Two Americans emigrate to New Zealand from Colorado,
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If the behaviour of banks is being closely watched in the US as some sort of sign of how things are going economically, a story here today in New Zealand says that a recovery has been made, but things are still not back to where they were before all the pain started. Seems no different to everywhere else, even though I think we've not had as hard of times as the US or Greece or other parts of Europe. I guess it pays to be on an island in more ways than one.
Because I get asked a lot how New Zealand has been affected and how things are turning around 18 months after the worst, I'll spend some time this month (MAY) gathering news indicators to give people an idea of where we are now.
Banks yet to shake off global meltdown - SHORTENED FOR BREVITY
By Tamsyn Parker
First-half results for two of New Zealand's largest banks show the sector has made a recovery but is not back to where it was before the global financial crisis.
Westpac yesterday said its New Zealand business had made a net profit after tax of $125 million for the six months to March 31.
The result was down 38 per cent on the previous corresponding period but was more than triple the $34 million net profit Westpac made in the six months to September when its impairment charges blew out to $388 million.
The Westpac result follows that of the ANZ which last week reported an underlying profit of $372 million, nearly three times the $134 million it made in the prior six months but still down 25 per cent from a year ago.
Massey University senior banking lecturer Claire Matthews said "We are seeing a better reporting season for all the banks. That reflects the fact the New Zealand economy and the banking system was not as badly hurt as others," she said.
Westpac New Zealand chief executive George Frazis said he believed it would take two years before the banks got back to where they were before the global financial crisis and the local recession hit.
Westpac had gained market share in both lending and deposits and had continued to lend during the difficult economic conditions.
The bank had also expanded, opening five new community branches, increasing its front-line bank staff and upskilling existing staff.
Frazis said there was no doubt the market had turned for the better but he predicted a challenging 12 months ahead.
"There is no doubt New Zealand is back on the road to recovery. But it is still tough for customers."
This super long double sized blog continues the May theme of focussing on the New Zealand economy - this time on how the jobs and unemployment news is playing in our part of the world. There's no getting around it after last week's news:
Wow! - economists reel at jobless stats fall
said the headline from the 6 May New Zealand Herald. Read on for yourself but but but there is a 'but' at the end ... and even an 'and' too. SHORTENED FOR BREVITY.
New Zealand's unemployment rate has fallen dramatically from 7.1 per cent to 6 per cent during the March 2010 quarter, Statistics New Zealand said today.
This is the first fall in the unemployment rate since the December 2007 quarter in the Household Labour Force Survey, which is based on a representative sample of 15,000 New Zealand households.
The number of people unemployed dropped by 25,000 during the quarter, while the number of people employed grew by 22,000.
ASB Bank economist Chris Tennent-Brown was one of many surprised at the strength shown in today's job figures.
"To summarise in one word WOW!" he said.
"The New Zealand labour market has turned. In the first quarter the number of people employed increased by 22,000," he said. The "unequivocally strong labour market data" had now opened the way for the Reserve Bank to begin removing stimulus and lift the Official Cash Rate (OCR)
"We expected that the labour market would turn during Q1, but not but not as impressively as the survey showed," said Tennent-Brown.
"The 1.1 per cent drop in Q1 is the largest fall in the unemployment rate recorded since the survey began in March 1986, and the 1 per cent lift in the number of people employed is the strongest lift since June 2008's 1.2 per cent gain," he said.
Philip Borkin, economist at Goldman Sachs JBWere said he was "amazed" at the unemployment figures. "This morning's data clearly suggested the labour market was in a better position that first thought," he said.
"Not only has employment and hours worked turned the corner, but the unemployment rate fell sharply. While we still have concerns over the patchiness of the domestic economy, this (on top of Reserve Bank Governor Bollard's speech this morning) is difficult to ignore."
"I'm thrilled to see the first drop in the unemployment rate in two years," says Social Development and Employment Minister Paula Bennett.
Bennett said there were now 2,177,000 New Zealanders employed, up by one per cent, "the magnitude of which was unexpected".
She said New Zealand's 6 per cent unemployment rate compares to UK (7.8 per cent), Australia (5.3 per cent), Canada (8.2 per cent) and Ireland (13.1 per cent).
Khoon Goh, senior markets economist at the ANZ Bank took a more sceptical line over today's stats.
