Economic research & market strategy

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Weekly Commentaries

Weekly Commentary

Weekly coverage of recent and upcoming economic and market events.

View our archived reports.

18 November 2019
11 November 2019




Economic Data Reports

NZ Dairy Update - 20 November 2019
The latest developments in the dairy sector.

Half marks for showing your working – Review of RBNZ Monetary Policy Statement, November 2019 - 13 November 2019
The RBNZ left the OCR unchanged at 1.00% as it paused to assess the economic data. Markets were surprised by the decision, but we recognised that it would be a close call. 

Nail biter – Preview of the RBNZ's MPS - 8 November 2019
We expect the RBNZ to keep the OCR unchanged but leave the door open to a future cut if required.

NZ labour market review, Q3 2019 - 6 November 2019
The September quarter labour market surveys were in line with our forecasts, with the unemployment rate reversing last quarter’s surprising decline and wage growth picking up gradually.

NZ Dairy Update - 6 November 2019
The latest developments in the dairy sector.

NZ labour market preview, Q3 2019 - 1 November 2019
We expect the unemployment rate to rise to 4.2% in the September quarter, reversing the previous quarter’s surprising drop to an 11-year low. Jobs growth has softened, but wages are gradually accelerating.

Hold the horses – Change of OCR call - 31 October 2019
We now expect the RBNZ to leave the OCR unchanged in November, but to remain open to future cuts. 

NZ CPI review, Q3 2019 – Inflation pressures and where to find them - 16 October 2019
Consumer prices rose 0.7% in the September quarter, ahead of forecasts. Tradables inflation remains weak, but inflation pressures in the domestic economy are building.

Milk Price Forecasts Update - 16 October 2019
A brief update on our forecasts for Fonterra’s farmgate milk prices.

NZ Dairy Update - 16 October 2019
The latest developments in the dairy sector.

The game is indeed changing – NZ Home Truths, October 2019 - 15 October 2019
Housing market data is now clearly strengthening, in line with our non-consensus view that house price inflation will lift to 7% next year.

Preview of NZ CPI, September quarter 2019 - 11 October 2019
We expect a modest 0.6% rise in prices for the September quarter, taking annual inflation down from 1.7% to 1.4%. Non-tradables inflation is gradually picking up, but tradables inflation remains weak.

Balancing the books – NZ fiscal accounts for the year to June 2019 - 11 October 2019
The Government recorded a modest surplus in the June 2019 year, consistent with Budget forecasts. Spending has ramped up substantially, and is expected to continue doing so in the coming years.

NZ Dairy Update - 2 October 2019
The latest developments in the dairy sector.

Q3 QSBO Review September 2019 - 1 October 2019
Business conditions continued to soften in the September quarter. That reinforces our expectations for a further cooling in GDP. It also supports our expectations for a November OCR cut.

Making it interesting – RBNZ OCR Review, September 2019 - 25 September 2019
The RBNZ left the door open to a future OCR cut, but only if required. 

A laggard no longer – Preview of the September 2019 RBNZ decision - 20 September 2019
We expect the RBNZ to keep the OCR unchanged but leave the door open to a future cut if required.

NZ Q2 GDP review – Neither here nor there - 19 September 2019
Growth remained subdued over the first half of this year, with a 0.5% rise in GDP in the June quarter. The result was close to forecasts and is unlikely to prompt further action from the Reserve Bank next week.

NZ Dairy Update - 18 September 2019
The latest developments in the dairy sector.

NZ Q2 GDP and BoP preview – Holding up for now - 11 September 2019
We expect a 0.6% rise in June quarter GDP. While growth has slowed from its earlier peaks, the indicators don’t suggest that there has been a further deterioration in the first half of this year. We expect the current account deficit to narrow to 3.4% of GDP, subject to annual revisions.

NZ Dairy Update - 4 September 2019
The latest developments in the dairy sector.

NZ retail spending 2019 Q2 - 23 August 2019
Retail volumes rose by 0.2% gain in the June quarter. The pace of spending has taken a step down over the past year as the housing market and population growth have cooled.

NZ Dairy Update - 21 August 2019
The latest developments in the dairy sector.

The jury is still out – NZ Home Truths, August 2019 - 13 August 2019
This month Home Truths gets elbows-deep in the NZ housing data in an effort to assess whether our forecast of 7% house price inflation next year is on the right track. 

Peacetime mobilization: RBNZ cuts the OCR 50 basis points - 7 August 2019
The RBNZ cut the OCR 50 basis points, unprecedented outside of emergencies and the GFC.

NZ Dairy Update - 7 August 2019
The latest developments in the dairy sector.

NZ labour market review, Q2 2019 – Against the wind - 6 August 2019
The unemployment rate fell to an 11-year low in June, despite signs elsewhere of a softening in labour market conditions. Wage growth appears to be picking up even beyond the large minimum wage hike.

NZ Over the Fence - 2 August 2019
The latest developments in the agri sector.

The floodgates are open: Preview of RBNZ MPS, August 2019  - 1 August 2019
We expect the RBNZ to reduce the OCR at next week’s MPS, and signal the possibility of more to come. 

NZ labour market preview, Q2 2019 – Turn for the worse - 31 July 2019
We expect unemployment to rise to 4.3% in the June quarter, as the evidence mounts for a slowdown in hiring. Wage growth will be boosted by an especially large minimum wage hike.

OCR limbo… how low can it go? Westpac changes its RBNZ call - 25 July 2019
We now expect the RBNZ to reduce the OCR in August and November this year, with a risk of a more aggressive cutting profile.

NZ Dairy Update - 17 July 2019
The latest developments in the dairy sector.

NZ CPI review, Q2 2019 – No surprises - 16 July 2019
Consumer prices rose 0.6% in the June quarter, with the expected increases in petrol, rents and eating out. Annual inflation remains in the lower half of the Reserve Bank’s target range.

NZ CPI preview, Q2 2019 – Still on the low side - 10 July 2019
We expect a 0.6% increase in the June quarter CPI, with fuel prices accounting for half of the rise. Underlying inflation is expected to remain on the lower side of the Reserve Bank’s target.

