The New Zealand economy is "firmly in recovery mode" and probably grew in the March quarter, says BNZ senior economist Craig Ebert.
In a report entitled More Grist to our Optimistic View, Ebert said any non-negative number for first quarter (Q1) Gross Domestic Product (GDP) would be amazing given the devastating impact of the February 22 Christchurch earthquake, BNZ expects 0.4% Q1 GDP growth. According to the New Zealand Institute of Economic Research's recent consensus forecast release, economists expect GDP to contract by -0.1% in Q1, but rebound by 0.5% in Q2.
However, Ebert said: "Even if Q1 New Zealand GDP does not prove as robust as we reckon there is certainly evidence of accumulating economic momentum in the second quarter."
As evidence he pointed to yesterday's Performance of Services Index (PSI), which edged up to a seasonally adjusted 52.8, from 52.6.
"While not exactly strong, and still a bit patchy in its details, the latest PSI signals a more expansionary pace, especially with new orders hitting 56.4. As such it’s broadly keeping touch with the Performance of Manufacturing Index, which, for May, achieved 54.7, also with new orders leading the way."
Ebert said BNZ's economists had hoped for reasonably strong results in the March quarter manufacturing survey and got them, with bells on.
"Note, first of all, that the survey did include Christchurch and that the response rate was relatively high and its sales and inventory data reasonably robust, as Statistics NZ mentioned," said Ebert.
"This bears out the feedback we were getting from customers and business groups immediately post the 22 February earthquake, upon which we based our sober judgments. This survey coverage makes the manufacturing results all the more “statistically significant” – in a technical sense, not just in their obviously good headlines."
Furthermore, Ebert said, last week's Q1 retail sales figures, showing a 2% rise by value from the December quarter in the largest quarterly rise since March 2007, certainly helped the nationwide cause.
Statistics NZ is due to release the Q1 (March quarter) GDP figure on July 7. December 2010 quarter GDP rose 0.2%.
34 Comments
What makes me even angrier. When the busy cleaners working for $13.- p/h clean the banksters offices throughout the country – the offices are clean – in case not they get sacked.
When senior advisers/ economists doing their jobs, telling crap for $ 120.- p/h - ohh well – that’s the system I guess.
what f%%$ing planet do these guys live on?
the only thing I can put it down to is spruiking the economy to build their business - either that or they are consistently proven wrong cos they are useless -
Apart from the farmers (who are mainly paying off debt rather than spending) the economy is dead
I think NZIER came out yesteday with a prediction of -0.1% GDP for Q1 - that seems a lot more likely
I think the main problem with these economists is they look at things too mechanically and in silos - I firmly believe they are poor at looking at the bigger picture and how all the various domestic and international factors inter-relate
"Furthermore, Ebert said, last week's Q1 retail sales figures, showing a 2% rise by value from the December quarter in the largest quarterly rise since March 2007, certainly helped the nationwide cause."
thats not a bullish indicator at all - the rise was mainly off the back of higher petrol prices, an eventual increase following the post-GST retail lull, and a lot of retail discounts on the back of poor sales and a strong NZ dollar making it easier to discount
Matt, these guys work for banks. They are there to perform a marketing function. The sooner we stop calling them 'economists' the better. So if I restate your first paragraph we get something closer to reality:
I think the main problem with these bank public relation analysts is they look at things too mechanically and in silos - I firmly believe they are poor at looking at the bigger picture and how all the various domestic and international factors inter-relate
yeah but they proclaim their "independance"
well, in my view they are either independent and generally very poor at their job or they are spruikers masquerading as credible independent economists
The Unconventional Economist in Aus has very generously renamed them "Housing Economists"
No independnce what-so-ever. Cameron Bagrie, in my time with ANZN, always referred to the fact he was involved in creating credit policy based on where their expectation of profitability lay acros C&CB, Rural, Institutional and Retail.
You don't get paid their salaries to be independant!
I'm sure that is not what Craig Ebert said ........I'm sure he said .." the economy is in full recovery mode Ha ha.."....the ha ha may have been omitted due to the reporters inability to recognise Ha ha as valid financial speak.
I think he went on to say "At the end of this spin cycle ...there will be a return to deep rinse untill all the signs of foaming bubbles have been removed....."
Given that Tony Alexander probably needs to read the instructions each morning on how to put a pair of trousers on, I would take little from his ability to foresee the future (or in this case predict the past!).
The December figure is likely to go down given they didn't include ChCh data (because the CBD was shutdown). Hence in reality growth would be lucky to be zero in December and be unlikely to be positive in March.
Tony and Craig (who is an ex Cantab btw) clearly are unaware (like Key/Brownlee) of the impact on ChCh. If ChCh was even 10% out of action for the quater it would slice 0.4% off GDP. The rest of the country would have to be going gangbusters to even come close to BNZ's prediction.
Now lets remember Australia, floods there cut a whopping 1.25% off GDP for the quarter. How could we possibly not have seen something similar here. The only way is with StatsNZs dodgy numbers, like those absurdly fluctuating employment numbers!!
I note that the Reserve Bank GDP forecasts from earlier in the month work out as:
Q1 +0.3%
Q2 +0.4%
Q3 +0.9%
Q4 +1.3%
All highly unlikely, especially as cash will start flowing out of ChCh (to Australia) quicker than look at you, when insurances are sorted. (Remember most ChCh people can't stand Auckland or Wellington so Ausralia will be the main destination for escapees).
