 1.5% but this is likely to be the lowest annual reading witnessed for some time. And more to the point, the portion of inflation that most reflects domestic demand conditions (non-tradables) has soared through 3.0%.
BNZ/SEEK Employment Report
From a sense of stability in August, job advertising took a step into positive territory in September.
Pressure For Negative Rates Gains Momentum
The chances of New Zealand ending up with negative interest rates took a big step up today with the release of NZIER’s Quarterly Survey of Business Opinion. Given the rhetoric in the August MPS, we made the point that it was now a matter of looking for reasons why the RBNZ wouldn’t cut its cash rate rather than seeking reasons why it might do so. Today’s findings not only provide no reason for the RBNZ to pause but, instead, imply accelerated action.
BNZ Forecasts Rate Cuts: November and February
Unlike the August Monetary Policy Statement, today’s OCR delivered no surprises. In short, the RBNZ left its cash rate unchanged at 1.00%, it confirmed it has an easing bias, and noted that interest rates will be staying low for some time.
Q2 GDP Keeps The Wolves At Bay
As encouraging as today’s Q2 GDP was (relatively speaking), and as much as we forecast growth to continue along at a similar pace, we still think the risks are tilted toward disappointment, looking ahead. And looking ahead is clearly what the Reserve Bank is attempting to do, in providing the “stimulus” it thinks is necessary.
Balance of Payments Still Broadly Encouraging
Normally, with such a stretched economy, New Zealand’s Balance of Payments (BOP) would be starting to test limits. Instead, the current account deficit is presently middling, and biased to shrink a bit further. The nation’s balance sheet with the rest of the world, meanwhile, is significantly less leveraged than it was ten years ago. Such starting points are encouraging, especially with global risks percolating.
Business Survey Not Weaker…But Still Weak
Today’s ANZ business survey wasn’t really any weaker than it was last month. Sure, many of its headline results did drop. However, after we adjusted them for seasonality they were more in the realm of stable. Nonetheless, this left the survey languishing at poorly levels, indicating that the economy could well undershoot official forecasts, including (especially?) those of the Reserve Bank.
Softer spending an RBNZ headache
From an RBNZ perspective, today’s data should be no big deal as they appear in line with the Bank’s near term estimates. Our concern, however, is that the Bank expects consumption to pick up relatively strongly through the latter part of this year and into 2020. We are not so convinced. If we are right, then the possibility that the cash rate heads ever closer to zero becomes elevated.