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NZ Herald
8 hours ago
- Business
- NZ Herald
Labour's chance to distance itself from Te Pāti Māori
Massey University's GDPLive is also trending back towards zero. The brain drain is worse than ever. As highlighted by Herald Business Editor at Large Liam Dann, this matches BusinessNZ's latest data suggesting both manufacturing and services went backwards in May and June, with services continuing its decline since February. The overall economy doing so poorly is especially alarming given the agricultural boom. Westpac observes that households' after-tax disposable incomes increased just 0.9% over the past year despite the tax cuts, while consumer prices increased 2.5%. Stats NZ reported yesterday that food prices were up 4.6% over the last year, and ASB thinks overall inflation is already back above 3%. Local and international inflation fears suggest just one more cut to the Official Cash Rate this cycle, although households moving off fixed mortgages before the election will benefit from earlier cuts. Bond markets remain worried about New Zealand's creditworthiness, with yields on 10-year bonds still stuck around 4.6%, nearly 7% higher than the 4.3% Nicola Willis' debt-servicing estimates assume. Westpac thinks yields will increase to nearly 5% over the next two years, suggesting Willis must find around another $1.5 billion a year for debt servicing alone. Assuming health, education, law and order and defence aren't cut, there's no prospect of a balanced budget this decade. While even the most pessimistic forecasts indicate that 2026 will feel better for voters than 2025, that'll be off the back of two recessions in two years, not quite what National promised in 2023. Nor would two recessions be evidence, to use Christopher Luxon's words, of his Government 'turning the joint around', however much 'blimmin' hard work' he says he's doing. New Zealand's results certainly compare unfavourably with Argentina, where President Javier Milei and Finance Minister Luis Caputo inherited a complete basket case from their left-wing predecessors at the same time as Luxon and Willis. After the kind of urgent and robust fiscal and regulatory reforms Luxon and Willis say aren't viable in New Zealand, Argentina's economy is booming at nearly 6% a year. Its books are in surplus, inflation has been subdued, exports are growing, private-sector wages are rising faster than prices, Milei's favourability rating is touching 50%, well ahead of poor Luxon on around 30%, and his Libertad Avanza Party is set to win this October's parliamentary elections. National, Act and NZ First supporters will never know what might have been had Luxon and Willis rejected the politics-first incrementalism recommended by their mentors Sir John Key and Sir Bill English and quickly implemented Milei-style reforms instead. That's all speculation. The relevance to the byelection is that, without an economic boom, National relies even more heavily on its scare campaign against TPM. Sadly for Labour, TPM seems to be doing everything it can to help National, with its co-leader Rawiri Waititi now revealing his political hero is Burkina Faso's Marxist military dictator Ibrahim Traore, who opposes democracy, seized power in a coup, butchered civilians, criminalised homosexuality, cracked down on public dissent and freedom of the press, and removed civil liberties generally. Labour must win the byelection decisively to demonstrate electoral power over TPM. At least as important, it must campaign hard in doing so, belying Luxon's suggestion the byelection could be a mere 'pillow-fight' between two allies and differentiating itself not just temperamentally but ideologically from its radical opponent. Among major party activists, there's sometimes a tendency to concede the moral high ground to smaller allies. Labour or National activists can be caught saying that, of course, they really agree with the Greens or Act, but – unlike them – they must sound more moderate to not scare off median voters. That's exactly the wrong way for Labour and National activists to think of their parties. They should instead define themselves positively for what they stand for, not just position themselves as paler and more cynical versions of the real thing. It doesn't help Labour when Willie Jackson – its fifth-ranked MP – declares that he 'loves' TPM but that 'a little bit of compromise could help the situation'. To win back the 60,000 swing voters from National it needs, Labour must demonstrate that it's not just TPM's tactics it opposes but its objectives. That shouldn't be too difficult even for Jackson. He sent his kids to Te Kōhanga Reo for primary school and then King's College for secondary school so they would be deeply immersed in both sides of the Treaty partnership. You won't hear any Labour MP express admiration for a butcher like Traore. Labour strategists say the issues concerning Tāmaki Makaurau voters are the same as those worrying everyone else: jobs, health, homes and the cost of living – the very things at risk from Luxon's failure to get the economy booming as promised. They point to their candidate, Peeni Henare, being very much a traditional Labour man, with a strong whakapapa to the Māori Battalion and even the National Party and its Reform Party parent, as well as to a number of Ngāpuhi iwi plus Whakatōhea, Ngāti Kahungunu and Rongowhakaata. The strategists say Henare speaks better te reo than anyone in TPM but thinks a roof over the head, food on the kids' plates and a decent local primary school are more important than academics' latest theories about the 1840 translations of kawanatanga and tino rangatiratanga. While Henare supported TPM's parliamentary haka against the Treaty Principles Bill, he also saw that it breached Parliament's tikanga and had the mana to apologise. Insiders say the former Minister of Defence, ACC, Tourism and Forestry would be a senior minister in a new Labour Cabinet, to which Hipkins prefers to appoint only Labour ministers rather than add-ons from the Greens and TPM. Strategists point out that a Henare win would also bring Labour's 39-year-old Georgie Dansey into Parliament, whose whakapapa includes not just Ngāti Tūwharetoa but also the Māori Battalion and Māori All Blacks. With the economy in trouble, a fierce battle between Labour and TPM rather than Luxon's pillow-fight would undermine the second of National's re-election pillars. Henare has a major opportunity to prove his worth to his leader and party.
