Tony Alexander

Economic Commentaries

Weekly Overview, Nov. 28

Thursday November 28th 2013

Household incomes are rising in NZ and this in conjunction with rising employment, high sentiment, rising house prices and rising house construction bodes well for retailing next year.

Wholesale Interest Rates Rising

As expectations firm for NZ monetary [policy tightening next year fixed borrowing costs are rising. Page 1

NZD Weakens

The NZD has been dragged down against most major currencies this week on the coat-tails of an AUD pushed lower by talk of RBA intervention (unlikely). Fundamentally the NZD looks strong however with our growth accelerating, high commodity prices, and central banks offshore figuring out how to keep their monetary policies as loose as possible for as long as possible. Page 2

Migration Boom

Courtesy of Australia’s bout of blue funk discouraging Kiwis from heading over there the annual net migration gain for NZ has passed 17,000 on its way to maybe 30,000. The retailing and housing implications are obvious. But it pays to remember that this migration boom is not being driven by a surge in foreigners coming here. And this is just a traditional turn in the cycle of people flows across the ditch. The cycle will eventually turn back the other way. When? Hard to say as this cycle has no set frequency. I choose to guess 18 – 24 months. Page 7