NZ Over the Fence - 5 July 2019
The latest developments in the agri sector.

NZ Dairy Update - 3 July 2019
Dairy prices fell 0.4% in last night’s GlobalDairyTrade auction. We have lowered our forecast for the farmgate milk price payout.

NZIER Quarterly Survey of Business Opinion, June 2019 - 2 July 2019
Business confidence fell to a ten-year low, as firms remained caught between rising costs and an inability to raise prices.

Regional Roundup, June 2019 - 28 June 2019
This report assesses recent economic activity in regional New Zealand, providing an outlook for each region.

Hinting Strongly – the RBNZ’s June OCR Review - 27 June 2019
The RBNZ has hinted strongly at a future OCR cut, leaving us happy with our call for an August OCR cut.

RBNZ keen to stay ahead of global slowdown – Preview of June 2019 OCR Review - 21 June 2019
The RBNZ is likely to leave the OCR on hold next week. We now expect an OCR cut in August, due to deepening global economic risks.

NZ Q1 GDP review – Slow but steady - 20 June 2019
GDP rose by 0.6% in the March quarter, in line with our forecast. While indicators for the June quarter have been subdued to date, we expect growth to pick up over the following year.

NZ current account, Q1 2019 – Deficit in check - 19 June 2019
New Zealand’s current account deficit narrowed to 3.6% of GDP in the year to March. The trade balance has improved compared to a year ago, and earnings from overseas investments were strong.

NZ Dairy Update - 19 June 2019
Dairy prices fell 3.8% in last night’s GlobalDairyTrade auction. That was their third consecutive decline.

NZ Home Truths - Capital gains tax-free: Why we expect New Zealand house prices to rise - 13 June 2019
The New Zealand housing market has slowed recently, but we expect the cancellation of capital gains tax combined with lower mortgage rates will be game changing.

Capital gains tax-free: Why we expect New Zealand house prices to rise - 13 June 2019
The New Zealand housing market has slowed recently, but we expect the cancellation of capital gains tax combined with lower mortgage rates will be game changing.

NZ Q1 GDP and BoP preview – More of the same - 12 June 2019
We expect a 0.6% rise in March quarter GDP, similar to the pace seen in previous quarters. A surge in building activity enlivened what was otherwise shaping up as a subdued quarter. We expect the current account deficit to remain at 3.7% of GDP.

A strong start to the year for the construction sector - 7 June 2019
Construction activity continued to rise strongly in the March quarter, with gains widespread across the country. 

NZ Over the Fence - 7 June 2019
The latest developments in the agri sector.

NZ Dairy Update - 5 June 2019
The latest developments in the dairy sector.

NZ Government Budget – Contents as labelled - 30 May 2019
A full review of the NZ Government’s Budget.

NZ Budget First Impressions, May 2019 - 30 May 2019
The 2019 Budget contained a substantial increase in social spending, against a set of economic forecasts that were surprisingly little changed despite recent weakness.

NZ Budget Preview, May 2019 - 24 May 2019
The Government’s Wellbeing Budget will be unveiled next week. It is likely to show the Government has a little less in the kitty than they had expected at the time of the December HYEFU.

NZ retail spending 2019 Q1 - 22 May 2019
Retail spending rose by 0.7% in the March quarter. That was another solid gain following a very strong end to 2018.

NZ Dairy Update - 22 May 2019
The latest developments in the dairy sector.

That’s all, folks – Update on Westpac’s OCR forecast - 10 May 2019
We have reaffirmed our forecast that the OCR will remain at 1.5% for the remainder of 2019. We have cancelled our call for an OCR cut in 2020, due to the Government’s cancellation of capital gains tax. 

One and done, or more to come? – Review of RBNZ Monetary Policy Statement, May 2019 - 8 May 2019
The RBNZ cut the OCR to 1.5%, and is uncertain about whether another cut will be required.

NZ Dairy Update - 8 May 2019
The latest developments in the dairy sector.

On a knife edge – Preview of RBNZ Monetary Policy Statement, May 2019 - 3 May 2019
The next OCR decision is on a knife edge. We think there is a 55% chance of a cut. 

NZ Over the Fence - 3 May 2019
The latest developments in the agri sector.

NZ labour market review, Q1 2019 – Waiting on wage growth - 1 May 2019
Unemployment fell slightly in the March quarter, but jobs growth is slowing and wage pressures have not picked up as much as expected.

NZ labour market preview, Q1 2019 – One step forward, one step back - 24 April 2019
The labour market has tightened in recent years, but low business confidence appears to have led to a slowdown in hiring. We expect a small rise in the unemployment rate to 4.4%, but a modest uptick in wage growth.

NZ CPI review, Q1 2019 – Not clear cut - 17 April 2019
Inflation slowed to 1.5% in the March quarter, falling slightly short of forecasts. Market pricing has now shifted in favour of an OCR cut in May, but we emphasise that this remains a close call.

NZ Dairy Update - 17 April 2019
The latest developments in the dairy sector.

NZ Home Truths, April 2019 – Immovable object versus unstoppable force - 12 April 2019
The latest analysis of New Zealand’s housing market.

Brextension  - The date for Brexit has been pushed out again - 11 April 2019
Two days before the UK’s long planned departure from the European Union, Brexit has once again been delayed. The scheduled date for Brexit has now been pushed out to 31 October 2019, with the option to leave sooner if the UK Parliament can agree on a path forward.

NZ CPI preview, Q1 2019 – Delicately poised - 11 April 2019
We expect a 0.2% rise in the March quarter CPI, with the recent drop in fuel prices taking annual inflation down to 1.6%. The CPI result will be crucial to the odds of an OCR cut at the May Monetary Policy Statement.

Starting with a bang – The outlook for the New Zealand OCR - 3 April 2019
We expect the RBNZ will cut the OCR to 1.50% in May 2019. There is a risk of a follow-up cut, but we think the RBNZ is more likely to hold off for the remainder of 2019. We have long been concerned about the economy slowing in the early 2020s. We now expect the RBNZ to react to that by cutting the OCR again in May 2020, to a new low of 1.25%. 

