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RNZ News
5 days ago
- Business
- RNZ News
Households 'under siege', BNZ economist says
Photo: RNZ New Real Estate Institute (REINZ) data showing a weak housing market, particularly in Auckland, is further evidence of the "air pocket" the economy hit in the middle of this year, one economist says. REINZ has released its data for July which shows seasonally adjusted sales counts at a national level were down. The House Price Index , which smoothes out variations in the median sale price, was up 0.1 percent year-on-year on a national basis but down 0.4 percent on the month before. For Auckland it was down 0.1 percent year-on-year and down 1.8 percent month-on-month. Papakura values were down 5.2 percent compared to 2024, while New Plymouth's were up 4.9 percent and Invercargill's 7.8 percent. BNZ chief economist Mike Jones said he had been looking at the numbers to validate or disprove what looked like a "stumble" in the housing market in June. "It looks like if anything the housing market was a little weaker again in July so it does appear that markets have lost some of that relatively modest momentum that was there and it's faltering a little bit." He said Auckland was noticeably softer than the rest of the country, particularly the South Island. "The unemployment figures we got last week and now the housing market as well - it just kind of adds to all those other signs and evidence we're getting in the economic numbers that the country hit something of a wobble or an air pocket in the middle part of the year." He said the labour market had weakened and cost of living pressures had intensified. "Food prices in particular are putting extra pressure on the household budget. At the same time, as it was pointed out last week, wage growth is cooling down so in some ways it feels like the average household is sort of under siege at the moment. That's causing faltering demand across a lot of different areas of the economy and the housing market would be one." ANZ's economists noted that house prices were now 0.4 percent above their most recent low in October 2024. "Given recent weakness in the market, we see some downside risk to our forecast that prices will end 2025 up 2.5 percent year-on-year. We remain of the view that three further cuts in the OCR will be needed to shore up the economy and stabilise inflation around the Reserve Bank's target midpoint. Lower interest rates and a cyclical recovery are likely to see the housing market gradually strengthen over the next year, but we don't expect prices to race away." Westpac senior economist Michael Gordon said the market was unusually well balanced. "While lower mortgage rates have helped to spur higher levels of activity compared to a year ago, demand is being matched by an ample supply of homes hitting the market. As a result, there has been little upward pressure on sale prices. "House sales were down 2.5 percent in seasonally adjusted terms in July, the third straight monthly decline. The number of sales is typically understated on the first release, so we expect that this will be later revised to around flat. Sales were up 4 percent on a year ago; it was around this time last year that the level of activity in the market took a marked step up, so year-on-year comparisons will look less impressive from here on." When seasonally adjusted, the house price index was down 0.5 percent in July and down 1.2 percent in Auckland, Gordon said. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
RNZ News
06-08-2025
- Business
- 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
06-08-2025
- Business
- 1News
Unemployment rate rises to 5.2%
Unemployment rose to 5.2% in the June quarter of 2025, according to new numbers from Stats NZ — the highest it's been since September 2020. It's a slight increase from the previous 5.1% in the March 2025 quarter and 4.7% in the June 2024 quarter. There were 158,000 people unemployed in the June 2025 quarter. In the March 2025 quarter, there were 156,000. Unemployment rose by 16,000 people (11.1%) annually. 'Labour market conditions have changed considerably in the last few years. Since the June 2022 quarter, the unemployment rate has risen by 1.9 percentage points,' labour market spokesperson Jason Attewell said. ADVERTISEMENT 'The underutilisation rate has risen by 3.5 percentage points over the same period.' The underutilisation rate, a measure of untapped labour market capacity which includes people who are unemployed or underemployed, was 12.8% in the June 2025 quarter. It was 12.4% in the March 2025 quarter and 119.% in the June 2024 quarter. The employment rate was 66.8%, down from 67.1% in the March quarter and 68.3% a year ago. Attewell said wages continued to grow, "although at a slower pace compared with June 2024'. Annual wage inflation was 2.4%, compared with 4.3% in the June 2024 quarter. 'Crushes my spirit' – jobseeker applies for dozens of roles Ata Patene had been looking for work for more than a year, applying for hundreds of roles in the process. (Source: 1News) ADVERTISEMENT Speaking before the release of today's numbers, job seeker Ata Patene, who had been looking for work for more than a year, told 1News she had applied for over 100 jobs. 'I've been looking for jobs for nearly a year and a half. I've been looking in person, on Seek, Indeed, Trade Me, and I've also been emailing companies directly. 'I've lost count of how many. This past week it was around 20.' She said she had been forced to look for work outside her experience in sectors such as retail, hospitality, administration and factory work. The morning's headlines in 90 seconds, new report into submersible implosion, body found in Auckland park, and mixed injury news for the Warriors. (Source: 1News) She once showed up to meet a family about a babysitting job, only to discover she had been catfished, and the "family" did not live there. Patene said looking for a job had been 'daunting' and 'pretty heartbreaking'. ADVERTISEMENT 'It's exciting getting interviews, but then I get the response that I didn't get the job, and that kind of crushes my spirit.' When can we expect things to get better? On Breakfast, BNZ chief economist Mike Jones gave his thoughts on what was driving unemployment, and when it could get better. (Source: 1News) BNZ chief economist Mike Jones told Breakfast this morning the job market was 'really tough out there'. 