Latest / Best of Business / Liam Dann: NZ Herald Business Editor on the GDP rising 0.8% in the March quarter

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Liam Dann: NZ Herald Business Editor on the GDP rising 0.8% in the March quarter · Best of Business

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  Speaker 1: You're listening to a podcast from news Talk zed B.
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  Speaker 1: Follow this and our wide range of podcast now on iHeartRadio.
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  Speaker 2: Just released stats in z data. As I said before,
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  Speaker 2: the news shows JUDP has risen zero point eight percent
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  Speaker 2: in the three months to March, the third consecutive quarter
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  Speaker 2: of positive growth. But before you pop the fake prosecco
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  Speaker 2: or the real champagne, that was before Donald Trump and
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  Speaker 2: Iran in the strength of Amar's Economics Editor at Business
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  Speaker 2: editor at large, Liam Dan joins me, Now, Hi not
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  Speaker 2: really caused to break up the champagne?
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  Speaker 1: Is that?
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  Speaker 2: Well?
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  Speaker 3: No, it is so historic, isn't it. It's not only
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  Speaker 3: before Donald Trump started the war. It's sort of like
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  Speaker 3: now we've now we've actually he's allegedly hopefully stopped it,
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  Speaker 3: so I don't.
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  Speaker 2: Know, at least around talking to him.
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  Speaker 3: But yeah, yeah, I mean, it's the old definition of
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  Speaker 3: happiness is banging your head against a wall and then
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  Speaker 3: stopping It's but it's important that we count up all
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  Speaker 3: the activity in the economy and see how we're going.
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  Speaker 3: And it takes a long time to do that and
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  Speaker 3: to do it accurately. There's even revisions typically to this
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  Speaker 3: with the two month lag.
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  Speaker 2: Well, again, what's the point Yeah, well.
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  Speaker 3: I mean, I guess the question is really what would
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  Speaker 3: be more about what's the point of, you know, getting
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  Speaker 3: too excited about it. It's it's important for the economists
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  Speaker 3: to see where how we're how we've been tracking, so
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  Speaker 3: we know we can have a go at guessing where
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  Speaker 3: we might be going. This is pretty good. There was
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  Speaker 3: some economists who thought it might have been a bit better.
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  Speaker 3: So zero point eight percent growth for the quarter. The
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  Speaker 3: range of picks was between zero point seven and one,
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  Speaker 3: so you know, it wasn't just sort of absolute knock
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  Speaker 3: it out of the park growth, but there was you know,
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  Speaker 3: after you know, zero point five and December there was
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  Speaker 3: some real hope. I was talking about green shoots. Things
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  Speaker 3: were looking promising, momentum was building, so manufacturing was really strong.
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  Speaker 3: One point nine good. Yeah, that is good. But I
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  Speaker 3: can tell you that we do they do a monthly
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  Speaker 3: performance of Manufacturing index, and that's gone negative again in
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  Speaker 3: the second quarter, so that possibly didn't last through the
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  Speaker 3: shock of the oil prices and things. The construction sector, well,
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  Speaker 3: we knew that was in a slump, and that's what's
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  Speaker 3: dragged down a bit. That was off by about almost
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  Speaker 3: a percent I think, or a whole percent down that has.
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  Speaker 2: Been down for about three years.
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  Speaker 3: Yeah, well it's pretty rough. Residential has started to pick
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  Speaker 3: up a bit as they but non residential construction we've
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  Speaker 3: seen that stay very downbeat. I guess that you know
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  Speaker 3: that there's talk that the developers have got smarter. There's
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  Speaker 3: a lot of money on the sidelines. You know. You
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  Speaker 3: rather than boom and completely bust, you go things sort
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  Speaker 3: of boom and then you dial back on the construction
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  Speaker 3: as you see the economy is struggling, and then the
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  Speaker 3: money's waiting to sort of come in because it takes
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  Speaker 3: about two years to get a commercial building up and
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  Speaker 3: running for eighteen months or more, so they should have
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  Speaker 3: been coming back in about now, and perhaps some of
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  Speaker 3: the bigger ones might be, but I think some of
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  Speaker 3: the others have just thought, well, we'll hold off a
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  Speaker 3: little bit longer because they want their buildings to be
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  Speaker 3: going out to get rented out when the economies, when
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  Speaker 3: the economic cycles stronger. So they're hoping that would presumably
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  Speaker 3: be sometime from next year.
