Shane Solly: Harbour Asset Management expert on the latest economic data revealing things are still shrinking

New data suggests New Zealand's economic turmoil is far from over.

New economic data from Stats NZ prompted BNZ to increase its estimate of the size of the contraction in the economy in the three months to the end of June.

Harbour Asset Management expert Shane Solly explained further.

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Episode Transcript

Speaker 1 (00:00):
Now Shane solely harbor asset management is with me right now?
Has Shane?

Speaker 2 (00:03):
And I hear that?

Speaker 1 (00:04):
Okay, So the latest economic data suggests we're still going
a bit backwards, are we.

Speaker 2 (00:09):
Yeah, Look the beings of businesses on performance of services next,
it fell to forty seven point five for the month
of August, down from forty eight point nine last month
in July. I'm remembering that measure below fifty that means
the activity is sling. This August number is actually the
eighteenth month in a row of contraction. So the unicator
suggesting the economy is still contracting in the third quarter

(00:30):
recovery struggling to gain momentum. So maybe not enough features.

Speaker 1 (00:35):
Maybe not enough. And what about the Chinese economic data,
what's that saying?

Speaker 2 (00:40):
Yeah, unfortunately another mess, you know, wasn't massive mess, but
it's again a trend where we're seeing the Chinese economy
and not really reacting to some of the similars that'
spent and out studio in the years and thus trual
output for August it was up five point two percent.
That's a year on year that was lower than expectation
of five point six. The fixed investment rows half a

(01:00):
percent year and year estimate was one and a half
and August resale sales were up three point four percent.
Estimate was three point next so miss miss miss not
surprising if we did see some more similars from Chinese authorities.
They have got this GDP target for the full year
of five percent, so their economic growth target is five percent,
and they'll probably try and get there with some stimulus.

Speaker 1 (01:22):
Now, what are you expecting from the feed Reserve later
this week?

Speaker 2 (01:26):
So yeah, it's a big week for central banks. We've
got four central banks talking this week. The big one,
of course, is the US Federal Reserve. That precision is
out on Thursday morning, zell in time. The current rate
is four point twenty five to four point five in
the USA A range. The market's very confident it's going
to be a zero point twenty five cut to our
four to four point two five range. In fact, ninety

(01:47):
three percent probability heither of that being priced and the
other seven percent the balance that's actually for our half
a percent fifty basis point cut. And mister Trump's come
out this morning is zell in time, and so he's
expecting a big cut. Guess is the percent and when
we look at what's set me in with the economy,
there is some slowing down and confidence, so perhaps there
is a bit of similars needed. And certainly the other

(02:09):
thing we've got to think about is capital markets have
run quite hard in the expectation of raatcut, so there's
always the quantum of the move and the commentary will
influence things. Then backing them, we'll got the Bank of Canada,
Bank of England and Bank of Japan out lady this week.
Bank of Canada probably cut as well, given their economy
is being hit by terraffs.

Speaker 1 (02:27):
Yeah, now, a whole bunch of company news here in
New Zealand. What caught your eye?

Speaker 2 (02:32):
Yeah, look, it was actually lots of little nuggets today
Pacific ch this is the producer by the cancer detection tests.
They have a little bit of a win one of
the US regulators saying, hey, well, look we're going to
consider covering insurance for some of their tests. Stop price
went up twenty four percent. A long way to go
there in that process, but it's a good step. Spark
some more changes in the leadership team to get to

(02:53):
their f y thirty ambitions. And what she didn't really
help sparks she placed down over the one point three
percent Aukland Airport. Bit of an improvement there in traffic. They'
who are two percent increase in the inertial passengers in
August for the month and they're actually seeing some bigger
aircraft coming on here there's a five percent increase in
the aircraft that she brought us up one. Maybe you've
got a little bit of a boost from the New
Zealand government seventy million events boost, tourism boost and baby

(03:16):
two and then finally we had literacy, general contact energy.
The August operating steps were but better than expected, higher gifteneral,
higher hydro lake production. So she probably stored down one
percent on the day, so but better in general across
the board.

Speaker 1 (03:32):
Because St Shane thanks so much running us through at
Shane solely harbor asset management.

Speaker 2 (03:36):
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