Fortnightly Agri Update - Dairy diary - 3 April 2019

NZIER Quarterly Survey of Business Opinion, March 2019 - 2 April 2019
After a brief respite, business confidence deteriorated again in the March quarter, unwinding most of December’s gains.

Brexit update – Mind the Gap - 1 April 2019
With less than two weeks until its scheduled departure from the EU, a political deadlock in the UK has left the Brexit process in turmoil. This report looks at the state of Brexit negotiations and what we could see over the coming weeks.

One out of the hat – RBNZ OCR Review, March 2019 - 27 March 2019
A review of the RBNZ’s latest OCR Review.

Steady as she goes – Preview of RBNZ OCR Review, March 2019 - 22 March 2019
The RBNZ is unlikely to alter its firmly on hold stance. That could be a surprise to financial markets.

NZ Q4 GDP review – A not so bad look - 21 March 2019
GDP rose by 0.6% in the December quarter, a stronger rebound than we expected after a weak September quarter result. With the economy running at around its potential, we expect the RBNZ to maintain its on-hold stance.

NZ current account, Q4 2018 – As bad as it gets? - 20 March 2019
New Zealand’s current account deficit widened to 3.7% of GDP in the year to December. With dairy export prices improving and oil prices falling in recent months, we expect the deficit to narrow again over 2019.

Fortnightly Agri Update - Standing tall - 20 March 2019

NZ Q4 GDP and BoP preview – Not a good look - 13 March 2019
We expect another weak GDP print and a further widening of the current account deficit in the December quarter. The recent slowdown in GDP growth appears to be genuine, though for less persistent reasons than those seen in Australia.

NZ Home Truths, March 2019 – The summer fling will soon end - 13 March 2019
House prices did pick up over New Year, as predicted, but the “summer fling” was disappointing and will prove brief. 

Fortnightly Agri Update - Brexit Bluster - 6 March 2019

NZ retail sales, December quarter 2018 - 25 February 2019
Retail spending was stronger than expected in the December quarter, supported by falls in petrol prices and the boost to households’ disposable incomes from the Government’s Families Package.

Fortnightly Agri Update - When the price isn’t right - 20 February 2019

Yesterday’s news, today’s fish and chip paper – RBNZ MPS review, Feb 2019 - 13 February 2019
A review of the RBNZ’s latest Monetary Policy Statement. 

Flatlining – Preview of RBNZ MPS and change of Westpac OCR call - 11 February 2019
We expect the RBNZ to shift back to a strictly neutral OCR forecast this week. Meanwhile, we now expect no change in the OCR over 2019, 2020 and 2021. The OCR outlook is evenly balanced for the foreseeable future.

NZ labour market review, Q4 2018 – There and back again - 7 February 2019
The latest unemployment figures confirm that the previous sharp drop was largely noise, and that the tightening in the labour market over the last year has been a gradual one. However, weak jobs growth points to the risk of another soft GDP print in the December quarter.

Fortnightly Agri Update - Full bodied but with hints of gooseberry - 7 February 2019

A smaller and slowing boost to the economy – A closer look at recent migration flows - 1 February 2019
Updated estimates have revealed that long-term migration has been much lower than initially thought. This will be important for many businesses. Smaller population increases mean than an ‘easy’ source of demand growth that they’ve enjoyed in recent years is dissipating even faster than expected. It also signals the need for fewer new houses than previously thought.

NZ labour market preview, Q4 2018 – Backing up - 1 February 2019
A range of evidence points to a tight labour market, but the sharp drop in unemployment to 3.9% last quarter may have overstated the case. We expect some unwinding in the December quarter.

NZ CPI review, Q4 2018 – Overs and unders - 23 January 2019
Inflation hewed closely to the Reserve Bank’s target over 2018. However, domestically-generated inflation is accelerating, and we expect a further gradual pick-up over the next few years.

NZ CPI preview, Q4 2018 – The mix matters - 17 January 2019
We expect a 0.1% rise in the December quarter CPI, with annual inflation holding at 1.9%. The recent plunge in fuel prices has taken some of the edge off headline inflation, but we think that domestically-generated inflation will be stronger than the Reserve Bank’s estimates.

NZ Home Truths, January 2019 – Foreign buyer ban starts to bite - 17 January 2019
A sharp drop in house sales suggests the foreign buyer ban is biting, but the overall impact on house prices remains uncertain. 

Fortnightly Agri Update - A positive start to the New Year - 16 January 2019

RBNZ bank capital proposal: impact on the OCR - 15 January 2019
The RBNZ surprised markets in December by proposing that banks should hold far more capital. This will reduce the need for the RBNZ to lift the OCR in the early-2020s. We have made a small adjustment to our long-range OCR forecast.

NZIER Quarterly Survey of Business Opinion, December 2018 - 15 January 2019
Business confidence rebounded from a nine year low in the December quarter. However, confidence remains at historically low levels. Rising costs and limited pricing power continue to eat into firms’ profit margins.

NZ Q3 GDP review – Highs and lows - 20 December 2018
GDP rose by 0.3% in the September quarter, below expectations. We don’t expect this softness to persist into the coming quarters, and data revisions actually paint a more positive picture about the economy’s recent momentum.

NZ current account, Q3 2018 – Well contained - 19 December 2018
New Zealand’s current account deficit widened to 3.6% of GDP in the year to September. The deficit remains within recent ranges, and higher dairy exports and lower oil prices should help to improve the trade balance over the next year.

Fortnightly Agri Update - A look at lamb - 19 December 2018

NZ Home Truths, December 2018 – Too soon to tell - 14 December 2018
A brief recap of the latest New Zealand housing market data.

NZ Half Year Economic and Fiscal Update – Money in the tin - 13 December 2018
A full review of the NZ Government’s Half Year Fiscal and Economic Update.

NZ Q3 GDP and BoP preview – Payback - 12 December 2018
We expect a modest 0.5% rise in September quarter GDP, as some of the factors behind the 1% jump in the June quarter unwind. The current account deficit is expected to widen further. 

