Andrew Kelleher: JMI Wealth Spokesperson on positive news for the manufacturing sector, inflation expectations

It's good news for the manufacturing sector. 

Business BNZ performance of manufacturing index shows an upward of 0.7 points.

JMI Wealth Spokesperson Andrew Kelleher says it's a strong indicator that recovery is underway for manufacturing. 

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Episode Transcript

Speaker 1 (00:00):
Right from Ji Wealth. Andrew Kello A very good morning.

Speaker 2 (00:03):
Good morning, Mike.

Speaker 1 (00:03):
So the good news. Let's start with the good news
manufacturing as opposed to consumer confidence, which isn't up. Manufacturing
is up.

Speaker 3 (00:10):
It is hey before we do that, though, fifteen dollars,
that's what the warriors are paying to win the whole thing.
Fifteen bucks, Sharks, panthers, bulldogs and stormer in front of them.

Speaker 2 (00:21):
What do you reckon?

Speaker 1 (00:21):
What are the bulldogs paying?

Speaker 2 (00:23):
Not sure, I think, but they're all bout, they're all less.

Speaker 1 (00:26):
Fifteen is not bad, not bad. With a shout, Andrew.

Speaker 2 (00:30):
Anyway, let's talk manufacturing.

Speaker 3 (00:33):
This is also going to start the week on a
positive note because last week we had some sort of
softish starter like things like cards spending that was a
bit weaker than we thought. So we've got the green
shoots that we're not really following through with the spending.
There was a number of companies who've been commenting on
week discretionary spending migration was a bit soggy than we thought,
and then Fletcher Building that the restructure at the end
of the weekend. In their comments, they said there is

(00:54):
a lack of any material momentum in the recovery of
New Zealand's economies. So that was a little bit of
a downer, but manufacturing is not. I mean a year
ago it was looking pretty sick. But if we look
at the Business New Zealand B and Z performance of
manufacturing headline number fifty three point nine up point seven
of a point. That is an uptick in an already
expanding sector. So you've got four months in a row

(01:15):
of expansion. And I look into the subcategories production, new orders, employment,
all in positive territory. As I said, a year ago
or not even a year ago. Last June, this indext
at forty one point four, So we've got a really
good indication that there is a manufacturing recovery.

Speaker 2 (01:32):
We can't ignore that.

Speaker 3 (01:34):
I sort of tend to agree with a bit of
a view out there that there's an underlying issue now
is whether we can sort of sustain these little pockets
of momentum that we do have. You know, AGRI looks
good and manufacturers looking good. But Mike, I think global
events do seem to potentially play a big role in
that whether or not we can keep that momentum going
because we've got you know, you've got the concerns around

(01:56):
a US recession, you got concerns around the impact of
global trail tariffs are not but on an international comparison
we look good. JP Morgan global manufacturing PMI is at
forty nine point one. Now, admittedly the global sort of
tariff uncertainty that'll be impacting these larger manufacturing economies to
a fire great extent than US, but at fifty three

(02:18):
point nine we're looking pretty good on a global comparison
at the moment.

Speaker 1 (02:21):
Yeah, I reckon. Now, these inflation expectations are so that's bad.
But within the band, so does that negate that or not?

Speaker 2 (02:28):
Well, I think there will be. This is potentially a
little bit of concern for the RBNZ.

Speaker 3 (02:32):
So on Friday, the RBNZ released there may survey of expectations,
and inflation expectations have picked up right across the all
of the time horizons, So specifically, one year has gone
from two point one five to two point four one,
two years has gone from two point oh six to
two point twenty nine. So you're right, they're not massive moves,
still in the one to three percent band, but they're

(02:54):
sort of heading the wrong way in the year's time.
Respondents also expect the OCI to be at.

Speaker 2 (02:58):
Two point nine one per cent of one. That seems reasonable.

Speaker 3 (03:01):
Look, it's just not a good sign that inflation expectations
are lifting. I think this will be noted by the
rbnzed Monetary Policy Committee.

Speaker 2 (03:09):
They'll also have to weigh up what I was.

Speaker 3 (03:12):
Talking about before, the headlines, the concerns around the tariff
global tariff landscape, and I think that will have played
on these responses. But Mike, you look at that selected
price and those selective price indexes last week. Those outcomes
there suggest that inflation will creep up this year. It'll
get into the high twos, it'll be closer to three.
And I think you, look, there is the chance that

(03:32):
this will elicit some caution on the OCI. Moves from
the abbey and said, the good thing, Mike, is on
twenty eight the May, next week, we'll get.

Speaker 2 (03:40):
An answer to this. We'll potentially get an answer.

Speaker 1 (03:42):
We will double A plus A.

Speaker 2 (03:44):
Yeah, yeah, very quickly.

Speaker 3 (03:45):
US federal government credit rating A change seems dramatic, doesn't it.

Speaker 2 (03:49):
But this is Moody going from triple A to double
A plus.

Speaker 3 (03:52):
But that just moves Moody in line with the other
credit agencies I mean Fitch down grade at the US
and twenty twenty three S and P of BENI since
twenty eleven, but the downgrade reflects the increase over more
than a decade in government debt, interest and payment ratios
to levels that are significantly higher than similar rated sovereigns. Look,
it's not it's it's not the end of the world,

(04:12):
but it is sort of a pointer that they've got
to do something about that deficit.

Speaker 1 (04:16):
You cannot live beyond your means, no ever, our numbers please.

Speaker 2 (04:21):
Yeah, So a good week last week, a good week.

Speaker 3 (04:23):
The recovery from sort of April the ninth continues. The
Dale Jones was up three hundred and thirty two points
forty two thousand, six hundred and fifty four.

Speaker 2 (04:32):
That's over three coars.

Speaker 3 (04:34):
Of percent, the S and P five hundred gain forty one,
closing the week just under six thousand, five nine five eight.
That was up point seven percent, and the Nasdaq also
up half a percent ninety eight points nineteen thousand, two
hundred and eleven forty one hundred up point five nine
percent eight six eighty four. The Nike vich I changed
three seven seven five four. Shanghai Composite was down point

(04:56):
four percent three three six seven. The Aussie's gained point
b five six percent forty six points eight three four
to three on the A six two hundred and then
sex fifty actually fell to close the week ninety four
points point seven three percent four twelve thousand, seven hundred
and eighty six.

Speaker 2 (05:11):
We're starting the week with.

Speaker 3 (05:12):
Kimi dollar at point five eight seven seven against the
US point nine one four seven against the ossie point
five to six five euro point four four one two
pounds eighty five point five in Japanese yen gold three thousand,
two hundred and four dollars, and oil finished the week
last week at sixty five dollars and forty one cents.

Speaker 1 (05:29):
Go well, have a good week and we'll catch up
next time. Andrew kellerhead Jomiwelth dot co dot nziit he's
im sure for the rest of the week. For more
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