New Zealand’s widely-praised response to the initial wave of the COVID-19 pandemic led to Prime Minister Jacinda Ardern’s profile receiving a significant boost.
In the past year, our Trans-Tasman cousins have flown under the radar in Australia as the 2022 Federal Election grabbed a lot of media attention.
The New Zealand Budget was handed down on Thursday 19 May, which prompted me to compile a brief summary of relevant economic news from across the Tasman.
Employment: As of 31 March, total employment was 2.83 million, and unemployment was 94,000 (3.2% – unchanged from the December 2021 quarter). In the 12 months to April 2022, the largest increase in employment was recorded by professional, scientific, and technical services – up 7.7 % (13,674 jobs) followed by construction – up 6.6 percent (12,467 jobs).
By region, the largest relative gain in employment was recorded in Waikato – up 3.5%t (7,421 jobs), followed by Canterbury – up 3.2% (9,375 jobs) and then Auckland – up 3.1% (23,592 jobs).
Employee earnings: In the year to March 2022, average ordinary time hourly earnings increased to $36.18 (up 4.8 percent). Average weekly earnings (including overtime) for full-time equivalent employees (FTEs) also increased on an annual basis – up 5.7% to $1,406.
Inflation: New Zealand’s inflation has been growing consistently and more rapidly than Australia’s since June 2021.
New Zealand’s annual CPI inflation has recently reached a three-decade high of 6.9%, significantly higher than Australia’s 5.1%. Drivers of inflation are very similar on both sides of the Tasman, as the war in Ukraine and supply chain disruptions have seen transport costs, food costs and the price of new housing rise rapidly.
Debt: New Zealand’s Net Core Crown Debt to GDP is the highest it has ever been at $133.6 billion (36.9%) in 2022, compared to 37.5% in Australia, the UK (76.1%), and the U.S. (95.8%). The difference in budget-reported net debt (20.0%) and the actual total amount owed by the Government is due to the change from the previously used definition of net debt. The new debt measure Finance Minister Robertson has introduced, essentially halves the old debt measure.
Interest rates: The Reserve Bank of New Zealand has lifted rates four times since October 2021, with the official cash rate now sitting at 1.5% (up from 0.25% during the pandemic). The cash rate is now at its highest point since mid-2016. The RBNZ is expected to continue with aggressive rate increases across 2022 as inflationary pressure rises.
Housing: New Zealand’s tighter lending rules have made it harder for homebuyers to gain approval for mortgages from banks causing a mini-panic about the prospects for house prices. Auckland’s average house property value has fallen 2.2% or $34,000 over the past three months.
It’s the city’s third consecutive quarter-on-quarter decline
It was reported this week that one Auckland real estate agency recently cancelled five auctions the day before they were due to take place because no one had registered to bid on the homes. Property website OneRoof reports just 23.4 per cent of Kiwi homes going under the hammer last month sold during their auctions.
Two of New Zealand’s major banks – ASB and Westpac – are predicting house prices to fall by about 20 percent over the next 12 months.
Climate change: A new $2.9b Emissions Reduction Plan has been announced over four years, with strategies, policies and actions consistent with New Zealand’s 2050 emissions target.
Health: Health reforms totalling $13.2 billion across the next four years were announced in the most recent budget.
Population: New Zealand’s estimated resident population as of 31 March 2022 was 5,127,100, an increase of 19,200 (0.38 percent) across the previous 12 months.
The 19,200 population gain was made up of a natural increase (births minus deaths) of 26,400 and a net migration loss of 7,300. This migration loss was the lowest net migration for a March year since 2012.
Divorce: The family solidarity required by the COVID-19 lockdowns may have been responsible for a change in the commitment levels of marriages as only 6,372 divorces (6.2 divorces per 1,000 estimated existing marriages) were granted by New Zealand’s family courts in 2021, the lowest annual number of divorces since 1979. The divorce rate is similar to 1974 levels, when it was 6.4 divorces per 1,000 marriages.
I’ll be heading to Auckland later next month for a conference so I am looking forward to checking things out for myself.
Note: Prime Minister Ardern delivered the 2022 Harvard University Commencement Speech last Friday. It’s worth investing 27 minutes of your day to watch it.