Fortnightly Agri Update - A changing landscape - 5 December 2018

Fortnightly Agri Update - The changing global backdrop - 21 November 2018

NZ Home Truths, November 2018 – Here we go - 14 November 2018
The housing market is showing clear signs of perking up, as predicted by Home Truths back in August.

She’ll be right – RBNZ MPS review, Nov 2018 - 8 November 2018
A review of the RBNZ’s latest Monetary Policy Statement.

NZ labour market review, Q3 2018 – The signal and the noise - 7 November 2018
The unemployment rate fell sharply to 3.9% in the September quarter. This survey is inherently noisy, but the broader range of evidence suggests that there has been a continued gradual tightening in labour market conditions.

Fortnightly Agri Update - Feeling the pinch - 7 November 2018

NZ labour market preview, Q3 2018 – Mixed messages - 1 November 2018
We expect modest jobs growth and an uptick in the unemployment rate to 4.6% for the September quarter. While the pace of economic growth has slowed, the labour market has tightened up in recent years and we’re seeing the first signs of a pickup in wage growth. 

Baby steps – RBNZ MPS preview, Nov 2018 - 1 November 2018
A preview of the RBNZ’s next Monetary Policy Statement. 

Fortnightly Agri Update - Dairy: Supply side - 17 October 2018

NZ CPI review, Q3 2018 – It all adds up - 16 October 2018
Inflation was stronger than expected in the September quarter. Higher fuel prices have given annual inflation a temporary boost, but imported and domestic inflation pressures are also picking up gradually.

NZ CPI preview, Q3 2018 – Gas in the tank - 11 October 2018
Rising oil prices and a lower exchange rate are expect to lift annual inflation to 1.7% in the September quarter, and higher again in following quarters. Rising inflation caused by fuel prices certainly wouldn’t preclude interest rate cuts by the RBNZ, but could make them a harder sell. 

NZ Home Truths, October 2018 – Signs of improvement? - 11 October 2018
Home Truths detects early signs that the Auckland housing market is responding to a drop in fixed mortgage rates.

NZ fiscal accounts, year to June 2018 – Room to manoeuvre - 9 October 2018
The Government recorded a much larger than expected surplus in the June 2018 year, albeit largely due to bottlenecks in planned spending. Nevertheless, the stronger starting point gives the Government room to deliver more stimulus in future fiscal updates.

Fortnightly Agri Update - Where's the beef - 3 October 2018

NZIER Quarterly Survey of Business Opinion, September 2018 - 2 October 2018
NZ business confidence fell further in the September quarter with both the headline measure and own activity components of the survey weakening. While firms face rising costs they remain circumspect about their ability to pass these on to their customers. The underlying details of the release support our view of a lull in investment and hiring this year. 

Cementing the view – OCR Review, Sep 2018 - 27 September 2018
A review of the RBNZ’s latest OCR Review. 

Let’s be frank – RBNZ preview, Sep 2018 - 21 September 2018
A preview of the RBNZ’s next OCR Review. 

NZ Q2 GDP review – Better this time - 20 September 2018
The New Zealand economy grew even faster than expected in the June quarter, after a few quarters of subdued growth. Some one-offs boosted the result, but the underlying picture was strong as well. 

NZ current account, Q2 2018 – Mind the gap - 19 September 2018
New Zealand’s current account deficit increased to 3.3% of GDP in the year to June. Revised figures on investment income resulted in a larger deficit over the last year than previously reported. 

Fortnightly Agri Update - The new kids in town - 19 September 2018

Home Truths, September 2018 – The foreign buyer ban - 17 September 2018
This month Home Truths peruses the latest data, sets the record straight on Westpac’s house price forecast and investigates the foreign buyer ban.

NZ Q2 GDP and BoP preview – Not bad at all - 13 September 2018

Fortnightly Agri Update - Dairy download - 5 September 2018

NZ retail spending review, June quarter 2018 - 22 August 2018
Mortgage rates will fall, and that has improved the house price outlook.

Fortnightly Agri Update - Low for longer - 22 August 2018

Home Truths, August 2018 – An improvement in the outlook - 15 August 2018
Mortgage rates will fall, and that has improved the house price outlook.

A risk to be taken seriously – Change of OCR call, August 2018 - 14 August 2018
We have changed our OCR forecast for the first time in a year. We now expect the RBNZ will keep the OCR unchanged until May 2020 before hiking. And we think there is a real risk that the OCR will be cut over the coming year. 

Snap back to reality: RBNZ MPS Review, August 2018 - 9 August 2018
The RBNZ has (finally) accepted the reality that the economy has slowed this year. Consequently, they have become more dovish on the OCR outlook. The intensity of their reaction today surprised both us and financial markets.

Fortnightly Agri Update - A woolly outlook - 8 August 2018

RBNZ MPS preview, August 2018 - 2 August 2018
A preview of the RBNZ’s MPS.

NZ labour market review, Q2 2018 – On the job - 1 August 2018
Jobs and wage growth strengthened in the June quarter, despite a slight uptick in the unemployment rate.

NZ labour market preview, Q2 2018 – Crossroads - 27 July 2018
New Zealand’s labour market has tightened over recent years, but slowing economic growth will put a dampener on employment growth and wage pressures. For the June quarter we expect an unchanged unemployment rate of 4.4%, and a slight uptick in wage growth due to the minimum wage increase. 

Fortnightly Agri Update - Kiwifruit – a rising star - 18 July 2018

NZ CPI review, Q2 2018 – Beyond the headlines - 17 July 2018
Inflation fell short of expectations in the June quarter. But the details were less benign than the headline – domestic inflation pressures are gradually picking up.

NZ CPI preview, Q2 2018 - Filling up - 12 July 2018
We expect a 0.6% rise in consumer prices for the June quarter, lifting the annual inflation rate to 1.7%. Fuel prices have switched from being a drag on inflation to a boost this year, but we’re not convinced that this effect will persist into next year.

