August 5, 2025 • 6 mins
The latest unemployment statistics for New Zealand are due out tomorrow, and experts are divided ahead of the announcement.
Many are projecting the market will have deteriorated further, but some are hoping things would have picked up.
HSBC chief economist Paul Bloxham explains further.
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Speaker 1 (00:09):
You're listening to a podcast from news Talk zed B.
Follow this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
Paul Blocks from ahspc's chief economist, is with us evening,
Paul good A, what are you picking for our unemployment
number tomorrow?
Speaker 3 (00:26):
Well, our forecast is a little bit more optimistic than
the market, where forecasting that it might track sideways and
sort of stay roughly the same level that it was
at the last print, so just over five percent five
point one. We've got in mind that you might see
a little bit of positive employment growth and we'll just
see what the print manages to deliver.
Speaker 2 (00:47):
Why why are you more positive than others? Do you
think there's laborhooding going on? Or are you accounting for
the fact that a lot of people are just when
they lose their jobs here heading off to Australia.
Speaker 3 (00:56):
I think that actually the economy is in a modest
up swing. We saw it in the first quarter GDP print,
we saw it in the fourth quarter print from last year.
I think there are some forces at work that are
supporting theomy. You know, dairy prices have risen to very
high levels. You've got interest rates that have come down
it's not coming through all of the timely activity indicators
(01:18):
as yet, but we're of the view that it will.
And the labor market tends to lag everything. I mean,
that's the thing to really keep in mind, that the
labor market's one of the last things to actually see
any of that sort of momentum. So you see an
improvement and a sentiment to a degree, and then it
feeds through to a bit more activity and then the
hiring starts. So we're not looking for a strong result,
but we're looking for some sense that the labor market's
(01:40):
starting to find some stability.
Speaker 2 (01:43):
There is a bit of chat, renewed chat at the
moment about how the economy is fearing, and people are
getting pretty grountchy with the government because we're eighteen months
into our electoral term and we thought things would be
a little bit better. How do you see things kind
of playing out this time next year when we're at
election time.
Speaker 3 (02:00):
As I said, and we've talked about this before on
this program, that you know, we sit and look at
the big picture factors and say, actually, there are some
things out there, some big forces at work that should
be lifting the New Zealand economy and the primary ones
are that commodity prices are at high levels, dairy prices
are at higher levels. That's a really positive terms of
(02:20):
trade shock that's been delivered to New Zealand that you've
got a trade surplus at the moment. The agricultural sector
is doing quite well. Is really the short of it.
That tends to eventually feed through to activity in the
cities as well in terms of a bit more spending.
It just takes a bit of time for it to
feed through. And then the other big force that's going
to be helpful is that interest rates have already come
down by two hundred and twenty five basis points, and
I think as people start to realize that there's not
(02:42):
that perhaps not that much more easy to come through,
they'll start to roll off their five year fixed rate
mortgages and then to choose to do a bit more spending.
And so we've got both those forces sort of in
mind when we're thinking that growth is actually going to
have a bit of positive momentum running into the second
half and into next year. Yeah.
Speaker 2 (03:00):
So at the moment, obviously the consumers are not feeling great.
There are worries about inflation expectations, you know, the expectation
is it will take up again. Do you think that
will just dissipate as we start to feel little bit
better about things.
Speaker 3 (03:12):
I think the primary driver of the lifted inflation has
been things that are sort of short term factors. Food
prices have risen a bit, and I think you've seen
that come through as you're describing into inflation expectation surveys.
But I think the other force at work on the
inflation front is going to be a trade diversion. So
you know, the global trade developments are going to lead,
(03:32):
we think, at least to China needing to export a
lot more of its manufactured goods to other markets that
aren't the US. And one of one of the features
is going to be that we're going to see more
manufactured goods showing up in Australia and New Zealand. And
we think that's going to be something that puts downward
pressure on inflation in the coming quarters, over the coming period,
(03:54):
and so that should sort of start to dissipate some
of the inflation pressures a bit and give people a
bit more spending power.