'A lot of people applying for a lot of jobs, and firms getting hundreds of applications for the jobs that they do list, so it's symptomatic of an imbalance that we're seeing in the labour market where there are more people looking for work, or looking for extra work than there are opportunities available.' He said the rising unemployment figures were likely an aftershock of last year's recession, and a reflection that the economic recovery had been 'pretty disappointing'. 'It's been a bit stop-start, it's been stumbling along, so that's impacted hiring plans as well. ADVERTISEMENT 'Firms haven't felt confident in the economic environment to get going, hiring again.' For employment numbers to stabilise again, the economy needed to find its feet, Jones said. He expected this to happen, but said 'it will take some time'. 'I think for the improvement that we'd all like to see in the labour market, we are looking at a picture that is probably sliding into next year.' 'Not satisfied' - Finance Minister Finance Minister Nicola Willis. (Source: Getty) Finance Minister Nicola Willis said that while unemployment was lower than what was forecast by Treasury, the Government was 'not satisfied' with the rate. 'We are concerned for every New Zealander who wants a job and can't get one.' ADVERTISEMENT She said the Government had worked hard to rebuild the economy, and said its focus had been on controlling inflation and ensuring interest rates could come down and economic growth could be restored. 'Those are the conditions that lead to a fall in unemployment, and we have long known that until we had those conditions in place, it would be very challenging to get the unemployment number down.' She believed the Government was making 'good progress' in recovering the economy, citing slower inflation and lower interest rates. Willis said the Government was using public projects to help with employment in the short term. PM has 'abandoned' middle NZ – Hipkins Labour Party leader Chris Hipkins. (Source: Getty) Labour leader Chris Hipkins said the latest figures were 'clear proof' that the Government was failing New Zealanders. ADVERTISEMENT 'While thousands of people are out of work and struggling to pay the bills, Luxon is looking after property speculators and fossil fuel companies. He has abandoned middle New Zealand. 'What's worse is that these figures don't even include the thousands of Kiwis who have left for Australia to find work that should be available here. 'Kiwis are voting with their feet and leaving in record numbers. That is a clear vote of no confidence in National.'
Scoop
02-08-2025
- Business
- Scoop
How Bad Is The Tariff News For NZ, Really?
, Money Correspondent New Zealand has been hit with a higher tariff rate than Australia on exports to the US - but economists say the situation could have been worse. It was revealed on Friday that New Zealand exports would have a 15 percent tariff applied, up from 10 percent announced earlier. Australia remains at 10 percent. Brad Olsen, chief executive at Infometrics, said that was a clear challenge for New Zealand. "There is now a wedge between us and Australia." There were other parts of the world that previously had a higher tariff rate that were now on the same level as New Zealand, such as Europe. "Wine, for example, under the original tariffs, we might have had a slight advantage. Now we don't." But he said it was not necessarily true that the country would have been better off had it negotiated a deal. He said New Zealand did not have a lot to "give up" in those negotiations, and it could have ended up being costly. "I'm a little bit surprised by comments, including from the opposition's trade spokesperson, that the government failed to achieve a lower tariff rate. "The comments seem to make the implication that New Zealand could have found a way to come up with a trade agreement that might have given us a lower tariff rate. "That might be true, but we have no idea what we would have had to give up to achieve that… some of what had to be given up by other countries to get a 15 percent tariffs rate is consequential - Japan and other countries had to give up to half a trillion dollars of further investment into the US." He said the impact on New Zealand's trading partners might not be as bad as had been expected, which should prove positive for the economy. "It will be slightly more challenging to export to the US from a New Zealand point of view, but our trading partner activity might not be hit as bad as was feared in April. That's probably a net benefit for us." Mike Jones, chief economist at BNZ, said the increase was not unexpected given indications of the past few weeks. "It's obviously unhelpful for NZ exports into the US, particularly how we line up with those coming from Australia and the UK, given the lower 10 percent baseline tariff rate for those countries. "Beef and wine exports could be affected. It's interesting in this context that we've seen the NZD/AUD exchange rate fall a little today in the wake of the announcements." Kelly Eckhold, chief economist at Westpac, said he thought New Zealand was in roughly the same position as in April. "On one hand, the tariff is higher, so there is a bigger direct cost, but it's a bit lower for a lot of our trading partners, so it's better for the economy than would otherwise be the case." He said how the lingering elements of uncertainty played out over the coming weeks would be important. "The legal basis of these tariffs, whether they're going to be able to continue or need to be replaced with a different type of tariff, is an issue. And the sectoral tariffs have not yet really been negotiated. "While I don't think these things affect the sort of goods New Zealand trades with the US, there may be some impact on our trading partners." He said it seemed strange that the US was calculating tariffs based on which countries exported more than they imported. "The concept that US authorities have had of countries ripping them off by selling more stuff to America than they're been buying is quite myopic. "We're only talking about goods trade here, we buy a lot of services from the US. "In large part, the trade imbalance is a cyclical rather than a structural story. "In the last few years, the economy has been relatively weak compared to the US. We're not sucking in as many imports, and the exchange rate has been lower than would normally be the case, which has encouraged export revenues. "I would have thought trade policy metrics like tariffs would be determined on the basis of structural, not cyclical factors. "All those things could easily be the other way around in a few years' time."