Fortnightly Agri Update - A step lower - 4 July 2018

NZIER Quarterly Survey of Business Opinion, June 2018 - 3 July 2018
NZ business confidence fell sharply in Q2. The underlying details of the release were undeniably soft, supporting our view of a lull in investment and hiring this year. There were also signs of emerging inflation pressure.

Uncertainty reigns: RBNZ OCR Review, June 2018
The RBNZ kept the OCR on hold, but gave no guidance as to the direction or timing of the next OCR move. 

Red herring: Preview of the RBNZ’s OCR Review - 22 June 2018
A preview of the RBNZ’s next OCR Review.

NZ Q1 GDP review – Slow news day - 21 June 2018
New Zealand’s GDP rose by 0.5% in the March quarter, in line with market expectations. The economy has lost some momentum as firms take a cautious approach to the new Government and as the housing market has cooled.

Home Truths, June 2018 – Tax and house prices - 21 June 2018
The housing market is positive for now, but Home Truths argues that the market will soon slow.

NZ current account, Q1 2018 – Better next time - 20 June 2018
The current account deficit widened to 2.8% of GDP in March. Exports fell sharply, but we expect some improvement in the next quarter.

Fortnightly Agri Update - Yes deer - 20 June 2018

NZ Q1 GDP and BoP preview – Loss of momentum - 14 June 2018
New Zealand’s economic growth appears to have slowed further in the first quarter of this year. We expect the current account deficit to widen a little, but to remain historically low.

Fortnightly Agri Update Turning the tables – Forestry and wood processing - 6 June 2018

NZ retail spending weaker than expected in March quarter - 21 May 2018
Retail sales were weaker than expected in the early part of 2018, with spending essentially flat over the March quarter. We expect spending growth will remain modest through the remainder of this year.

A ‘patient’ Budget - New Zealand Budget 2018 - 17 May 2018
A full analysis of the Government’s 2018 Budget.

New Zealand Budget 2018 First Impressions - 17 May 2018
No major surprises in this Budget, with the parameters and main initiatives signaled well in advance. Higher revenue, higher spending allowances particularly in the later years. Net debt on track to fall below 20% of GDP.

Fortnightly Agri Update Dairy debrief - 16 May 2018

NZ Budget Preview - A Balancing Act - May 2018
The new Government delivers its first Budget next week. The tax take is running well ahead of forecast, providing scope for additional operating spending while still sticking with its Budget Responsibility Rules. 

Home Truths, April 2017 – The market cools again - 11 May 2018
The housing market is now cooling again, much as Home Truths anticipated.

In with the new: Review of the RBNZ’s May 2018 MPS - 10 May 2018
A review of the RBNZ’s latest Monetary Policy Statement.

RBNZ MPS preview, May 2018 - 3 May 2018
A preview of the upcoming Monetary Policy Statement from the RBNZ.

NZ labour market review, Q1 2018 – No pay wave - 2 May 2018
New Zealand’s unemployment rate continues to fall, but there is no sign yet of wage inflation emerging.

Fortnightly Agri Update The big picture - 2 May 2018

NZ labour market preview, Q1 2018 – Stuck in the mud - 27 April 2018
There are signs that the tightening of the labour market has stalled in the early part of this year. We expect the unemployment rate to remain steady at 4.5% and wage growth to remain in line with previous quarters.

NZ CPI review, Q1 2018 – Inflation to remain subdued - 19 April 2018
Consumer prices rose 0.5% in the March quarter. The dip in the annual inflation rate should prove temporary, but at the same time we don’t expect it to test the upper half of the Reserve Bank’s target any time soon.

Fortnightly Agri Update Guacamole anyone? - 18 April 2018

Home Truths, April 2018 – Looming slowdown - 17 April 2018
The housing market is positive for now, but Home Truths argues that the market will soon slow.

NZ CPI preview, Q1 2018 – Down a bit - 16 April 2018
We expect a modest 0.5% rise in consumer prices for the March quarter. Base effects will bring the annual inflation rate down temporarily, and the introduction of a year’s free tertiary study will knock off an estimated 0.2%.

NZIER Quarterly Survey of Business Opinion March 2018 – A mixed bag - 10 April 2018
NZ business sentiment improved a touch in Q1, but remains below pre-election levels. Employment indicators were generally softer, supporting our view of a lull in hiring in 2018.

Fortnightly Agri Update A primer on Mycoplasma bovis - 4 April 2018

Travel journal: Observations from my recent tour of Europe - 27 March 2018
Chief Economist Dominick Stephens recently returned from a two week tour of Europe, including UK. This bulletin briefly details his observations of what Europeans are thinking about New Zealand.

A new era: The RBNZ’s new PTA and governance arrangements - 26 March 2018
A review of the RBNZ’s new Policy Targets Agreement and the announcement of upcoming changes to the RBNZ’s governance arrangements.

Curtain Raiser: RBNZ OCR Review, March 2018 - 22 March 2018
The RBNZ left its OCR guidance unchanged. From here, attention will turn to the new PTA, to be signed within a day or two.

Fortnightly Agri Update Plenty at steak - 21 March 2018 

RBNZ OCR preview, March 2018 – Last turn at bat - 16 March 2018
Acting Governor Spencer’s last OCR decision is likely to be a low-key affair, with no real surprises in the data in recent weeks. We expect the OCR to remain on hold until late 2019.

NZ Q4 GDP review – Subdued growth persists - 15 March 2018
December quarter GDP grew by 0.6%, in line with our forecast. We expect growth to remain subdued in the near term, due to growth constraints and the uncertain impact of the new Government’s policies.

NZ current account, Q4 2017 – Well contained - 14 March 2018
The current account deficit widened in the year to December, but remains at levels consistent with an improvement in New Zealand’s external imbalances.

NZ Q4 GDP and BoP preview – Late fade - 9 March 2018
The New Zealand economy’s momentum appears to have eased over the course of 2017.