"The extreme volatility seen in recent quarters leaves us scratching our heads and raises many questions about the true state of the labour market," he said.
Forward indicators pointed to further improvement in employment ahead, which suggested the unemployment rates will continue to head lower, though Goh said he did not expect it to fall by the same amount seen in this latest quarter.
"Today's HLFS report surprised with a large fall in the unemployment rate. The 1.1 percentage point decline from 7.1 per cent to 6 per cent was the largest in the history of the survey," said Goh.
"Today's survey certainly raises many questions, and Statistics NZ did acknowledge that seasonal factors have played a more influential role than normal.
Be that as it may, we have to take the data as it comes."
I told you there was a but ... it affects our largest city with half the country's population.
Jobs boost misses out heartlands - SHORTENED FOR BREVITY
By Adam Bennett 7 May 2010 NZ Herald
New Zealand's recovery from recession was resoundingly confirmed yesterday with the biggest quarterly fall in unemployment ever recorded, but the strength of the improvement is yet to be enjoyed by Auckland's jobless or the Pacific Island community.
However the numbers suggest there was barely anything to celebrate for the Auckland region where the unemployment rate fell just one tenth of a percentage point from 8 to 7.9 per cent, although that figure had a margin of error of 0.9 per cent.
Unemployment continued to rise in Northland, Bay of Plenty, Manawatu-Wanganui and the Tasman/Nelson Marlborough/West Coast and Otago regions.
But the news was worst for Pacific Islanders whose unemployment rate rose from 14 to 14.4 per cent.
And I also mentioned an 'and' ... save the worst for last!
Big pay rises for bosses - SHORTENED FOR BREVITY
By Christopher Adams 7 May 2010 NZ Herald
Almost half New Zealand's chief executives received pay rises last year - with a median increase of 5 per cent - despite the worldwide recession and many workers enduring salary freezes.
A survey, released today, of 455 chief executives, general managers and managing directors found 48 per cent received a salary increase last year.
The percentage of bosses receiving pay rises was a big drop on previous years, but commentators are surprised the number was so high.
Less than 1 per cent of those surveyed had their pay cut, and the median increase for those who did get a raise was 5 per cent, down from 6.1 per cent in last year's survey.
The Moyle Consulting survey says the average chief executive is male, aged between 47 and 59, and has a median base salary of $200,000 and a $300,000 overall package.
Employers and Manufacturers Association chief executive Alasdair Thompson was surprised by the results of the survey.
"I would say those 48 per cent that got a pay rise were pretty lucky," he said. "I would have thought it would have been more like 25 per cent."
Shareholders Association chairman Bruce Sheppard said he was also surprised.
"I have no problem with CEO pay going up if they deliver on the performance criteria the board set for them, but I can't see too much rationale to increase base pay," he said.
Mr Sheppard said he could understand a board lifting a chief executive's base pay if other employees in the organisation were receiving salary levels that were creeping towards the CEO's rate.
"There are adjustments that are made, but 48 per cent in an economy that's flat - that surprises me. But I would have been equally surprised if it was zero."
The Moyle survey follows the labour cost index released this week, which showed 43 per cent of general workers received a pay rise in the year to March.
The median increase was 3.3 per cent - 1.7 percentage points below the chief executives in the Moyle survey.
Council of Trade Unions economist Bill Rosenberg said the surveys showed companies should be able to give pay rises to their workers.
"A lot have been saying 'we can't afford to' in these recessionary times ... . we would hope that they are treating their workers at least as well as they are treating the CEOs."
And there you have it, a snapshot of overall job and unemployment info. Take it all in!!
I seem to get questions about house prices more often than most - how much does home ownership cost, are house prices going down in this worldwide downturn, etc. Here's the latest on property prices and also on the building industry, often a bellweather for future growth.
Property prices, sales down in April
By Susie Nordqvist May 14, 2010, NZ Herald
Property prices and sales fell in April, but the New Zealand residential property market is holding steady, says Real Estate Institute of New Zealand president Peter McDonald.
REINZ's Monthly Housing Price Index for April, released this morning, fell by 0.4 per cent.
Compared to 12 months earlier, the index has risen by 6.2 per cent. Housing prices are now 3.7 per cent below their November 2007 peak.
In Auckland, housing prices in April were 6.8 per cent above those in April 2009 with housing prices in Christchurch (up 5.6 per cent), Wellington (up by 5.1 per cent), other South Island suburbs (up 5.6 per cent) and Other North Island suburbs (up by 3.4 per cent) also up from the year earlier levels.
