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Recent releases

Flat consent growth in May Seasonally adjusted new dwelling consents in May were unchanged from a month earlier. This limited growth is due to cooling consent activity in Canterbury being offset by climbing approvals for dwellings in other parts of the country. Although these trends are expected to continue, the uptick elsewhere in the country is soon expected to outweigh the slowdown in Christchurch. As a result, we expect total approvals to be climbing again by early 2016. Read more

Non-residential building stays strong The value of non-residential consents eased 1.2% between April and May (seasonally adjusted), but rose by a strong 31% from activity in May last year. The annual growth was primarily driven by a rise in hospital consents, while factory consents also recorded a large increase. Hotel consents were at their highest monthly level for three years. The continued high level of consents supports ongoing growth in non-residential work put in place over coming quarters. Read more

Commentary

Greek headlines hide the real culprit in New Zealand slowdown Although Greece has been capturing headlines this week, it is events onshore that should be making us all a bit nervous about New Zealand’s growth prospects over the next eighteen months. Read more.

Default is the word? The latest instalment of the Greek debt crisis looks set to go down to the wire, with optimism earlier this week that a deal might be struck giving way to further deadlock at the most recent meeting between European officials overnight. Greek Prime Minister Alexi Tsipras presented a programme on Monday that would have improved the Greek government’s fiscal balance by an estimated €8bn, and was described at the time as the first serious proposal he had delivered since taking office in January. But by last night, the consensus had shifted to viewing the suggested programme as being too reliant on increasing taxes, as well as falling short of the level of retrenchment required to sustainably bring Greek government debt under control. Read more.

NZ dollar has settled below 70 cents against the Greenback The New Zealand dollar has settled at a lower level following the Reserve Bank’s surprise announcement to lower the official cash rate by 25 basis points to 3.25%.  The Kiwi dollar had traded as high as 72 cents against the US dollar in the days preceding last Thursday’s announcement, but has since fallen below the 70 cent mark this week.  Similar falls have been experienced against other major currencies. Read more.

Latest Forecasts

Overhauling the economic growth menu

The New Zealand economy has drawn praise from connoisseurs around the world over the past year, with a perfect balance of ingredients pushing GDP growth above 3%pa. Migrants have come from far and wide to sample our fare, while bubbles have continued to flow on the party circuit for construction and housing market participants. Although the regions have kept the pantries well stocked with fresh primary produce, critics claim that our dairy products will struggle to cut it against a growing supply of European milk, and so must now be priced down accordingly. Given these low dairy prices, at a time when growth in residential building consent numbers in Canterbury is being removed from the menu, economic growth is set to cool. We forecast that GDP growth will reach an eight-year high of 3.7%pa in the September quarter, but be turned down to a simmer after that.