NZ building work put in place, December quarter 2017 - 7 March 2018 

Fortnightly Agri Update Trump and trade - 7 March 2018 

Q4 2017 Retail spending review - 23 February 2018

Fortnightly Agri Update Down in the dumps - 21 February 2018

Get it? A short note on our GDP and OCR forecasts compared to the Reserve Bank's - 12 February 2018

Stay on target – Review of the Feb 2018 Monetary Policy Statement - 8 February 2018
A review of the RBNZ’s latest Monetary Policy Statement.

NZ labour market review, Q4 2017 – All work, no pay - 2 February 2018
New Zealand’s unemployment rate fell to its lowest since 2008. But wage growth remains subdued, suggesting that the labour market has room to tighten further. 

Fortnightly Agri Update A positive start to 2018 - 7 February 2018 

NZ labour market preview, Q4 2017 – Unemployment declining - 2 February 2018
We expect a further drop in the unemployment rate to a nine-year low of 4.5%. However, we may see some payback for the sharp spikes in employment and participation in the September quarter. 

The great moderation: Preview of the February 2018 Monetary Policy Statement - 1 February 2018
We expect the RBNZ to remain firmly on hold.

NZ CPI review Q4 2017 – Imported inflation remains absent  - 25 January 2018
Consumer prices rose just 0.1% in the December quarter, with widespread softness in imported goods prices. While the era of uncomfortably low inflation may have passed, there is little sign of a resurgence.

NZ CPI preview, Q4 2017 – Fuelled up and on the go - 17 January 2018
We expect a 0.4% rise in the December quarter CPI, led by higher prices for fuel, airfares and accommodation. Underlying inflation is expected to remain close to – but still below – the Reserve Bank’s 2% target.

NZ business opinion, Q4 2017 – Confidence down, prices up - 16 January 2018
Business confidence fell further in the December quarter, some but not all of which could be put down to the change of government. However, more firms expect costs and prices to rise as the economy runs closer to full capacity.

To view archived reports click here.

Deeper Insights

In-depth review of topical issues.

Deeper insights

A ‘just transition’ for Taranaki - 24 October 2019
This report details a set of case studies that show how Taranaki might transition away from fossil fuel production without causing significant disruption to the communities that depend on it.

New Zealand’s commercial property outlook - 21 October 2019
Firm activity and very low interest rates in recent years have boosted both occupier and investor demand for commercial property. We’re now seeing some of the positive momentum in the economy easing back, and that is likely to dampen demand on both of those fronts to some extent. Nevertheless, with interest rates expected to remain low for an extended period, we think investors’ appetite for commercial property will remain firm for some time.

Industry Insight – Metallic and non-metallic mineral products manufacturing
This report focuses on New Zealand’s metallic and non-metallic mineral products sector, which is concerned with the manufacture of ferrous and non-ferrous metals and metal products, cement, ready-mix concrete and a diverse range of concrete products. It also refers to the manufacture of glass bottles and jars and the fabrication of flat glass products.

From zero to hero – Exploring the RBNZ's options if the OCR reaches zero - 18 September 2019
This Economic Insight explores the RBNZ’s options for unconventional monetary policy, including negative interest rates, quantitative easing and unsterilised exchange rate intervention. 

Food – A matter of trust - 4 July 2019
This bulletin details some of the dynamics at play in the food manufacturing industry, highlighting key challenges and opportunities facing industry participants.

Wellbeing, well what? – A look at wellbeing and the Living Standards Framework, May 2019 - 27 May 2019
Ahead of this week’s inaugural Wellbeing Budget we consider what the focus on wellbeing might mean for policymaking and detail the Treasury’s Living Standards Framework. 

Industry Insight – Equipment rental and leasing - 3 May 2019
This report focuses on New Zealand’s equipment renting and leasing industry, which is primarily concerned with providing a wide range of tangible goods, such as cars, computers, consumer goods, and industry machinery and equipment, to customers in return for a periodic rental or lease payment.

Shopping around: The outlook for household and retail spending - 24 January 2019
Household spending levels are set to grow at rates of around 5% per annum through 2019 and 2020. However, this is set to give way to a period of softer spending growth in the following years as slower population growth and a weakening in the housing market crimp demand. 

Industry Insight – New Zealand Winemaking - 22 January 2019
This report focuses on New Zealand’s winemaking industry which is concerned with a range of activities, from the growing of grapes to the production, marketing and distribution of wine, both within New Zealand and in offshore markets.

RBNZ bank capital proposal: impact on the OCR 15 January 2019
The RBNZ surprised markets in December by proposing that banks should hold far more capital. This will reduce the need for the RBNZ to lift the OCR in the early-2020s. We have made a small adjustment to our long-range OCR forecast.

London calling: An update on Brexit and the New Zealand economy - 12 December 2018
Brexit day – 29 March 2019 – is fast approaching. However, there is still little clarity around how the UK’s exit from the EU will occur. In this article we look at what’s been happening in the negotiations and how conditions in the UK are evolving. We also take a look at some of the issues Brexit raises for New Zealand businesses. 

Industry Insight – Accounting Services - 21 September 2018
This report focuses on New Zealand’s accounting services industry which is concerned with a range of activities, from bookkeeping and the preparation of financial statements and tax returns to the provision of auditing, assurance and advisory services.

The construction cycle is shifting into a new phase - July 2018
Auckland is now entering a new phase of its construction cycle. An acceleration in home building is occurring at the same time as net migration is cooling. We expect that Auckland will soon be building enough homes to start gradually eating into its housing shortage. Nevertheless, the region will still need a protracted period of rapid home building

Tax and House Prices – How changes to the tax system would impact New Zealand house prices - June 2018
This bulletin provides estimates of how various tax changes would affect house prices, using our Investment Value of Housing model.

Spending up is hard to do – A look at the NZ Government’s Budget responsibility rules
 - 11 May 2018
The New Zealand Government is aiming to reduce net core Crown debt to 20% of GDP within five years. We think it’s on track to meet that target, but perhaps not for the right reasons. Capacity constraints are leading to delays in infrastructure spending – and hence in the borrowing required to pay for it.

