Shane Solly: Harbour Asset Management spokesperson on BNZ's performance of services index staying below 50

BNZ’s performance of services index - which measures sentiment across services firms - was up 3.9 points to 44.6 in July from a rock-bottom level of 40.7 in June.

While it’s better than June it’s still a very low result - a result below 50 indicates activity is contracting for the fifth straight month.

Harbour Asset Management's Shane Solly explains how this adds to the proof that the Reserve Bank needed to cut the OCR.

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Episode Transcript

Speaker 1 (00:00):
Got more evidence the Reserve Reserve Bank did make the
right call in cutting the OCR Last week, BNZ Performance
of Services indexes out was up almost four points to
forty four points six in July. Shane Solely from Harbor
Asset Management has been looking at these numbers for us.

Speaker 2 (00:13):
Hey Shane, Yeah, hey, now.

Speaker 1 (00:15):
It's still under fifty, so it's still contracting, right.

Speaker 2 (00:18):
That's right, And I think this is a really important
thing here. We're still actually well below where we were
in the GFC and I think a lot of people
if they know that when they see it out in
the streets. But we've readly got a lot of work
to do here. There was a little bit of life
in the measure, so the recovery in terms of the
activity and sales measure and actually a little bit of
pick up in new orders. But this is still suggesting

(00:38):
the economy is continuing to decline and the Reserve Bank, well,
they need to keep moving with those cuts.

Speaker 1 (00:45):
And we've had a start to the August profit reporting
season on the market today. What do you make of it?

Speaker 2 (00:50):
Yeah, a couple of interesting results. So two beats, two
beats against the expectations and one mass and the two
beats Contact Energy and freightways slightly better. Obviously Contact Energy
literacity generator. They're hanging on to their balance sheet. They're
talking about focusing on future investment and infrastructure to support
growth and demand. Freight ways not a bad result, but

(01:12):
cautious about the outlook the next six months, but suggesting
maybe as these rate cuts come through they see a
bit of recovery. But really for them it was Australia
was there when the clanger. The real disappointment was atm
MIL missed expectations. The stock price was actually down nineteen
percent at one stage, and the management team really quite
conservative about sales demand, particularly into China. With this unfortunate

(01:38):
we haven't seen a real boost in terms of infants
being born in the Year of the Dragon against expectations,
and really just actually a shortage of formula supply and
some higher cargo costs, particularly air freight, so a few
things really pushing back on expectations of a recovery and
demand and Margin's. Yeah, tough day for a tow. The

(02:00):
stock has actually been really strong into this, so little
bit of the market perps getting ahead of itself.

Speaker 1 (02:06):
Oh what else are we expecting to see in terms
of profit results for the rest of the week.

Speaker 2 (02:10):
Yeah, busy week here that this week we've actually got
fifteen companies Tomorrow, we've got Mercury Energy Wednesday, Ebos, Fletcher Building,
Sky TV Thursday, Auckland Airport, Genesis, Sky City Friday, Channel Infrastructure,
the old ENZI Refining inside X, the Stock Exchange, Port
of Tower on A Spark, New Zealand, and Winton, which
is the real estate developer.

Speaker 1 (02:30):
Yeah, and not only that, we've got a whole bunch
of data coming out this week. What are you looking for?

Speaker 2 (02:34):
Yeah, look, I think econ I look wise tomorrow, we've
got the ARII and Z house sales for July and
that's important because we are we see a turning point.
But I think US politics and economic data come back
to the fray again. Either we're certainly investors have been
watching this US Democratic National Conference starts tomorrow. Is there
any sort of policy announcements that come through that are different, challenging?

(02:57):
And then later in the weekend, buses are going to
switch their force to the US Federal Reserve Jackson Hole Symposium.
And that is about whether our friend mister J. Powell,
Chair of the USC Reserve, actually starts to talk about
we're going to cut rates again here assuming the inflation
data is supporting that.

Speaker 1 (03:14):
Yeah, Shane, thank you very much, Really appreciated that. Shane Solly,
who's with Harbor Asset Management. For more from Heather Duplessy
Allen Drive, Listen live to news Talks.

Speaker 2 (03:23):
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