Mike Jones: BNZ Chief Economist on GDP figures released today

An economist is predicting a gloomier number than the Reserve Bank from the latest GDP figure. 

Stats NZ data on GDP for the year's second quarter will be released today. 

The Reserve Bank's predicting a 0.3 percent drop. 

BNZ Chief Economist Mike Jones is a picking a 0.5 percent fall. 

He told Ryan Bridge economic growth is probably going to be slow for a while. 

Jones says it will probably be until next year that we see what can be classed as recovery. 

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Episode Transcript

Speaker 1 (00:00):
Back home GDP day today. Quarter two numbers do out
at ten forty five, most bank economists expecting a point
four drop, worse than the reserve reserve banks expected point three,
but optimism remains for a quarter three bounce back. Mike Jones,
B and Z Chief Economists, Morning, Mike, all right, you're
slightly more gloomy than the rest of the bank economists.

Speaker 2 (00:20):
Why a sliver more gloomy. Yeah, half percent decline is
what we're picking, not too far from the condensus, but
you know, when we add up all the numbers, that's
what we get. I think it's pretty clear that the
economy fell into a bit of a pothole in the
second quarter. We'll just get out from this morning's numbers exactly.

Speaker 1 (00:39):
How much, And obviously this is backwards looking. Do do
we expect quarter three will give us back what quarter
two taketh.

Speaker 2 (00:47):
Largely? Yeah, we think this is probably the low point.
We've actually just lifted our FUKA for the third quarter.
The quarter announced its two point seven percent. We've got
a few lumpy factors in Q two we think will
come out and help us in the current quorder. Gortible
pictures stabilized a little bit we've had more rate caps,
so those things should help restore a bit of go forward.

Speaker 1 (01:09):
How are you worrying other services set? The manufacturing numbers
that we've had.

Speaker 2 (01:15):
Not what we would have liked or perhaps expected. I mean,
if you've sort of looked through the trend in those
PMI and PSI numbers, it is still positive, but kind
of barely. There's not a whole lot of momentum there.
But it does seem like, generally speaking, a step back.
The numbers are tilting in a positive direction, but looks

(01:37):
like it's just going to take a little more time
before we're kind of properly back up and been growing again.

Speaker 1 (01:44):
The interesting piece on interest dot co us today is
saying that the December and March bumps that we saw
were more relief activity rather than the start of a
real recovery. Do you agree with that or do you
think that it was we were on the way and
then it was Trump and trade hitting sentiment and affecting everything.

Speaker 2 (02:04):
Yeah, look, there's possibly a bit of that. I think
there was some genuine growth happening. It's a two steps forward,
one step back sort of growth pattern. I think the
growth outlooks just relatively fragile. It's stops start because we
don't have blowing in our favor some of those things

(02:24):
that often help us in a recovery, things like rising
house prices and booming migration, extra governments spending, that sort
of stuff. So without that stuff, I think we're going
to stay in this sort of choppy still a recovery,
but a choppy back and forth, stop start sort of environment.

Speaker 1 (02:40):
Mike, the most important question on everyone's lips, especially Christopher
Luxon's when does your average household actually start to feel
like things are getting bit, like we're getting ahead.

Speaker 2 (02:52):
Yeah, I mean, that's the big question I think for us.
When we look at the outlook it's going to we
think until probably that the final quarter of this year,
for example, so Q four before GDP is back up
to that high watermark of the start of last year,
and at that time we're going to start to see,

(03:13):
we think, the unemployment rate start to turn down. It's
going to take some time, but that's when we might
think the labor market will start to turn I think
that's probably when households will start to feel a little
more confident and better about the economy. But there's no
doubt it's going to be probably well into next year

(03:33):
before it actually kind of feels properly, properly like a recovery,
all right?

Speaker 1 (03:38):
Might we live in hope? Thanks Mate and Mike Jones,
bean z Intief Economist.

Speaker 2 (03:42):
For more from earlier edition with Ryan Bridge. Listen live
to News Talks it'd be from five am weekdays, or
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