Archive | Indicators

Auckland readymix production slips

Statistics NZ’s quarterly calculation of ready-mixed concrete production shows a small slowdown nationally over the last 12 months and a bigger slowdown in Auckland.

The concrete statistics are an indicator of construction activity.

There’s been a switch from concrete to steel framing for some major construction, including the Commercial Bay downtown project being undertaken by Precinct Properties NZ Ltd, but readymix’s main role is in domestic & smaller commercial construction.

Statistics NZ produces metropolitan area & regional statistics for concrete use in Auckland, and the metropolitan area shows a bigger decline.

For the 4 quarters to March 2018 compared to the previous 12 months, readymix production nationally fell 0.32% to 4070m³ (4084m³). For the Auckland region, production was down 4.8% to 1428m³ (1488m³) and, for the metropolitan area, it was down 6.3% to 990m³ (1057m³).

Comparing just the 2 March quarters, the falls were 4.99% nationally to 913m³ (961m³), 8.35% for the region to 318m³ (347m³), and 7.4% for the metropolitan area to 225m³ (243m³).

Auckland’s share of national readymix production also fell for the year, to 35.1% (36.4%) for the region and to 24.3% (25.9%) for the metropolitan area.

National production rose in the June & September quarters last year, but Auckland regional & metropolitan production fell in all 4 quarters compared to a year earlier.

Attribution: Statistics NZ.

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Dickens alleges business confidence surveys contain major political bias

Independent economist Rodney Dickens said in his first Ravings with Rodney column for the year the business confidence surveys which lead political & economic direction “have major political bias”, and backed that up with charts & statistics.

Mr Dickens, who runs his own company, Strategic Risk Analysis Ltd, wrote: “The ANZ business survey has gone AWOL again. Unfortunately, the bank economists – and therefore the media – haven’t focused enough on the massive political bias that currently overwhelms the results of the survey and make it a poor input into business & investment decisions.

“The NZIER business survey has been corrupted less by political gamesmanship, but some components have become poor leading indicators, while even the most useful component is under a cloud.”

In his Raving column, Mr Dickens put the 2 main components of the ANZ & NZIER surveys “in context which is critical for assessing whether much, if any, weight should be put on them in making business & investment decisions.

“When what were once useful leading indicators can’t be relied on, it increases the importance of having access to quality analysis of economic and housing prospects as input into business and investment decisions. Our driver-based approach to forecasting, that is supported by educated interpretation of the leading indicators rather than blind faith in indicators that have gone AWOL, should be a must-have for any businesses & investors wanting to make informed & profitable decisions.”

What Dickens found

“Based on the ANZ business confidence survey, the economy is heading for a recession (ie, negative gdp growth), with significantly more firms negative than positive (left chart). Based on the ANZ own activity survey, near-term prospects for annual gdp growth aren’t so bad, but growth should slow to below 2% over the first half of this year (right chart).

“When these surveys tumbled in November after the election outcome was finalised, the results were reported as if there was a significant threat to economic growth. For example:

NZ Herald, 30 November 2017: Business confidence tumbles to 8-year low in November
Stuff, 30 November 2017: Slump in business confidence poses ‘material risk’ to economy

Mr Dickens didn’t blame the journalists for reporting the survey results verbatim: “They lack the resource & maybe knowhow to back-test the reliability of the surveys. Consequently, they rely on the bank economists to provide the appropriate interpretation, which is a mistake.

“The headlines should have read: “Businesses again hijack survey to make political protest” & “Survey greatly overstates economic risks from the change in government”.

Mr Dickens said these surveys were useful indicators of near-term economic growth prospects before 2002.

He said the NZIER survey “hasn’t been corrupted as much by political gamesmanship: Thankfully the commentary by the NZIER principal economist regarding the falls in many components of the NZIER quarterly business opinion survey was more balanced. This has in turn largely been reflected in the media commentary on the results of the December quarter survey.”

Note: Red & blue lines across the foot of each graph denote periods of government: Labour (red), National (blue).

NZIER, 16 January 2018: NZIER’s quarterly survey of business opinion shows businesses more pessimistic after the election
Stuff, 16 January 2018: Business confidence drops, with fewer expecting to hire or invest, 16 January 2018: NZIER business opinion survey shows the usual fall in confidence after a Labour-led government takes office, effect of election on actual business activity muted

Mr Dickens took issue with what he said was “still a lack of supporting analysis to put the NZIER December quarter results in context. And in my assessment there hasn’t been enough focus on political gamesmanship; instead, like the commentary accompanying the ANZ November & December surveys, the initial focus was on ‘uncertainty over new government policies’.”

He said the NZIER business confidence survey “has, like the ANZ business confidence survey, become much less useful as a leading indicator of economic growth since 2002. As the NZIER principal economist goes on to point out, it has generally had a negative bias while Labour governed and a positive bias while National governed, although this has only been the case after 2002.”

Rodney’s Ravings (entry by free subscription)

Attribution: Rodney’s Ravings.

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Dickens to provide more regional economic research

Economist Rodney Dickens’ Strategic Risk Analysis Ltd will produce quarterly Regional barometer reports from April.

