Business confidence lifts in July, but going still tough
ANZ said those expecting better business conditions rose two points to 48%.
Businesses' expected own activity was flat at 41%.
Past own activity rose four points to +6,
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RNZ News
a day ago
- RNZ News
Here's what unemployment data means for your home loan
Photo: RNZ More official cash rate cuts could be on the cards after unemployment was reported at the highest level since 2020 on Wednesday. Stats NZ numbers showed the unemployment rate rising to 5.2 percent in the three months ended June, from 5.1 percent in the previous quarter. That was a little less than was expected but economists said it still showed that there was significant "excess capacity" in the economy which should keep inflation in check. ANZ economists said there was even the possibility that businesses could shed "hoarded labour" over the rest of this year. They said there was evidence that some had been holding on to staff in anticipation of an economic recovery and that had kept unemployment about 0.5 percent lower than it would otherwise have been. If the recovery didn't happen as expected, some of those jobs could be cut. ANZ said the Reserve Bank was likely to put more weight on factors that indicated inflation was less likely to get too strong for its target band. "Today's data certainly don't present any roadblocks to an OCR cut in August." ASB economists agreed the data should encourage more interest rate cuts. "We expect a 25bp [basis points] OCR cut in August…Persistent labour market softness could see the OCR end the year below 3 percent as the RBNZ presses harder on the policy accelerator to try to revive the economy." Photo: RNZ BNZ chief economist Mike Jones said he still expected another 25bp cut this month and probably another one after that. "The lift in the unemployment rate to 5.2 percent was a little less than the 5.3 percent the consensus had expected. But the key reason we didn't see a larger increase was the fall in the labour force participation rate to 70.5 percent. And more people deciding to exit the labour force is hardly a positive signal. "The labour market is weak and, balancing all the overs and unders in today's numbers, we think it's a bit weaker than the Reserve Bank's most recent set of forecasts. This, coupled with the clear wobbles we're seeing in broader economic indicators, points to a recovery that needs a little more help from interest rates." Jarrod Kerr Photo: Supplied / Gino Demeer Kiwibank chief economist Jarrod Kerr said the data supported his long-held view that monetary policy needed to be stimulatory, not just neutral. "The unemployment rate looks a little better than expected, but only because people, especially younger people, are leaving the workforce, unable to find work. "The underutilisation rate is up, as hours worked are down. The fall in employment over the quarter points to a potential contraction in activity (GDP) over the quarter. That's not good enough for an economy that should be bouncing out of the recession. The soft underbelly of the report shows the economy is struggling to recover. The RBNZ will be forced to do more than they think." Cotality chief property economist Kelvin Davidson said mortgage rates were probably at or near the bottom across many of the fixed-rate terms. But Kerr said there could be room to move a bit. "I think they could fall a little further, as we are getting more rate cuts offshore." Jones agreed. "I think we're probably entering the home stretch as far as the downtrend goes. But the fact the market is now more readily pricing in the downside to the OCR, along with the moves lower we're seeing in offshore interest rates, to me suggests we could still see some further modest falls from here. I still think those declines will be more concentrated in the shorter terms though."
