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GDP- What does the 1.1% increase actually mean · The SME Stream

• 0:00
  Speaker 1: Well back here. The latest DUDP figures show the New
• 0:02
  Speaker 1: Zealand economy grew one point one percent in the September quarter.
• 0:06
  Speaker 1: The rebound follows a fall in June. So what are
• 0:09
  Speaker 1: we to make of the latest data? Economist Brad Olson
• 0:12
  Speaker 1: is here. Hey, Brad, thanks for being with us this morning.
• 0:14
  Speaker 1: A bit bit of economic Christmas chair after a lot
• 0:17
  Speaker 1: of gloomy forecasts. Is this quite significant in your opinion?
• 0:22
  Speaker 2: Well?
• 0:22
  Speaker 3: Look, it certainly starts us on a better track. I
• 0:24
  Speaker 3: think we've got to be realistic. It's not an immediate
• 0:27
  Speaker 3: and sort of overwhelming bounce back in the economy in
• 0:30
  Speaker 3: terms of the recovery rarely rolling on. We know that
• 0:33
  Speaker 3: economic activity, yes, was up one point one percent in
• 0:37
  Speaker 3: the September quarter. That follows a one percent drop though
• 0:40
  Speaker 3: in the June quarter, So we're sort of more back
• 0:42
  Speaker 3: to where.
• 0:42
  Speaker 2: We were towards the start of this year. Not a
• 0:45
  Speaker 2: bad place to be.
• 0:46
  Speaker 3: We've filled in some of the hole, but we certainly
• 0:48
  Speaker 3: haven't got the economic motor fully running underneath.
• 0:51
  Speaker 2: The surface though.
• 0:52
  Speaker 3: I think that's where you see again a few more
• 0:54
  Speaker 3: signs of better or improvements four twenty twenty six, The
• 0:58
  Speaker 3: likes of durable spin, so longer term stuff on electronics
• 1:02
  Speaker 3: and similar that picked up for household So that does
• 1:05
  Speaker 3: look like there's a little bit more momentum beneath the surface.
• 1:08
  Speaker 2: But we're certainly not wanting to overplay it just yet.
• 1:11
  Speaker 1: Yeah, I mean the ben Zetas said we need to
• 1:14
  Speaker 1: remain skeptical and it's quote more noise than signal. Is
• 1:19
  Speaker 1: that fair in your opinion or is that, you know,
• 1:22
  Speaker 1: overstating it.
• 1:24
  Speaker 3: I think we do have to remain skeptical. I mean,
• 1:26
  Speaker 3: let's be clear that the GDP figures have been bouncing
• 1:29
  Speaker 3: around a lot the last couple of quarters that have
• 1:31
  Speaker 3: been big ups, big down downs, big ups again, so.
• 1:34
  Speaker 2: There is a lot of volatility.
• 1:35
  Speaker 3: And if there's one call for next year, I really
• 1:38
  Speaker 3: hope that we have not only better economic times, but
• 1:41
  Speaker 3: sort of more reliable, stable economic times. You know, having
• 1:45
  Speaker 3: a bit more confidence in what's going to happen in
• 1:47
  Speaker 3: the economy is important for businesses when it comes to
• 1:50
  Speaker 3: you know, investment decisions, hiring decisions, and getting jobs back.
• 1:54
  Speaker 3: But I don't know if i'd say it's more sort
• 1:56
  Speaker 3: of noise than signal, because looking at some of the
• 2:00
  Speaker 3: figures you do see again a bit more of a
• 2:02
  Speaker 3: pickup in some of.
• 2:03
  Speaker 2: The important areas.