1News
01-08-2025
- Business
- 1News
How bad is the tariff news for NZ, really?
New Zealand has been hit with a higher tariff rate than Australia on exports to the US – but economists say the situation could have been worse. It was revealed today that New Zealand exports would have a 15% tariff applied, up from 10% announced earlier. Australia remains at 10%. Brad Olsen, chief executive at Infometrics, said that was a clear challenge for New Zealand. "There is now a wedge between us and Australia." ADVERTISEMENT There were other parts of the world that previously had a higher tariff rate that were now on the same level as New Zealand, such as Europe. "Wine, for example, under the original tariffs, we might have had a slight advantage. Now we don't." But he said it was not necessarily true that the country would have been better off had it negotiated a deal. He said New Zealand did not have a lot to "give up" in those negotiations, and it could have ended up being costly. "I'm a little bit surprised by comments, including from the opposition's trade spokesperson, that the Government failed to achieve a lower tariff rate. "The comments seem to make the implication that New Zealand could have found a way to come up with a trade agreement that might have given us a lower tariff rate. "That might be true, but we have no idea what we would have had to give up to achieve that… some of what had to be given up by other countries to get a 15% tariffs rate is consequential – Japan and other countries had to give up to half a trillion dollars of further investment into the US." ADVERTISEMENT US President signs an executive order for new tariffs on a wide swath of US trading partners to go into effect in seven days. (Source: 1News) He said the impact on New Zealand's trading partners might not be as bad as had been expected, which should prove positive for the economy. "It will be slightly more challenging to export to the US from a New Zealand point of view, but our trading partner activity might not be hit as bad as was feared in April. That's probably a net benefit for us." Mike Jones, chief economist at BNZ, said the increase was not unexpected given indications of the past few weeks. "It's obviously unhelpful for NZ exports into the US, particularly how we line up with those coming from Australia and the UK, given the lower 10% baseline tariff rate for those countries. "Beef and wine exports could be affected. It's interesting in this context that we've seen the NZD/AUD exchange rate fall a little today in the wake of the announcements." 'Quite myopic' ADVERTISEMENT Cranes and shipping containers are seen at a port in Busan, South Korea, Thursday, July 31, 2025. (Source: Associated Press) Kelly Eckhold, chief economist at Westpac, said he thought New Zealand was in roughly the same position as in April. "On one hand, the tariff is higher, so there is a bigger direct cost, but it's a bit lower for a lot of our trading partners, so it's better for the economy than would otherwise be the case." He said how the lingering elements of uncertainty played out over the coming weeks would be important. "The legal basis of these tariffs, whether they're going to be able to continue or need to be replaced with a different type of tariff, is an issue. And the sectoral tariffs have not yet really been negotiated. "While I don't think these things affect the sort of goods New Zealand trades with the US, there may be some impact on our trading partners." He said it seemed strange that the US was calculating tariffs based on which countries exported more than they imported. ADVERTISEMENT "The concept that US authorities have had of countries ripping them off by selling more stuff to America than they're been buying is quite myopic. "We're only talking about goods trade here, we buy a lot of services from the US. "In large part, the trade imbalance is a cyclical rather than a structural story. "In the last few years, the economy has been relatively weak compared to the US. We're not sucking in as many imports, and the exchange rate has been lower than would normally be the case, which has encouraged export revenues. "I would have thought trade policy metrics like tariffs would be determined on the basis of structural, not cyclical factors. "All those things could easily be the other way around in a few years' time."