1News
a day ago
- 1News
Unemployment rate expected to hit nine-year high
Unemployment is set to hit its highest level in nearly nine years, as the lagging effects of last year's recession and the sluggish recovery hit hiring and wages. Economists expect the rate to rise to 5.3% at the end of June – the highest since the end of 2016 – and up from 5.1% in the previous quarter, with jobs having been shed and hiring almost at a standstill. "We expect the unemployment rate to rise... as very modest growth in the labour force - labour supply – meets a small contraction in employment – labour demand," ANZ senior economist Miles Workman said. Economists have picked that the labour market was close to the bottom, but the lack of meaningful growth in the past quarter has cast doubt whether this might be the case. Workman suggested a degree of "labour hoarding" had suppressed unemployment as firms opted to hold on to staff in anticipation of an economic upturn. ADVERTISEMENT "If a recovery in economic momentum doesn't do the heavy lifting when it comes to 'right-sizing' firms' labour input, a further reduction in headcount may be needed." ASB senior economist Mark Smith said partial indicators since the last set of numbers had shown falling job advertisements, firms still shedding staff, little problem in finding staff except in specialised positions, and people quitting the workforce. "Earlier falls in hiring and more competition for jobs is expected to continue to deter some candidates from actively seeking work." No hiring, some firing Westpac senior economist Michael Gordon said chief among the casualties of the downturn and job losses have been young people. "As the economy cooled off, this group has found themselves out of work again or are struggling to get into work in the first place." The overall slide in immigration from post-Covid gains of more than 130,000 a year to a mere 15,000, and a subsequent exodus to Australia, are likely to be marginal influences for the labour market. ADVERTISEMENT However, cooling wage growth may be a more significant factor. Expectations are that private sector labour costs grew about 2.3% in the June quarter – a four-year low – as the weaker employment market shifted the bargaining advantage to employers from workers. That would mean wages falling behind rising inflation, but would also reduce wage pressures on domestic prices. "Wage inflation can be considered broadly consistent with CPI inflation around target, but given we're a decent clip from the labour market entering inflationary territory... it's fair to say that disinflation pressures stemming from the labour market are set to continue for a while yet," Workman said. Kiwibank economists said conditions were right for another Reserve Bank interest rate cut on August 20. "Downside risks to medium term inflation are growing given the soft labour market and dimming global outlook. "We expect the RBNZ to cut the cash rate by 25bps (basis points) at the August meeting. And they'll need to go to 2.5% eventually," they said in a commentary. ADVERTISEMENT By Gyles Beckford for
NZ Herald
2 days ago
- NZ Herald
New Zealand's largest infrastructure event begins
Close to 1000 delegates are expected, making this one of the largest events in the summit's near two decades' history. ANZ chief executive Antonia Watson will give the opening address, followed by Finance Minister Nicola Willis speaking for the Government. ANZ chief executive Antonia Watson. Photo / Mark Mitchell All eyes will be focused on Minister for Infrastructure, Housing, RMA Reform and Transport Chris Bishop who will speak to the Government's vision for delivering a 'resilient, future-ready infrastructure system'. He will share insights on long-term planning, funding priorities, and the critical policy shifts needed to drive delivery and improve outcomes across the country. The first international keynote speaker, Andrew Tan, will talk to one of New Zealand's most pressing issues — how to build a bipartisan vision to drive infrastructure investment. A former Temasek International managing director with a prior three-decades career spanning high-profile roles in Singapore's senior administrative service, Tan will explore how bipartisan approaches can unlock long-term investment, accelerate delivery and lift national productivity. The keynote address is billed as challenging delegates to think beyond political cycles and focus on the partnerships, policies, and funding strategies that can transform infrastructure outcomes for generations to come. 'As a nation, we have always viewed infrastructure as strategic to the country's economic growth, prosperity and well-being,' says Tan. 'This cuts across the political spectrum. 'There is broad-based recognition that sustained investment in core infrastructure such as roads, ports, airport and public housing have been an essential element of Singapore's competitive advantage. 'Singaporeans themselves expect no less.' Bishop and Labour's Infrastructure spokesperson, Kieran McAnulty, will later take the conference inside the in-depth discussions on cross-party collaboration taking place, which are critical to unlocking long-term infrastructure progress. On the international front, Tan will be tomorrow by followed by former Taoiseach (Prime Minister) of Ireland Leo Varadkar, who will take the stage to talk on excellence in delivery and ensuring equitable outcomes. He is billed as bringing a global perspective on how governments can deliver major infrastructure projects that not only meet performance targets but also ensure fairness and equity for communities. Leo Varadkar, former Taoiseach of Ireland Varadkar served as Taoiseach from 2017 to 2020 and from 2022 to 2024. Through the Project Ireland 2040 plan, investment in public infrastructure budget more than doubled during his time as Prime Minister from under €6b a year to more than €12b a year with major investments in transport, rural broadband, energy, climate action, healthcare and education. Other sessions will include presentations from Regional Development Minister Shane Jones and Labour leader Chris Hipkins. Infrastructure New Zealand's Strategy and Engagement Manager Katie Bradford, who is also the summit's MC, will host a range of panels throughout the two days. Bradford notes the symposium is an opportunity to explore practical, systems-based thinking for sustainable growth. 