Median house values fell $4500 to $356,000 in the month to April, while the median number of days to sell fose from 35 to 40.
The total value of residential sales, including sections, during April was $2.24 billion, a decrease on the March total of $2.73 billion.
In April 5207 dwellings were sold - down on the 6161 sold in March and 6210 sold in the same month last year.
Northland posted the biggest increase in the value of homes sold during April, jumping 10.4 per cent to $320,250.
Other regions to show growth were Auckland, up 8 per cent to $470,000 and Nelson/Marlborough, up 8.8 per cent to $339,500.
Southland posted the only negative change, with median prices in the district falling 2.63 per cent to $185,000.
The fastest sales were recorded in Auckland, with a median of 35 days to sell, ahead of Canterbury/Westland on 36.
To give you the latest exchange rate, the currency has been around .73c NZ to the US dollar, but in recent weeks with the Greek economic woes has fallen to a low today of .69c.
But a real look at property prices has to take into account investment property, because kiwis are heavy property investors. So many grab the greatest deal they can and turn it into a rental property as a savings mechanism for retirement.
NZ investors' love affair with property fades - SHORTENED FOR BREVITY
Tuesday May 18, 2010, NZ Herald
New Zealand investor confidence in rental property has cooled in the past three months, and the popularity of other investment classes is gaining momentum, according to the latest ASB Investor Confidence Report.
The 2010 first quarter report indicates that investor attitudes are changing as the recession fades and as speculation mounts about loss of tax breaks for property investors in Thursday's budget.
"Markets are gaining some stability and the doom and gloom of the recession recedes," said ASB head of investment services Jonathan Beale.
"All investment classes surveyed, with the exception of rental properties, shifted upwards in favourability as offering the best rate of return. Investors are now looking at a range of options to get the best returns they can on their capital. They are also more measured in their outlook."
This is reflected in investor confidence simmering down from record highs late last year. A net 23 per cent of investors are expecting a better rate of return over the next 12 months, a fall of seven points since the December 2009 quarter.
About 17 per cent of investors regard rental property as offering the best rate of return, though the gap over bank savings accounts and term deposits; both at 16 per cent, has shrunk.
Managed investments at 10 per cent, shares on 8 per cent and KiwiSaver's 6 per cent have all crept upwards as being favoured asset classes for better returns.
The survey reveals that current KiwiSaver usage is up two points to 37 per cent, the highest ever level recorded in the survey.
Happy house hunting!
Rounding out this month of focus on the NZ economy, we end with a few snippets from all over the spectrum - some good news, some not so good. Of course, it depends on who you are which is good or bad. And then there's the European crisis, which is having an effect here too.
The currency against the US dollar has tanked in the last week or two, losing about 8c and rebounding in the last few days a couple of cents. Ick if you want to buy in the US (so many Banana Republic sales I could have taken advantage of). But then it's also down against the euro and the yen and pretty much everything else.
One could argue that most NZ businesses are small businesses, I mean the major companies on the stock market here sell for a few dollars a share - the scale is waaayy smaller than what we're used to.
Business borrowing is not happening lately. Although the NZ Herald reported that business surveys point to firms intending to increase investment, there isn't any activity to prove that this is actually happening. Without business investment, we aren't really moving forward. Lending to farmers seems to be pretty regular, with agriculture being a good part of our economy; those small business farmers are doing their part.
It has taken just one month for the New Zealand sharemarket to wipe out the gains made since July last year. Enough said. Ugh.
You might have heard, if you're following, that income tax will be reduced come October - our third decrease since National took office 2 years ago. The only catch is you have to make NZ$48,000 or more to see any tax benefit. And even if you do ... WHAM, the biggest news in the last month or so is that GST is leaping from 12.5% to 15%. That's the Goods and Services Tax, like the VAT in UK and Europe - so lower income tax, more consumption tax. It feels like tax cuts for the rich and tax hikes to everyone including the poor. National has taken a couple of years to make their mark, now we see what we were expecting. More on GST to come.
The best news of all is that we have the Stanley Cup finals to watch, yay!! And there won't be any Detroit to suffer through, a couple of new teams have come through the wars. We're looking forward to a couple of weeks of good hockey - fingers crossed it goes to 7!!