My prediction based on nothing other than my own gut feeling is that Q1 will be down a half, Q2 down a quarter, Q3 down a half, Q4 flat. Oh dear another recession, but when December gets revised we'll all know we've been in recession since Q3 2010!
yeah I agree lots of Cantabrians don't like Auck - I get plenty of ribbing from my mum's family!
The reality is too there aren't the jobs in Auckland for Cantabrians anyway (or Wellington for that matter, especially as they are cutting the public service)
I'm sure too that for many Cantabs the thought of going from their home city to another earthquake-prone city doesn't really appeal
By the way Q1 Aussie GDP was 50bps below consensus estimates. So -0.6% NZ GDP anyone? Only 100bps below TA and CEs guess! But then remember even in September 2008 TA thought interest rates would drop only marginally over the next few months because of the booming construction sector amongst other things! Yeah right, Tony!
The only factor that may arrest the slide somewhat is how much money is being spent in the economy from reinsurance money. MSD has a lot its reinsurance money out with NGOs and the non profit sector providing social services...while the amount spent on roading and temp infrastructure time and again in Christchurch may mask the trend. GDP is about spending not the nature there of.
There will always be conspiracy theorists, especially on blog site. It used to be the Jewish financiers, now it's just financiers in general as the old Jewish phobia has neen put to bed Actually the economists may be right, heard Cameron Bagrie from ANZ a couple of months ago who saw good growth potential from the obscene(my words) amount of income farmers are earning these days, once they start freeing up their cheque books, he said by next year. The manufacturing sector has been going from srength to strength in past 6-9 months, also.
one reputable economist told me recently that the economy will grow 2.5% in the coming year - "because population growth will be about 1% and we can add about 1.5% to that"!!!!
LOL
We've had population growth in the last 3 years but that hasn't stopped negative GDP!
"The New Zealand economy is "firmly in recovery mode" and probably grew in the March quarter, says BNZ senior economist Craig Ebert."
I'm quite sure many 'bank economists' think that around the world, UNTIL Greece defaults that is! And they will, and then watch it snowball!
Fonterra producers 95% of milk and the average Fonterra supplier's income this year is over $1 million. Bet some gloomsters here on this site wouldn't mind that sort of annual income, even allowing for expenses and tax. This is even better than when I was farming in the bouyant times! The good news for Kiwis is the old adage, when the cockies are doing well, so will NZ, so cheer up guys, NZ will be a not so bad country to be in, stick with it.
Yes, I was also going to say that we are enjoying around $150 for lambs, and $200 for good quality ewes, and the regular, substantial rain is liquid gold feeding the entire agricultural sector. But didn't want to spread too much joy all at once as there's only so much good news some can take!
Muzza, if you are a sheep farmer, what was your taxable income?? From how much land?? And that was earned from how much capital tied up in that land??
I can assure you that it's not hard to make tax losses even if you have a seven figure income before expenses.
Everyone I know is doing it tough, we've got a number of acres done south (Otago) that we just let the neighbour graze for free because there's no money in it. The money that he earns from the land is only a token amount that barely covers the cost in maintaining it.
Just imagine how much better off we would be with Labour/Greens leading SS New Zealand.
We are coping ok with the depression we are having. To blame the govt for it all is laughable, we are at the whim of the world markets.
I think differently to most, I beleive the non productives get given too much money (beneficairies) and workers get taxed too much. This is 1 answer to fixing the funding (borrowing) shortfall.
Thank god National in gummies are doing well. Let the cows shit and bring in the revenue.
Two things:
1: No one EVER said governments are 100% to blame but they sure as hell contributed a great deal to current events! But yes many people have themselves to blame for believing the BS on property and other such global ponzi schemes etc
2: Public servants, ALL OF THEM are ALSO "beneficiaries" of the state, THEY are the overpaid ones. They are also the most unproductive, far more than any solo mum, or the dole bludger or the sickness beneficiary. How come? Well, who's money do you think they are spending? and borrowing? and who's assets do you think they run down to ruin, then sell off for sweet F all? Let alone their own perks, wages and benefits!
So lets get that straight shall we? Your bias of National ain't exactly obvious either. Quite frankly they are ALL a waste of space, hence our current ever increasing worldwide match toward "stagflationarydepressionrecession"
Chris_J
I talked with several friends last week. all are well established sheep and beef farmers on family farms. No one was happy even though the prices are so good, they appeared to be swamped by costs and were retrenching. One friend in his mid 50's said to me that he has resigned himself to working the rest of his life to pay off debt and is getting used to spending a lot less. Another on a family cropping unit with irrigation said that he too is struggling and looking at his options. If it helps, I sold my farm in 2007 but the year before i paid 150k in tax excluding ACC, I often paid around that figure in tax. It looks like its tougher now than then and there is a feeling that the good times wont last.
"Greece's sovereign debt woes have weighed heavily on market sentiment in Europe and around the world, making debt more expensive for any institution wanting to raise money there." herald
As I said earlier..and others pointed out too...rates will rise as the truth about the piigs debt and default potential is exposed ...this is just the start..sit back and watch the show..there will be heaps of laughs to be had as the pollies invent new ways to tell lies and bankers rush to escape their losses.....oh and if you have a mortgage it might be wise to fix asap for as long as poss.
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