Speaker 2 (04:00):
So do you think come this time next year we
are feeling better off like materially better off enough to
want to re elect this slot.
Speaker 3 (04:08):
We should be the New Zealand economy should be in
an up swing. That's what we think, and I think
you know the other way to square it away would
be if you don't get quite as much of an
upswing and the inflation numbers do start to come down, well,
then the Arbyenz may very well have more scope to
lower interest rates for them. I mean, we've only got
one more cut in for the Rbenz in our central case,
(04:30):
but if it turns out the economy's weaker, they've got
more scope to lower to lower things, to lower rates.
I think you know that's going to be Those are
going to be the two forces at least we've got
that we've got in mind will lift it and lift
the economy running into next year. Yeah.
Speaker 2 (04:44):
Were you surprised to see the fifteen percent tariff slept
on New Zealand.
Speaker 3 (04:48):
I think we were all watching and waiting to see
what the Trump administration was going to deliver. It's very
difficult to pick what the numbers are going to be
out of the administration, but I guess it is quite
interesting that fifteen percent New Zealand got a fifteen percent.
Australia ended up with a ten percent, and so that's
that's been an interesting feature, but it was very difficult
to predict what those numbers will go to be. Like,
(05:09):
I mean, the key feature we're pointing out is both
countries have actually got you know, comparatively low tariffs into
the US, and both countries have a fairly limited exposure
in terms of their direct sales into the US market anyway.
So we are countries that are mostly tied to the
growth story in Asia, and what happens in China matters
(05:30):
more than you know, what happens in the US in
terms of the growth story for Australia and for New Zealand,
and China's got more scope to pull leavers and they
are delivering more incremental support for their growth. So that
should mean that, you know, I think the biggest effect
on Australia and New Zealand is actually going to be
the disinflationary impulse, the inflation coming down because we get
lots of cheap manufactured goods showing up in our markets
(05:53):
over the coming period.
Speaker 2 (05:54):
Not half bad, hey, Paul, as always really appreciate talking
to you. Thank you, Paul Bloxham agspecies chief Economist.
Speaker 1 (05:59):
For more from News Talk sed B, listen live on
air or online, and keep our shows with you wherever
you go with our podcasts on IR Radio
You're listening to a podcast from news Talk zed B.
Follow this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
Paul Blocks from ahspc's chief economist, is with us evening,
Paul good A, what are you picking for our unemployment
number tomorrow?
Speaker 3 (00:26):
Well, our forecast is a little bit more optimistic than
the market, where forecasting that it might track sideways and
sort of stay roughly the same level that it was
at the last print, so just over five percent five
point one. We've got in mind that you might see
a little bit of positive employment growth and we'll just
see what the print manages to deliver.
Speaker 2 (00:47):
Why why are you more positive than others? Do you
think there's laborhooding going on? Or are you accounting for
the fact that a lot of people are just when
they lose their jobs here heading off to Australia.
Speaker 3 (00:56):
I think that actually the economy is in a modest
up swing. We saw it in the first quarter GDP print,
we saw it in the fourth quarter print from last year.
I think there are some forces at work that are
supporting theomy. You know, dairy prices have risen to very
high levels. You've got interest rates that have come down
it's not coming through all of the timely activity indicators
(01:18):
as yet, but we're of the view that it will.
And the labor market tends to lag everything. I mean,
that's the thing to really keep in mind, that the
labor market's one of the last things to actually see
any of that sort of momentum. So you see an
improvement and a sentiment to a degree, and then it
feeds through to a bit more activity and then the
hiring starts. So we're not looking for a strong result,
but we're looking for some sense that the labor market's
(01:40):
starting to find some stability.
Speaker 2 (01:43):
There is a bit of chat, renewed chat at the
moment about how the economy is fearing, and people are
getting pretty grountchy with the government because we're eighteen months
into our electoral term and we thought things would be
a little bit better. How do you see things kind
of playing out this time next year when we're at
election time.
