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Economic Weekly: Watching the tallies

This week the NZ data calendar is a little light, with less likelihood of the recent string of market-jolting events that have made an imminent Official Cash Rate increase look almost certain.  Much of the week will be spent watching the Olympic medal tally – and the COVID case tally across the Tasman for signs the current Delta strain outbreak is coming under control.

That outbreak has put the trans-Tasman bubble on hold for at least 8 weeks.  NSW is grappling to get on top of its outbreak and is still experiencing large numbers of community cases.  The situation is more encouraging in other states that have recent experienced COVID cases, such as Victoria and Queensland, with the former set to ease some restrictions.

It is all a warning to NZ of the changed risk dynamics of the more infectious Delta variant.  With still-small percentages of the population fully vaccinated, both Australia and NZ are very vulnerable to outbreaks and need to rely on swift lockdowns to contain outbreaks.

Domestic events are relatively light this week, with just the ANZ business and consumer confidence surveys on Thursday and Friday, respectively.  The business confidence survey is the final read for July.  It will still get an eye cast over it, given the preliminary ANZ read and the NZIER survey showed added inflation pressures are coming through dramatically.  Still, any market implications will be dampened by the fact that expectations for future OCR increases have already been brought forward very sharply.

In Australia, their CPI will be dissected for signs of rising inflation pressures.  There are many similarities between Australia and NZ, with supply-chain cost pressures and growing labour shortages.  The immediate monetary policy implications aren’t so strong as in NZ, however, as the Reserve Bank of Australia will be a lot more cautious about the state of the Australian economy once the current outbreak is finally contained.

The US Federal Reserve is meeting later this week.  We don’t expect any shifts in interest rates or asset purchases at this point.  But it’ll be worth a watch in case there are some tweaks to the guidance around how long future asset purchases will continue: we think the Fed will start reducing the pace of asset purchases before the end of the year.

After last week’s soft dairy auction, we have tweaked our 2021/22 farmgate milk price forecast down a touch to $7.90/kg milk solids.  Of late GDT auction prices have pulled back slightly faster than we had anticipated.  Still, something near $8/kg would be a great outcome.  And meat prices have been surging as COVID restrictions have eased in the UK and EU.  Let’s hope that encouraging trend can continue.

Contact us

Jane Turner

Senior Economist

Originally hailing from sunny Nelson, Jane moved to Auckland to join the ASB team in 2008.  As Senior Economist, Jane's main focus is co-ordinating the team’s macro-economic forecasts.  In this key role, Jane was thrilled by the team’s twice consecutive win of the Consensus Economics Forecast Accuracy award.   

During her decade-long career in economic forecasting, Jane has gained a thorough knowledge of the New Zealand economy.  Her current focus is on New Zealand GDP growth, including both manufacturing and the construction sectors.  She has spent time forecasting most sectors of the economy, including inflation, trade, housing, labour and financial markets.

Prior to joining ASB, Jane honed her macro-economic forecasting skills at the Reserve Bank of New Zealand.  Jane is a qualified scarfie, attending Otago University and graduating with a Bachelor of Commerce in Economics with 1st class honours.  In 2014, she took a career break from ASB to travel the world and learn to snowboard.

Mark Smith

Senior Economist

Mark joined ASB in 2017, with over 20 years of public and private sector experience working as an economist in New Zealand and the UK.

His resume includes lengthy stints at ANZ and the Reserve Bank of New Zealand, and he has also worked at the Bank of England, HM Treasury and the New Zealand Transport Agency. Mark's areas of specialisation include interest rate strategy, macro-economic analysis and urban economics.

Born and bred in the Waikato, Mark studied at Waikato University where he graduated with a Master of Social Sciences, majoring in Economics.

Mark's key strengths are the ability to use his extensive experience, inquisitive nature, analytical ability, creativity and pragmatism to dig a little deeper and to deliver common sense solutions to tackle complex problems.

When not at work Mark likes to travel, keep fit and spend time with his friends and family.

Mike Jones

Senior Economist

Mike joined ASB in 2019 armed with almost 15 years of experience in applied macroeconomic and financial markets analysis.

Mike's career has been all about distilling the risks and opportunities of economic and financial market trends for business. Basically asking the "what does it all mean" question. Mike's enthusiasm and skill for drawing out practical, commercial insights from the murky world of economics has been honed over a relatively broad base of experience.

After spending the early part of his career on the tools at the Reserve Banks of both NZ and Australia, Mike had a lengthy stint at BNZ where he was NZ’s top-ranked currency strategist. His regular and topical macro research also saw him pick up several FX forecast accuracy gongs from Bloomberg.

Drawn in by the prospect of putting strategy into practice, Mike moved from Wellington to Auckland in 2013 to join Fonterra as GM Treasury Risk Management. In this role, Mike lead Fonterra’s macroeconomic research output, and was responsible for the strategy and execution of Fonterra’s foreign exchange, debt, and interest rate hedging programmes.

mike.jones@asb.co.nz