NZ Economic Outlook. 15 July 2015 Felix Delbruck Westpac. Page 1

Transcription

1 NZ Economic Outlook 15 July 215 Felix Delbruck Westpac Page 1

2 Overview The construction outlook The dairy downturn Interest rates and exchange rates The housing market Page 2

3 Gauging the Canterbury rebuild Component Infrastructure Public projects Undercap repairs Residential, commercial Current pace Source SCIRT CERA, MBIE EQR Insurance council Building work, consents data Page 3

4 Rebuild forecasts 1,5 1,25 1, $m $m Source: Westpac Westpac forecast Residential Commercial Infrastructure 1,5 1,25 1, Page 4

5 Building consents, Canterbury 3 $m $m 3 25 Residential (left axis) Commercial Source: Statistics NZ Page 5

6 Population growth (five year forecasts) Thousands Five years to Thousands Source: Statistics NZ Auckland Waikato Wellington Other Canterbury Other North Is South Is Page 6

7 Average people per dwelling Page 7

8 Annual net immigration 15 1 s Net (right axis) Arrivals Departures s Westpac forecast Source: Statistics NZ, Westpac Page 8

9 Building consents, Auckland 3 $m $m 3 25 Residential (left axis) Commercial Source: Statistics NZ Page 9

10 Thousands Construction outlook (212 dollars) 35 3 $bn Canterbury rebuild Ex-rebuild construction Westpac forecast $bn Source: Statistics NZ, Westpac Page 1

11 Thousands Change in construction spending (212 dollars) 3 $bn Westpac forecast $bn Source: Statistics NZ, Westpac Canterbury rebuild Ex-rebuild construction Page 11

12 What s going on in dairy markets? The Chinese economy Global milk production Quotas, sanctions, weather Milk powder stocks Page 12

13 Changes in WMP volumes, tons Source: USDA, Westpac Consumption Production China NZ EU US Argentina Brazil China Aust Page 13

14 Export commodity price outlook 45 index index Meat and wool Dairy Forestry Source: ANZ, Westpac Page 14

15 Terms of trade New Zealand and Australia 2 index Westpac forecasts index New Zealand Australia Source: Statistics NZ, Westpac Page 15

16 Business and consumer confidence 8 net % positive Index Consumer Business (left axis) Source: NZIER, Westpac McDermott Miller Page 16

17 Vehicle registrations passenger and commercial 22, vehicles vehicles 5, 2, 18, Passenger cars (left axis) Commercial vehicles (right axis) 4,5 4, 16, 3,5 14, 3, 12, 2,5 1, 2, 8, 1,5 Source: NZTA 6, Jan-7 Jan-8 Jan-9 Jan-1 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 1, Page 17

18 Inflation forecasts %yr Inflation target band Headline inflation Ex-petrol Westpac forecast %yr Source: RBNZ, Statistics NZ, Westpac

19 Cash rate forecasts 9 8 % Westpac forecast Source: RBNZ, Westpac Mar- Mar-4 Mar-8 Mar-12 Mar-16 1 Page 19

20 NZD and commodity prices, inflation-adjusted NZD/USD NZD/USD (left axis) Commodity price index (right axis) index Source: RBNZ, ANZ, Westpac Page 2

21 NZD/USD and NZD/AUD 1..9 Source: RBNZ, Westpac NZD/USD NZD/AUD Westpac forecast Page 21

22 Drivers of New Zealand s economic growth 213/14 215/16 215/16 217/18 Other construction Migration x Employment growth x Canterbury rebuild? x Export prices x x? Interest rates Page 22

23 The housing market Page 23

24 Index = 1 at peak Index = 1 at peak House prices, regions of New Zealand Auckland Wellington Canterbury Other North Island Other South Island Source: REINZ, Westpac Page 24

25 Annual change in rents, regions of NZ 6% 5% 4% Auckland NZ ex Auckland and Canty Canterbury 6% 5% 4% 3% 3% 2% 2% 1% 1% % % -1% % Page 25

26 Explanations of Auckland house prices Explanation Supply shortages Construction costs Low interest rates Cashed-up foreigners Problem Rents up just 2.6%yr Not rising enough Low everywhere The jury is out Speculation but why? Page 26

27 Components of rise in Auckland valuations, 211 to 214 5% 45% 4% 35% 3% 25% 2% 15% 1% 5% % Land Value increase Improvement Value increase Page 27

28 House price inflation, year to May 215 (QVNZ) 2 15 % % 18% 18% 17% 16% 15% % 1% Rodney District North Shore City Waitakere City Auckland City Manukau City Papakura District Franklin District Page 28

29 Annual net immigration 15 1 s Net (right axis) Arrivals Departures s Westpac forecast Source: Statistics NZ, Westpac Page 29

30 Working-age population growth by region 4 3 % Auckland Other North Island Other South Island % Canterbury Source: Statistics NZ Page 3

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33 Fonterra distribution of payout $m Source: Fonterra Retrospective payments Current payments Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Page 33

34 New Zealand GDP growth (annual average) % % Westpac forecast Source: Statistics NZ, Westpac Page

35 Average hourly earnings (adjusted for inflation) 3 % % Source: Statistics NZ, Westpac Page 35-2

36 Construction costs New dwelling price index Auckland NZ ex C&A Source: Statistics NZ, Westpac Page 36