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Recent releases

Other regions picking up Canterbury’s slack A huge number of apartment consents in Auckland helped to moderate the overall decline in residential building consent numbers in April, down 1.7% from March (seasonally adjusted). Despite consent numbers in the Canterbury region declining, we expect overall residential building consents to rise slightly during the next year. Read more

Non-residential growth spread across the regions The value of non-residential consents in April was up a modest 4.2% from a year earlier, although the monthly result represented a healthy 13% rebound from the March total (seasonally adjusted). Although there was little change in activity in Auckland and Canterbury, a number of smaller regions recorded solid growth, with the biggest positive contributions coming from Bay of Plenty, Hawke’s Bay, and Wellington. Read more

Commentary

Fonterra’s milk price lessons unlearnt The story of declining dairy prices continued this week with lower export returns expanding the trade deficit and Fonterra making a late-hour downwards revision to its payout numbers for the 2014/15 season. But the dairy co-operative showed its optimism for the year ahead, picking its forecast farmgate milk price up to $5.25 per kilo of milk solids (kgms) even we think $4.80 kgms is more likely.
Welcome focus of the government on investing in children The government should be commended for “pressing ahead withits social investment approach, which is about targeted, evidence-basedinvestment to secure better long-term results for the most vulnerable NewZealanders” (2015 Budget Speech, p8).  In particular, a focus on alleviatingchild poverty will potentially be of great benefit, not just for today’svictims, but for New Zealand in general.  Economic deprivation as a child is acause of poor adult outcomes when it denies them access to critical needs fortheir full development. Read more.

Lower interest rates possible as Reserve Bank gets nervous Labour market data released last week spooked financial markets a bit, with a static unemployment rate and no wage inflation increasing speculation about interest rate cuts by the Reserve Bank. The most obvious reaction came from the dollar which dropped, on a TWI basis, more than 1% within a day to its lowest level in almost two months. Read more.

Latest Forecasts

Trying to keep the run rate up

Last year began with an opening partnership of accelerating rebuilding work in Canterbury and high dairy prices that looked to be sending the New Zealand economy’s growth towards a McCullum-esque rate of 4.5%pa. Twelve months down the track, the dairy sector has been caught out by increased milk supply from Europe, forcing the rest of the economy to take a more cautious approach instead of trying to smash everything out of the park. GDP growth was 2.6% in the year to September 2014, and is now set to peak at 3.2%pa within the next year.