Straits Times
4 days ago
- Business
- Straits Times
New Zealand spending slowdown adds to signs of cooling economy
Sign up now: Get ST's newsletters delivered to your inbox Sluggish consumer spending mirrors recent data showing the services and manufacturing industries remained in contraction in the month of June. New Zealand retail card spending fell in the second quarter, adding to signs that an initial spurt of economic growth early this year has all but disappeared. Purchases on debit and credit cards at retail stores fell 0.7 per cent from the first quarter, when it was unchanged, Statistics New Zealand said July 14 in Wellington. The value of spending is lower than in the year-earlier quarter when the economy was entering a deep depression. Sluggish consumer spending mirrors recent data showing the services and manufacturing industries remained in contraction in the month of June. The slowdown in domestic demand suggests gross domestic product barely expanded in the second quarter after 0.8 per cent growth in the three months through March. Sentiment is being challenged by a soft housing market, rising unemployment and a high cost of living. While home-loan interest rates are falling, many borrowers on fixed-terms are yet to get the full benefit until their mortgages roll over later this year, and are watching their budgets closely. July 14's report showed spending on discretionary items such as hospitality, apparel, motor vehicles and durable goods such as appliances fell in the quarter. Purchases of consumable items such as groceries gained. Household confidence may also be dented by the Reserve Bank's decision last week to keep the Official Cash Rate unchanged at 3.25 per cent, although policymakers did signal further cuts are expected. At the same time, business confidence has been buffeted by uncertainty over US tariff policies and their impact on global economic growth. Top stories Swipe. Select. Stay informed. Business Singapore's economy continues to expand in Q2 despite US tariff uncertainty: Advance estimate Singapore What's in a name? Local author traces the evolution of Singaporean Chinese names Business From wellness zone to neurodivergent room: How companies are creating inviting, inclusive offices Singapore Govt will continue to support families, including growing group of seniors: PM Wong at PCF Family Day Singapore Swift action needed to stop vaping's slide from health risk to drug epidemic Singapore Art by Pathlight students to be displayed along Singapore River Opinion Hong Kong's past is disappearing, one icon at a time Sport Jannik Sinner dethrones Carlos Alcaraz to capture maiden Wimbledon crown Earlier July 14, Business New Zealand and Bank of New Zealand reported that the services industry contracted for a fifth straight month while the organizations last week said manufacturing had shrunk for a second consecutive month. 'The time line for New Zealand's long-awaited economic recovery just keeps getting pushed further and further out,' said Mr Doug Steel, senior economist at BNZ in Wellington. He expects GDP contracted in the second quarter. BLOOMBERG
Business Times
4 days ago
- Business
- Business Times
New Zealand spending slowdown adds to signs of cooling economy
[WELLINGTON] New Zealand retail card spending fell in the second quarter, adding to signs that an initial spurt of economic growth early this year has all but disappeared. Purchases on debit and credit cards at retail stores fell 0.7 per cent from the first quarter, when it was unchanged, Statistics New Zealand said on Monday (Jul 14) in Wellington. The value of spending is lower than in the year-earlier quarter when the economy was entering a deep depression. Sluggish consumer spending mirrors recent data showing the services and manufacturing industries remained in contraction in the month of June. The slowdown in domestic demand suggests gross domestic product barely expanded in the second quarter after 0.8 per cent growth in the three months to March. Sentiment is being challenged by a soft housing market, rising unemployment and a high cost of living. While home-loan interest rates are falling, many borrowers on fixed terms are yet to get the full benefit until their mortgages roll over later this year, and are watching their budgets closely. Today's report showed spending on discretionary items such as hospitality, apparel, motor vehicles and durable goods such as appliances fell in the quarter. Purchases of consumable items such as groceries gained. Household confidence may also be dented by the Reserve Bank's decision last week to keep the Official Cash Rate unchanged at 3.25 per cent, although policymakers did signal further cuts are expected. At the same time, business confidence has been buffeted by uncertainty over US tariff policies and their impact on global economic growth. Earlier Monday, Business New Zealand and Bank of New Zealand reported that the services industry contracted for a fifth straight month while the organisations last week said manufacturing had shrunk for a second consecutive month. 