Industry Insight – Forestry and Wood Processing - 11 May 2018
This report focuses on New Zealand’s forestry sector which is concerned with the sustainable management of commercially grown softwood forests, the harvesting of these forests at maturity and the processing of harvested logs into primary products, ranging from sawn timber and wood panels (veneers, particleboard and fibreboard) to pulp and paper.

Housing market slowdown to put the brakes on household debt - 30 April 2018
Significant changes in housing market policy are planned over the next few years. We expect that these changes will put a brake on the run up in household debt. They will also have an important impact on household spending and the RBNZ’s policy stance.

Far away, so close - New Zealand inflation to linger below 2% - 23 April 2018
Global inflation is rising, and consumer price inflation in New Zealand is set to pick up over the coming year. However, a sustained lift in inflation to levels close to the RBNZ’s 2% target mid-point is still looking elusive. Several long lasting factors will continue to dampen inflation over the next few years. 

An update on Auckland’s housing shortage and home building - 13 April 2018
Population growth in Auckland has continued to outpace home building, and around a decade of strong construction activity will be required. That is going to be a tough task to achieve. Furthermore, even if home building does rise to the required levels, Auckland’s housing shortage is still going to persist for years to come.

Raising the bar: The impact of NZ’s minimum wage hikes - 12 April 2018
The planned increase in the minimum wage over the next few years to $20/hr will have modest impacts on employment, costs and inflation.

A new era: The RBNZ’s new PTA and governance arrangements - 26 March 2018
A review of the RBNZ’s new Policy Targets Agreement and the announcement of upcoming changes to the RBNZ’s governance arrangements.

NZ Industry Insight - International Education  - 1 February 2018
This report focuses on the international education industry which is concerned with the export of educational services to full fee paying international students coming into New Zealand. 

A look at recent migration trends in New Zealand - 8 December 2017
While still elevated, net migration has turned and it’s set to fall sharply. This will be a significant drag on growth over the coming years.

Transport driving for success October 2017 - 13 October 2017
This bulletin provides a brief assessment of the quality of New Zealand’s road and rail networks.

NZ Industry Insight – Residential Building - 13 September 2017
This report focuses on the residential building industry which is concerned with project managing the construction of dwellings, ranging from standalone houses to high-density apartment blocks.

Home truths - A tale of three cities - 7 April 2017
Pressures in the housing market are one of the largest challenges that the New Zealand economy is currently confronting. In this edition of Home Truths, we look at the varied housing market conditions in New Zealand’s three main centres. While there are some similarities, each is facing its own challenges that they will be wrestling with for years to come.

To view archived reports click here.

Quarterly Economic Overview / Regional Roundup

Quarterly publication providing an in-depth economic outlook, topical issues and forecasts.

November 2019
Having endured the chill winds of a slowdown, it is nice to see signs of spring emerging in the New Zealand economy. The slowdown intensified in the September quarter, but recent data tentatively suggests we are past the worst of it.

August 2019
Storm clouds have gathered over the global economy, and New Zealand is getting caught in the downdraught. We expect the situation to get worse before it gets better, as the escalating US-China trade war makes its mark on global economic growth. We’ve slashed our 2020 annual GDP forecast for New Zealand from 3.1% to 2.3%, and we expect unemployment will soon rise.

May 2019
The dramatic decline in interest rates over the past few months is going to be a game changer. For the past year or so the global and New Zealand economies have been slowing. But that is going to change, partly due to the dose of monetary stimulus that has just been delivered. Over the coming year we are expecting the global economy to stabilise and the New Zealand economy to pick up to above 3% GDP growth.

February 2019
Right now the New Zealand economy is in an extraordinarily ordinary position. Unemployment, inflation and the exchange rate are all close to average or neutral levels. And the output gap tells us the economy is running neither above nor below its capacity ‘speed limit’. Such a balanced situation is something normally seen in economics textbooks, not real life.

November 2018
New Zealand’s economy at present really is a case of different strokes for different folks. Auckland and Canterbury are experiencing lacklustre economies and flat or falling house prices. There is a completely different feel in some other parts of the country, where local economies are at their most buoyant in years.

August 2018
The pieces of the puzzle that we laid out in past Economic Overviews are now falling into place. We have consistently warned that the economy would slow, businesses would feel the impact, the Treasury and Reserve Bank would revise their forecasts down, and the New Zealand dollar would fall. All of this has come to pass.

May 2018
At seven years old, New Zealand’s economic expansion is now entering its “mature” phase. Two years ago the economy was really in its prime. Economic growth was 4%, driven by rising house prices, burgeoning construction, population growth, and a strong terms of trade. But the economic cycle is now over the hill.

February 2018
Stats NZ has revised the history of GDP to something that makes more sense. The New Zealand economy was on fire during 2015 and 2016, but slowed in 2017. We expect it will remain slow in 2018 due to a weak housing market and low business confidence. The economy will not be strong enough to generate much inflation, so we expect the OCR to remain on hold until late 2019. Meanwhile, inflation is appearing in the United States, and US interest rates are set to start rising more aggressively. Later this year the US Government may be paying higher interest rates on 10-year bonds than the New Zealand Government. This hasn’t happened since 1994, and will surely have consequences for the exchange rate. 

November 2017
We have made significant changes to our economic forecasts for this Economic Overview, mainly due to the change of government. Government plans to borrow and spend will stimulate the economy, but plans to dampen the housing market and migration will have the opposite effect. We expect the economy to slow in 2018 before gaining momentum in 2019.

August 2017
The New Zealand economy is set to continue growing at a firm pace over the coming year. However, some of the big drivers of activity in recent years have started to dissipate, and we expect that growth will slow to low rates before the decade is out.

May 2017
The New Zealand economy is expected to continue growing at around 3% per annum over the coming years. However, there are some subtle but important changes happening to the mix of factors underpinning growth. At the same time, while inflation looks to be past its lows, the Reserve Bank is under no pressure to raise rates to head off the risk of an overshoot in inflation.

February 2017
New Zealand finds itself in something of a sweet spot right now. The economy has been growing at a steady pace for some time, and a strong pipeline of building work and an improvement in dairy prices will help to keep that momentum going. 