Mr Dickens said yesterday the Regional Barometer reports would:

  • provide advance warnings of upturns & downturns in the number of consents for new dwellings, the number of existing dwelling sales and existing house prices for each region covered, and assess the likely magnitudes of upturns & downturns
  • assess whether the region will significantly outperform or underperform the national experience in the 3 areas listed above in the year ahead
  • assess regional consumer spending prospects and provide a range of background information particularly relevant to the performance of residential building, and
  • assess which city or cities & major districts within the region are likely to significantly outperform or underperform the regional experience in the year ahead.

Mr Dickens founded Strategic Risk Analysis in 2006 after 5 years at ASB Bank, which included being group strategist & head of research. He’s been a member of the Reserve Bank’s monetary policy committee and researched international interest rate behaviour at the Bank of England in London.  He’s also been chief economist at one New Zealand commercial bank and New Zealand head of research at 2 international investment banks.

Link: Strategic Risk Analysis

Attribution: Company release.

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NZIER says data points to recovery slowdown

Published 31 August 2010

NZ Institute of Economic Research principal economist Shamubeel Eaqub said today local & global data made it plain the recovery was slowing.


“There is sufficient momentum &stimulus in the economy to avoid a repeat recession, but the economy will be soft in the next 6 months. Households remain cautious with spending, net migration will slow further and non-residential construction work is now running dry.”


The details are in NZIER’s September quarterly predictions, which contain forecasts covering the next 5 years.


“We remain less optimistic than other forecasters. Businesses should review their risk exposures, investment & hiring plans accordingly. We expect economic growth of 2.2% in 2010, but it will slow to 1.2% in 2011 before rebounding to 2.9% in 2012. This reflects a weak patch in late 2010 & early 2011. Our view reflects a cautious attitude from households & businesses, slowing net migration and an impending slump in non-residential construction. Other forecasters on average expect growth of 2.6% in 2010, 3.2% in 2011 & 2.7% in 2012.


“For retailers, it will feel like a recession for some time. Retailers should plan for a disappointing pre-gst-hike spend-up & Christmas shopping. Households remain cautious and are making do with less than before the recession. A slow recovery in jobs & wage, and debt repayment will dampen spending for some time. Impending food price increases and other one-off costs will offset the personal tax cuts for the lower half of income earners.


“The non-residential construction sector is at the precipice of a collapse. Work usually lags consents by a year – a year ago the level of consented floor area fell by a third. This alone may put around 20,000 construction sector jobs at risk.


“Businesses are not yet ready to pay higher wages or invest in new capital & employees. Profit margins are skinny and business borrowing continues to contract – indicating that a very low official cashrate has not yet encouraged investment in the economy.


“The Reserve Bank will pause in raising interest rates, given near-term growth risks and distant inflationary pressures. Interest rates for households & businesses are much higher than the official cashrate or wholesale interest rates. This is strangling the recovery and there is little growth in borrowing. We expect the Reserve Bank to keep the official cashrate at 3% until March 2011, and then gradually increase to 5.5% by early 2012. Rates may rise earlier in 2011 if the recovery strengthens.”


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Attribution: NZIER release, story written by Bob Dey for the Bob Dey Property Report.

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Indicators report sets scene, doesn’t list easy comparisons

Published 6 January 2008

The Government’s Economic indicators report, released on 19 December, “shows New Zealanders have a good quality of life and our economy is improving faster than the OECD average,” Economic Development Minister Pete Hodgson said.


The report is a joint publication from the Ministry of Economic Development, Treasury & Statistics NZ. It updates & expands the 2 previous reports published in 2003 & 2005.


It’s not a document that lists easily compared pluses & minuses, but collates a large amount of information on New Zealand’s economic performance – high-level outcomes like economic growth and also the underlying factors like innovation & investment that drive growth.


Its official authors, the heads of the 3 Government entities, said: “The main purpose of the reports is to inform future economic policy, promote informed debate and provide a basis to engage with people over the direction of the New Zealand economy. The indicators also provide a basis to measure New Zealand’s performance over time & against other countries.”


Mr Hodgson said: "Under the Labour-led Government, our economy has been stronger for longer than at any point since the end of the Second World War, but we are ambitious to keep improving in areas such as labour productivity, national & household savings rates, innovation and research & development.


"The report is encouraging in that it shows income levels (gdp/head) have begun to slowly increase relative to the OECD average, after decades of decline. Much of this recent growth is due to near-full employment rather than productivity, which is still not sufficiently strong.


"On most of the things that are important for growth, the report says we are either keeping up with the OECD or improving relative to them. For example, it shows a relatively good level of entrepreneurial behaviour, improving skill levels, high rates of labour utilisation and a recent improvement in business investment."


The 2007 report contains new indicators covering wellbeing & prosperity, regulation & tax policy and infrastructure, and 2 new chapters – one looking at Auckland as an international city and another comparing New Zealand’s performance to that of Australia & its states.


Mr Hodgson said: "Our growth performance has been around the middle of the Australian states over the last decade or so and, while more New Zealanders are moving to Australia, the net outflow is similar to that experienced by some states to other parts of Australia."


He said the Government was addressing many of the issues the report raises through a number of initiatives: “As the report points out, these initiatives have not yet had time to impact on the picture the report presents. These include Kiwisaver, the R & D tax credit and the latest range of initiatives to advance the economic transformation agenda."


Websites: Economic development indicators report 2007

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Attribution: Government release, report, story written by Bob Dey for this website.

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