BNZ Weekly Overview
An overview of the economy in language you can understand
Learn more about the housing market, interest rates, and foreign economies in Tony Alexander's Weekly Overview - designed to help Kiwi businesspeople and householders make informed financial decisions.
In this week's issue
2014's themes update
Let's have a quick run-through our catch-all list here and see if anything needs changing five weeks after we
- Interest rates will rise.
No need for change there. The data remain strong and March 13 is when the tightening cycle is still expected to kick-off.
- The NZD will remain highish.
Yes, it still looks high, our economic data are good, commodity prices high, and no shocks have come along.
- The labour market will tighten, pushing employment costs up.
The Household Labour Force Survey was stronger than expected for the December quarter so things definitely are moving into a tight phase.
- House prices will rise with gains spreading out of ChCh and Auckland.
The January data for REINZ showed prices falling, but for now we shall put that down to normal volatility. Our BNZ-REINZ Residential Market Survey has shown improvements for all our measures and the return of a seller's market.
- Construction will boom.
Definitely no change there. Consent numbers are rising and the anecdotes for Christchurch tell us activity is really, really, picking up.
- World growth will improve with unprecedented uncertainty regarding monetary policies.
Yes, but the data for China and Japan recently have been wobbly, a bout of the heeby geebies has run through emerging economies generally, and some US data have been weaker than expected. The question is whether bad weather may have simply distorted the numbers for a while. This view of an improving world is the one which has been shattered many times these past four years and if anything in this list is going to prove well off the mark it will be this factor.
- Business capital spending will grow.
The data do no show it yet but investment intentions measures are strong. So nothing really has altered here.
- Household spending growth will accelerate.
Actually, although consumer confidence remains at a very high level the December quarter Retail Trade
numbers were not all that impressive. So accelerating growth in consumer spending remains a forecast, an
article of faith, but one we firmly stick with given what is happening in the labour market.
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