November 2016
Stronger population growth, rising business confidence and a rebound in milk prices point to a more enduring period of growth for the New Zealand economy. Dealing with the growing pipeline of building work will be a significant challenge over the coming years.

August 2016
The Economic Overview summarises the outlook for the New Zealand economy, global economy, agriculture sector, interest rates and exchange rates. This quarter’s special topic looks that the growth in New Zealand’s household debt in a global context.

May 2016
The Economic Overview summarises the outlook for the New Zealand economy, global economy, agriculture sector, interest rates and exchange rate. This quarter's two special topics cover macro-prudential policy options and the services sector.

February 2016
The Economic Overview summarises the outlook for the New Zealand economy, global economy, agriculture sector, interest rates and exchange rate. This quarter's special topic covers New Zealand's commitments under the Paris Protocol.

November 2015
The New Zealand economy has dodged the worst of the downturn in world dairy prices, but the slowing global economy and the risk of drought this summer will continue to weigh on agriculture. We expect GDP growth to slow to 2% next year - no more than population growth - before accelerating again in 2017. Through these ups and downs we expect one dynamic to remain constant: low inflation.

August 2015
New Zealand's economic outlook has changed. There has been a ferocious decline in the global price of New Zealand's biggest export, and the Canterbury rebuild has peaked nine months earlier than anticipated. This Economic Overview discusses the revised outlook, including our expectation that GDP growth will fall below 2%, unemployment will rise to 6.5%, and the OCR will fall to 2.0%.

May 2015
A summary of the prospects for New Zealand's economy, interest rates, exchange rate and agricultural sector, plus an overview of the global economy.

February 2015
A summary of the prospects for New Zealand's economy, interest rates, exchange rate and agricultural sector, plus an overview of the global economy.

November 2014
A summary of the prospects for New Zealand's economy, interest rates, exchange rate and agricultural sector, plus an overview of the global economy.

August 2014
A summary of the prospects for New Zealand's economy, interest rates, exchange rate and agricultural sector, plus an overview of the global economy.

May 2014
As New Zealand's economic upswing rolls on, we are starting to see encouraging signs that the economy still has room to grow without generating excessive inflation. However, we still expect a substantial OCR hiking cycle over the coming three years. This year's election is a key risk event - the Special Topic this quarter provides a guide for financial markets.

February 2014
The construction boom and rising house prices are now maturing themes for the New Zealand economy. This quarter, the NZ Economic Overview focusses on the causes and consequences of New Zealand's stratospheric export commodity prices.

November 2013
Comprehensive analysis and forecasts of the New Zealand economy, global economy, and financial markets.

August 2013
New Zealand is now clearly in the grip of a self-sustaining economic upswing, driven by construction activity and house prices. Our Economic Overview discusses the implications for interest rates while noting that the upturn will prove temporary. The remaining "forks in the road" for New Zealand include the question of Fed tapering and the possible impact of the RBNZ's new mortgage restrictions. Our expectation of a substantial OCR hiking cycle has not changed.

May 2013
The New Zealand economy is caught in a tug-of-war between high GDP growth and low inflation. The May Economic Overview includes articles on the New Zealand economy, New Zealand dollar, inflation and interest rates, and the international outlook. Our new section, Agricultural Outlook, covers the impact of drought on the New Zealand economy. And our special topic discusses the Reserve Bank's macroprudential tools.

February 2013
The economy is starting to move as the Canterbury rebuild hits its straps. But the stratospheric exchange rate has kept inflation in check. So the RBNZ has been able to keep interest rates low. The predictable result has been improved consumer confidence and higher house prices. Our forecasts for 2013 follow the same formula, but with greater intensity on all fronts.

November 2012
After a strong start to 2012, the New Zealand economy has lost momentum, reflecting the patchiness of the current construction-led economic upturn.

August 2012
Growth is accelerating but low inflation and the strong exchange rate mean interest rates will stay low for longer. This edition of the Economic Outlook discusses the possibility that rising house prices will reignite New Zealand's economic imbalances.

May 2012
The global economy has cooled as expected, but the surprisingly strong NZ dollar and soft inflation point to low interest rates for a while longer.

February 2012
Export conditions are deteriorating, but we envisage a dip rather than a disaster. Low interest rates will boost the housing market.

 

Regional Roundup

Quarterly focus on the outlook for New Zealand's regions.

Regional Roundup - 8 October 2019
This report assesses recent economic activity in regional New Zealand, providing an outlook for each region.

Regional Roundup - 28 June 2019
This report assesses recent economic activity in regional New Zealand, providing an outlook for each region.

Regional Roundup - 5 March 2019
This report assesses recent economic activity in regional New Zealand, providing an outlook for each region.

Regional Roundup - 6 December 2018
This report assesses recent economic activity in regional New Zealand, providing an outlook for each region. 

Regional Roundup - 31 August 2018
This report assesses recent economic activity in regional New Zealand, providing an outlook for each region. 

Regional Roundup - 8 May 2018
Economic conditions improved slightly in the latest quarter, with more regions posting higher activity levels than in the preceding quarter. 

Regional Roundup - 18 December 2017
This report assesses recent economic activity in regional New Zealand, providing an outlook for each region.

Regional Roundup - 24 November 2016
The outlook for New Zealand’s regions is generally stronger than it was three months ago on the back of dairy’s recovery, and continued strong population growth.

Regional Roundup - 18 August 2016
The fortunes of New Zealand’s regions vary depending on their exposure to dairy and their ability to capitalise on current drivers of economic activity – tourism, horticulture and construction.

Regional Roundup - 19 May 2016
Weakness in dairy, strength in tourism and other services, and construction activity continue to dominate regional outlook, with low interest rates for longer now also having an impact.

Regional Roundup - 23 February 2016
Our quarterly Regional Roundup examines the recent fortunes of each region in New Zealand, and their outlook for the year ahead.

Regional Roundup - 10 November 2015
Three stories are driving regional economic fortunes – dairy, impending drought, and construction and housing activity.

Consumer & Economic Confidence 2012 - 2019