Speaker 3 (02:00):
As I said, and we've talked about this before on
this program, that you know, we sit and look at
the big picture factors and say, actually, there are some
things out there, some big forces at work that should
be lifting the New Zealand economy and the primary ones
are that commodity prices are at high levels, dairy prices
are at higher levels. That's a really positive terms of
(02:20):
trade shock that's been delivered to New Zealand that you've
got a trade surplus at the moment. The agricultural sector
is doing quite well. Is really the short of it.
That tends to eventually feed through to activity in the
cities as well in terms of a bit more spending.
It just takes a bit of time for it to
feed through. And then the other big force that's going
to be helpful is that interest rates have already come
down by two hundred and twenty five basis points, and
I think as people start to realize that there's not
(02:42):
that perhaps not that much more easy to come through,
they'll start to roll off their five year fixed rate
mortgages and then to choose to do a bit more spending.
And so we've got both those forces sort of in
mind when we're thinking that growth is actually going to
have a bit of positive momentum running into the second
half and into next year. Yeah.
Speaker 2 (03:00):
So at the moment, obviously the consumers are not feeling great.
There are worries about inflation expectations, you know, the expectation
is it will take up again. Do you think that
will just dissipate as we start to feel little bit
better about things.
Speaker 3 (03:12):
I think the primary driver of the lifted inflation has
been things that are sort of short term factors. Food
prices have risen a bit, and I think you've seen
that come through as you're describing into inflation expectation surveys.
But I think the other force at work on the
inflation front is going to be a trade diversion. So
you know, the global trade developments are going to lead,
(03:32):
we think, at least to China needing to export a
lot more of its manufactured goods to other markets that
aren't the US. And one of one of the features
is going to be that we're going to see more
manufactured goods showing up in Australia and New Zealand. And
we think that's going to be something that puts downward
pressure on inflation in the coming quarters, over the coming period,
(03:54):
and so that should sort of start to dissipate some
of the inflation pressures a bit and give people a
bit more spending power.
Speaker 2 (04:00):
So do you think come this time next year we
are feeling better off like materially better off enough to
want to re elect this slot.
Speaker 3 (04:08):
We should be the New Zealand economy should be in
an up swing. That's what we think, and I think
you know the other way to square it away would
be if you don't get quite as much of an
upswing and the inflation numbers do start to come down, well,
then the Arbyenz may very well have more scope to
lower interest rates for them. I mean, we've only got
one more cut in for the Rbenz in our central case,
(04:30):
but if it turns out the economy's weaker, they've got
more scope to lower to lower things, to lower rates.
I think you know that's going to be Those are
going to be the two forces at least we've got
that we've got in mind will lift it and lift
the economy running into next year. Yeah.
Speaker 2 (04:44):
Were you surprised to see the fifteen percent tariff slept
on New Zealand.
Speaker 3 (04:48):
I think we were all watching and waiting to see
what the Trump administration was going to deliver. It's very
difficult to pick what the numbers are going to be
out of the administration, but I guess it is quite
interesting that fifteen percent New Zealand got a fifteen percent.
Australia ended up with a ten percent, and so that's
that's been an interesting feature, but it was very difficult
to predict what those numbers will go to be. Like,
(05:09):
I mean, the key feature we're pointing out is both
countries have actually got you know, comparatively low tariffs into
the US, and both countries have a fairly limited exposure
in terms of their direct sales into the US market anyway.
So we are countries that are mostly tied to the
growth story in Asia, and what happens in China matters
(05:30):
more than you know, what happens in the US in
terms of the growth story for Australia and for New Zealand,
and China's got more scope to pull leavers and they
are delivering more incremental support for their growth. So that
should mean that, you know, I think the biggest effect
on Australia and New Zealand is actually going to be
the disinflationary impulse, the inflation coming down because we get
lots of cheap manufactured goods showing up in our markets
(05:53):
over the coming period.
Speaker 2 (05:54):
Not half bad, hey, Paul, as always really appreciate talking
to you. Thank you, Paul Bloxham agspecies chief Economist.
Speaker 1 (05:59):
For more from News Talk sed B, listen live on
air or online, and keep our shows with you wherever
you go with our podcasts on IR Radio
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