We haven’t learnt much fresh about the NZ economy this week beyond some weakness in debit and credit card spending in January somewhat calling into question the euphoria expressed by many heading into Christmas. Nevertheless things are improving in our economy and why not! Our terms of trade are at their highest level since 1973, there is a huge reconstruction job now solidly underway in Christchurch set to stretch out for 5 – 8 years, hefty investment is occurring in the dairying sector and the country’s infrastructure, and jobs growth has picked up tremendously.
In fact this afternoon we learnt that in Australia job numbers fell yet again in January to deliver exactly zero growth for the year compared with 3% or 67,000 new jobs in New Zealand. In the past year our unemployment rate has fallen from 6.8% to 6% and Australia’s has risen from 5.4% to 6%. As this year advances and their rate goes higher while ours heads to then falls below 5% we will see the recent reduction in our net Kiwi loss across the ditch continue and deliver a full year migration gain for NZ across all countries above 30,000.
That means more people supporting the retailing and housing sectors. Speaking of which, I shall release the results of our first BNZ-REINZ Residential Market Survey on Monday and what I have quickly analysed so far shows that we have switched back to a seller’s market once again. Investor interest in particular has picked up and prices are definitely seen as going up – though first home buyers remain squeezed out of the market. Thus we have official Reserve Bank policy ensuring continuation of the declining home ownership rate in NZ, already down from 66.9% in 2006 to 64.8% in last year’s census revealed in data released last week.
On the currency front the NZD has not moved much this past week but the most basic economic fundamentals say we are headed higher. The same goes for our interest rates which is why I would fix three years currently were I a borrower.