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  Speaker 2: Are they waiting for house prices to improve as well?
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  Speaker 3: Law, I think on the residential side, not so much.
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  Speaker 3: I think We've seen a lot of multi unit building
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  Speaker 3: consents going through. They're still going through a really high numbers.
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  Speaker 3: And I guess if you're knocking down one old house
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  Speaker 3: and putting eight units on it, you can still make money.
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  Speaker 3: So I think that's still happening probably.
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  Speaker 2: Yeah.
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  Speaker 3: So so residentials held up, it's been the commercial, the
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  Speaker 3: office space, retail space. Obviously number of you know, struggling
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  Speaker 3: retailers out there. So that's that's where it's been slow,
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  Speaker 3: and that's a big part of Auckland's economy and one
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  Speaker 3: of the reasons that Auckland's been feeling a bit rougher
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  Speaker 3: than other parts of the country. I think it.
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  Speaker 2: Really is, it really is lagging behind, isn't it. Who
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  Speaker 2: are the manufacturers who are doing so well? Because gosh,
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  Speaker 2: when you think about the price of firing up the
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  Speaker 2: great big industrial you know, machines they have, what are
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  Speaker 2: they making and who are they selling it?
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  Speaker 3: Well? The reality the manufacturing in this country includes a
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  Speaker 3: lot of agricultural manufacturing and agricultural goods and things as
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  Speaker 3: well as actually processing meat and stuff. So when that's
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  Speaker 3: booming and processing dairy and all that sort of stuff,
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  Speaker 3: So manufacturing food so that it has been booming because
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  Speaker 3: the export prices have been good. As we know, everyone's
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  Speaker 3: all the media has been down to field days and
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  Speaker 3: seen the happy farmers. Yeah, and so that has been strong.
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  Speaker 3: And look, I mean, although I think the manufacturing index
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  Speaker 3: went negative in the second quarter, I'm still dare I
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  Speaker 3: say it optimistic day that there is so much pent
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  Speaker 3: up demand in this economy. People have been waiting for
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  Speaker 3: a recovery for at least three years. I'd say, fine, probably,
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  Speaker 3: but we know that, you know, twenty twenty four, like
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  Speaker 3: the economists are expecting it in the second quarter, didn't happen.
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  Speaker 3: Twenty twenty five, tariffs happened, and in the recovery we
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  Speaker 3: are hoping for it didn't happen, and then we had
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  Speaker 3: this war, in this oil shock. I just feel like
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  Speaker 3: if there's a stable bit from here, there's oil prices
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  Speaker 3: already back to seventy eight US dollars a barrel, which
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  Speaker 3: isn't as low as it was before the war, but
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  Speaker 3: is roughly the average of the last five years. So
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  Speaker 3: it's not you know, it's not a particularly high oil price. Now.
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  Speaker 3: I know, there's all sorts of complicated reasons why it'll
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  Speaker 3: take ages to build up the oil stocks, and the
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  Speaker 3: petrol companies will tell you there's a whole bunch of
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  Speaker 3: reasons why the price is the pump isn't going down
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  Speaker 3: quite that fast. But I still think that's going to
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  Speaker 3: really lift people. I think there was a lot of
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  Speaker 3: that Oil shock was really just a blow to confidence.
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  Speaker 3: People thought, oh the uncertadey, we were talking about petrol
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  Speaker 3: running out and diesel that's right.
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  Speaker 2: It all got those honestly, with so many chicken lickens gosh.
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  Speaker 3: Yeah, yeah, there was a lot of a lot of
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  Speaker 3: gloom and I was always reasonably hopeful that the markets
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  Speaker 3: would sort it out, and they kind of have kept
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  Speaker 3: things rolling. They've they've managed. We didn't see oil go
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  Speaker 3: to two hundred dollars a barrel, honestly, go to four
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  Speaker 3: or five dollars.
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  Speaker 2: And now we've got the Aussies getting grumpy because because
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  Speaker 2: of the billions that was spent on the topping up
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  Speaker 2: the subsidy for fuel prices.
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  Speaker 3: Yeah, so the government's been pretty pretty cautious about here,
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  Speaker 3: and that's proved to be the right move. I think,
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  Speaker 3: you know, we wanted to make sure that, if anything,
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  Speaker 3: the response was just people driving less and being cautious
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  Speaker 3: with them how they were using their fuel and price
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  Speaker 3: is a good way to signal people to do that.