'Building Nations provides a platform for the industry to engage in and explore how we can do things differently, using our existing infrastructure more effectively and investing in the right assets to achieve a coherent vision for Aotearoa's infrastructure.' The 2025 programme also includes focused sessions on Treaty partnership, regional collaboration, and community inclusion. Panels will examine how the infrastructure sector can work in true partnership with Māori, unlock the potential of local government, and embed diversity and accessibility into infrastructure planning. Winners of the Building Nations Impact awards will be announced at a gala dinner tonight. ● Programme is at Singapore keeps its infrastructure in good health Andrew Tan has a message: 'Singapore transformed itself from a Third World to First World country by putting in place a first-class infrastructure that enhances our global hub status and connectivity with rest of the world, including our region.' The city state lacks both natural resources and a natural hinterland. The upshot is the Singaporean Government takes a long-term view towards infrastructure, starting with optimal land use to balance the needs of current versus future generations. 'We have developed long-term concept plans and master plans for the whole island, taking a 30-40 years' timeframe down to actionable five-year timeframes,' says Tan. 'The beauty is not in the planning but having a process that allows close co-ordination across government departments along with consultations with the private sector and civil society, to the final execution of these plans. This requires trust and confidence in the process, transparency and open communications, especially in land sales/allocation, bidding for projects and their evaluation.' Andrew Tan was formerly managing director with Temasek International; a global investment firm headquartered in Singapore. He joined as an operating partner in the Enterprise Development Group, and later as managing director of the new Strategy Office.' Singapore looks after its infrastructure. Photo / 123rf Prior to joining Temasek, Tan spent nearly three decades with the Singapore Administrative Service in senior positions across key agencies across defence and foreign affairs, environment and water resources and transport. He also served in the Prime Minister's Office as the principal private secretary to Senior Minister/Minister Mentor Lee Kuan Yew. He later became CEO of the National Environment Agency and founding director of the Centre for Liveable Cities, He was also CEO of the Maritime and Port Authority of Singapore (MPA). These days he holds a number or private sector roles. Tan makes the point the bulk of the funding for basic infrastructure in Singapore comes from the Government's budget. 'Over the decades, the Government has been able to generate surpluses as well as maintain healthy reserves. This allows government agencies responsible for key infrastructure as public housing, transport, schools/universities and hospitals and other social facilities to be upkept,' he explains. 'It has been a central tenet of the Government not to allow any public infrastructure to deteriorate beyond its normal lifespan. It is a reflection of the state of the country and how well it is run. Further, the upgrading of existing infrastructure, such as public housing has led to their values rising over the years for homeowners.' Andrew Tan speaking in Auckland in 2023. It has been a central tenet of the Government not to allow any public infrastructure to deteriorate beyond its normal lifespan. Andrew Tan He says in recent years, the Singaporean Government has also undertaken several private-public sector projects on a design-build-own-operate basis (DBOO) as well as leveraged on bonds to finance major infrastructure projects such as transport network and public utilities, eg desalination water plants and waste-to-energy plants. Notably, as part of Singapore's climate change and green transition efforts, the public sector will take the lead to issue green bonds of up to S$35 billion of green bonds by 2030. This will serve as a reference for the corporate green bond market, deepen market liquidity as well as attract issuers, capital and investors for green financing. Tan adds, beyond public infrastructure, through the Government Land Sales (GLS) Programme, land is also sold to the private sector for various development purposes. Rather than simply outright sales of land, the GLS allows the Government to shape the developments in line with its strategic objectives based on various planning parameters and built-in incentives. 'It has been used for urban renewal after our independence, later, positioning Singapore as a tourism hub, and business and financial hub in the 2000s, as well as heritage and conservation needs. This ensures that other than receiving revenues from land sales, land is optimised for the greater well-being of the country.' Through the Long-Term Planning Review (LTPR) led by the Urban Redevelopment Authority (URA), the Singapore Government engages the private sector and civil society to define the key features of how they envision Singapore in the future. In the recent review, for example, four themes emerged from public consultations - a Singapore that is Inclusive; Adaptable and Resilient; Sustainable, and Distinctive & Endearing. This feeds into the overall long-term strategies. Tan says the URA has also partnered community and business groups to support ground-up ideas for local precincts and neighbourhoods such as for mixed-use developments involving the Singapore River Precinct, Tanjong Pagar, Marina Central and Raffles Place to create more buzz and vibrancy. 'That said, private developers are always keen to provide inputs to the plans and the Government is equally open to new ideas while balancing the greater needs of society and reconciling short versus long-term gains. It is an ongoing, open-ended dialogue with all stakeholders. The enhancements to the Government Land Sales Programme is one such example of continuous feedback and improvement.'
