6th May 2010 BNZ Weekly Overview - This column is a plain English analysis of the Economy, Financial Markets and Interest Rates.  Some Good News. This week we are running our monthly confidence survey, so if you have the time please click on the link below and let us know if you think the economy will get better or worse over the coming year.

If time permits also pen a sentence telling us how things are in your particular industry at the moment specifying what that industry is.

http://survey.usuite.com/survey/7f801dd05f3742619b046cc119c15106.sur

Many thanks to those who replied to our interest rates survey last week. This morning we learnt that New Zealand’s labour market has improved even earlier than we were thinking – thus highlighting however our long-running warning that the labour market has the capacity to turn faster than people might think coming out of the recession. The unemployment rate has collapsed from 7.1% to 6% with 1% jobs growth during the March quarter. Yet we have also seen over the past week that the situation in Greece and wider Europe continues to get worse and it is unclear when and where the nadir for sentiment regarding the public sector debt situation will be reached. The longer it takes the greater the volatility likely in financial markets.

For some months now we have been reporting anecdotes from those in the recruitment sector that employers have been out again looking for people. And we have highlighted our expectation that labour shortages risk re-emerging far earlier than many people anticipate. This morning the quarterly Household Labour Force Survey data were released and they show a labour market in far better shape than anyone thought. Job numbers rose 1.0% during the quarter – 22,000 people, rather than firming just 0.2% as had been the common expectation. The unemployment rate dropped sharply back to 6% from 7.1% though this is still up from 5.1% a year ago.

Businesses Hiring But Reluctant To Build
In March the value of consents issued for the construction of non-residential buildings stood at $345m. This was a small gain from $332m in March last year but over the year to March values were down 5.1% while in the March quarter all up they were 17.7% below levels of a year ago. This sector of the economy, which usually accounts for about 3% of all economic activity (house construction is usually above 5%), never boomed ahead of the global financial crisis and our own recession so the pullback in activity has not been as spectacular as seen after the 1987 crash for instance. More>>

Interest Rates