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  Speaker 3: I think that happened a bit. But actually, sadly, I
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  Speaker 3: think what probably happened was people had to drive as
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  Speaker 3: much as they had to drive, and it was other things.
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  Speaker 3: So the retailers and the hospitality guys have copped it
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  Speaker 3: again as people have delayed spending or going out to
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  Speaker 3: sort of make up for that sort of thirty thirty
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  Speaker 3: dollars a week or whatever the extra they had to
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  Speaker 3: put in the tank. So hopefully that money's coming back
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  Speaker 3: into the pockets pretty soon.
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  Speaker 2: Is the economy going to come right in time for
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  Speaker 2: the election so that national can say, see what we did,
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  Speaker 2: everything's better.
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  Speaker 3: It's never going to come right in the sense that
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  Speaker 3: everybody's going to be happy and saying aren't you know,
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  Speaker 3: there are structural reasons why the economy isn't going to
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  Speaker 3: be sort of an amazing sort of Irish or a
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  Speaker 3: Poorian success story in the near future. But the cycle
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  Speaker 3: could well start to turn before the election. But that's
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  Speaker 3: you know again, that gets you get economists and people
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  Speaker 3: like me saying, oh, look, it's starting to look good.
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  Speaker 3: It doesn't mean everybody in New Zealand's feeling it. And
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  Speaker 3: that's the tough job for a prime minister or anyone
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  Speaker 3: in the government now, just to sort of find that
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  Speaker 3: balance between trying to tell you know, you don't want
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  Speaker 3: to go out there and tell people, look, it's great
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  Speaker 3: now you're having a great time, because if they're not
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  Speaker 3: feeling that, it tends to backfire.
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  Speaker 2: Well, that's exactly what happened. I remember the Prime minist
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  Speaker 2: and here when we did start to see things, he said, honestly,
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  Speaker 2: things are so much better. I said, they're not for
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  Speaker 2: the people who are feeling it. They're really not that.
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  Speaker 3: That's right. So yeah, it'll be interesting. I mean again,
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  Speaker 3: that means it becomes a sales job, doesn't it.
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  Speaker 2: Yeah, it does.
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  Speaker 3: You have to believe that things are moving in the
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  Speaker 3: right direction.
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  Speaker 2: And you know, economics is a lot about confidence, isn't it.
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  Speaker 3: A whole lot about commonfidence? You know, the you know,
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  Speaker 3: if you think about it being the economy being made
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  Speaker 3: up of individuals who spend money on a new fridge
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  Speaker 3: or a new or you know, can you get by
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  Speaker 3: with that oven, with the where one element's not working
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  Speaker 3: for a bit longer, it's my house, Yes, you probably can,
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  Speaker 3: or you think, oh, no, I get something nice. And
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  Speaker 3: the same with businesses. You know, you might think, oh,
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  Speaker 3: I've seen the opportunity here. You know, I could expand
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  Speaker 3: could take on another another staff member. But you know,
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  Speaker 3: when something like that oil shock happens and you just
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  Speaker 3: aren't sure about what your cash flow is going to be,
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  Speaker 3: it's it can be a huge decision, and so that
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  Speaker 3: puts you off. But look, as I say, I think
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  Speaker 3: the economy, there are a lot of businesses out there,
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  Speaker 3: a lot of people out there have an upgraded their oven,
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  Speaker 3: a lot of businesses out there who have got great
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  Speaker 3: ideas and plans for expansion that have been on hold.
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  Speaker 3: So if we can get that confidence back into the economy,
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  Speaker 3: if we get a sense that even if it's not
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  Speaker 3: incredible growth that's suddenly making us all rich. But if
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  Speaker 3: we're moving in the right direction and it looks like
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  Speaker 3: we're going to continue to move in the right direction
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  Speaker 3: for the foreseeable future, like a year or something like that,
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  Speaker 3: that starts, it sort of builds on itself. And that's
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  Speaker 3: honestly what's been missing in the economy for almost as
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  Speaker 3: long as we've been talking and coming in here and
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  Speaker 3: talking about it.
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  Speaker 2: Absolutely Amen, And you.
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  Speaker 3: Have to go. There was a time, wasn't there.
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  Speaker 2: I mean I was just trying to remember the last
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  Speaker 2: time we were all joyous. Anyway, Thank you so much.
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  Speaker 2: Business Editor at New Zealand Heralds, Business Editor at large,
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  Speaker 2: Business editor at large for the entire that does Liam Dan,
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  Speaker 2: Thank you very much
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