'The timeline for New Zealand's long-awaited economic recovery just keeps getting pushed further and further out,' said Doug Steel, senior economist at BNZ in Wellington. He expects GDP contracted in the second quarter. BLOOMBERG
NZ Herald
09-07-2025
- Business
- NZ Herald
NZ sharemarket dips as Reserve Bank holds OCR steady
The New Zealand sharemarket on Wednesday lost most of the gains it made yesterday, while the Reserve Bank aligned with other global counterparts in holding New Zealand's Official Cash Rate. The Reserve Bank decided to leave the Official Cash Rate (OCR) on hold at 3.25%, as widely expected. On the
1News
09-07-2025
- Business
- 1News
OCR held at 3.25% by Reserve Bank
The Official Cash Rate (OCR) has been held at 3.25%. It is the first time the OCR has not received a cut since July 2024, marking the end of six consecutive cuts. The decision to hold the OCR at its current rate by the Reserve Bank of New Zealand (RBNZ) was widely expected by economists. Last week, Infometrics economist Brad Olsen told 1News expectations in the market are for no cut to the OCR in July 'as the RBNZ takes a pause'. He did however add the market is expecting 'one further cut', which would be 'pencilled in at some point before the end of 2025'. ADVERTISEMENT Today, RBNZ said annual consumers price inflation will likely increase towards the top of the Monetary Policy Committee's one-to-three percent target band over mid-2025. "However, with spare productive capacity in the economy and declining domestic inflation pressures, headline inflation is expected to remain in the band and return to around 2% by early 2026. "Elevated export prices and lower interest rates are supporting a recovery in the New Zealand economy. However, heightened global policy uncertainty and tariffs are expected to reduce global economic growth. This will likely slow the pace of New Zealand's economic recovery, reducing inflation pressures." Finance Minister Nicola Willis said more Kiwis will benefit when they re-fix their mortgage this year, and pointed to the 2.25% point reduction in the OCR since August 2024. Finance Minister Nicola Willis. (Source: Breakfast) "Lower interest rates free-up household budgets for spending elsewhere and they ease the path for those wishing to enter the housing market. "They also provide relief to interest-rate sensitive sectors of the economy, including building and construction, with lower interest rates often providing a kick-start for big new projects." ADVERTISEMENT Willis to meet Fonterra boss over dairy prices The Finance Minster signalled she would meet with the Fonterra chief executive "in the next little while" to talk about "what we can do to make sure New Zealanders have affordable cheese, milk and butter". "What I worry about is when I see that it appears you can get cheaper milk and butter in other countries than here, and as I say I'm going to be talking to Fonterra about what's behind that, because I'm on the side of New Zealanders who say 'well that doesn't seem quite right.'" Willis added she was "interested" to see how much of the dairy prices in New Zealand were due to "supermarket competition" and "prices Fonterra are passing through". RBNZ outlines path for further cuts RBNZ added the current economic outlooks remains "highly uncertain". "Further data on the speed of New Zealand's economic recovery, the persistence of inflation, and the impacts of tariffs will influence the future path of the Official Cash Rate. ADVERTISEMENT "If medium-term inflation pressures continue to ease as projected, the Committee expects to lower the Official Cash Rate further." Are mortgage rates expected to drop? Olsen told 1News banks are likely to tweak their rates slightly to remain competitive, but large cuts to interest rates have largely run their course. 'Further OCR cuts or global interest rate declines would be needed to see any more substantial easing in rates.'