• 2:04
  Speaker 3: You saw a lift in the likes of business investment
• 2:07
  Speaker 3: in infrastructure spending. You've seen again better export numbers in
• 2:11
  Speaker 3: some areas. So looking at those, I think it's hard
• 2:14
  Speaker 3: to sort of ignore them and say, well, look, let's
• 2:16
  Speaker 3: throw up our hands and say we've got no idea
• 2:18
  Speaker 3: what's happening with the economy. Yes there's a bit of volatility,
• 2:21
  Speaker 3: Yes it's a little bit all over the place, but
• 2:23
  Speaker 3: looking below the headline figures and that sort of jumpiness,
• 2:27
  Speaker 3: you do start to see a little bit more activity.
• 2:30
  Speaker 2: And the thing that I guess was pleasing to see in.
• 2:33
  Speaker 3: The figures is that there was a bit more broadness
• 2:35
  Speaker 3: to the economic recovery. In that September quarter, you saw
• 2:39
  Speaker 3: I think fourteen of the sixteen industries that STATSN said
• 2:42
  Speaker 3: measures all of those fourteen increased. Only two of them
• 2:46
  Speaker 3: then decline. So it wasn't that you had three that
• 2:48
  Speaker 3: were boosting away and the rest that were middling.
• 2:51
  Speaker 2: You had sort of fourteen that were doing a little
• 2:53
  Speaker 2: bit more than average.
• 2:54
  Speaker 3: And so that level of I guess restart is helpful
• 2:58
  Speaker 3: as we head into the area head But again, if
• 3:01
  Speaker 3: you look at the likes of New Zealand with that
• 3:03
  Speaker 3: sort of one percent down one point one percent up.
• 3:05
  Speaker 2: Compared to our Australian cousins.
• 3:07
  Speaker 3: Who sort of had you know, zero point six then
• 3:09
  Speaker 3: point four percent growth, they are a little bit more consistent,
• 3:13
  Speaker 3: and again that's just helped their momentum get going a
• 3:15
  Speaker 3: bit quicker.
• 3:16
  Speaker 1: Yeah, right, So what sectors exactly sort of continue to struggle?
• 3:20
  Speaker 1: If you know, obviously manufacturing performed pretty well. Where are
• 3:25
  Speaker 1: we struggling still?
• 3:27
  Speaker 3: You've seen a few areas that have are still not
• 3:29
  Speaker 3: performing quite as strongly. The biggest decline in the September
• 3:33
  Speaker 3: quarter was in the information, media and technology.
• 3:36
  Speaker 2: Sort of area, and I think that's sort of just.
• 3:38
  Speaker 3: A combination of Again at the moment, everyone's a little
• 3:41
  Speaker 3: bit sort of cautious about how much money is going
• 3:44
  Speaker 3: into some of those other.
• 3:46
  Speaker 2: Sort of sectors of the economy.
• 3:47
  Speaker 3: But even the likes of manufacturing and construction they did
• 3:51
  Speaker 3: see a bit of a boost in the September quarter.
• 3:53
  Speaker 2: They're still not running great compared to.
• 3:55
  Speaker 3: Where they could have been, say, two years ago, but
• 3:57
  Speaker 3: again that little bit of momentum is starting to show through.
• 4:01
  Speaker 3: And I think if you look at the likes of construction.
• 4:04
  Speaker 3: There was a lift in particular that infrastructure area, which
• 4:07
  Speaker 3: I think has been an area that we expected to
• 4:10
  Speaker 3: get going the likes of residential and non residential construction.
• 4:13
  Speaker 3: A bit of a boost for some of those parts
• 4:15
  Speaker 3: in the short term, but again not running at sort
• 4:18
  Speaker 3: of the highs they were three years ago.
• 4:20
  Speaker 2: And that's like, yes, the challenge right.
• 4:22
  Speaker 3: When we've looked at the figures for the September quarter,
• 4:25
  Speaker 3: they were better than June, which was a bit affected
• 4:27
  Speaker 3: by the Trump tariff announcements. They were better than the
• 4:30
  Speaker 3: September twenty twenty four quarter, but that was also influenced,
• 4:34
  Speaker 3: of course by the energy price shops that.
• 4:37
  Speaker 2: New Zealand saw at that time.
• 4:39
  Speaker 3: All of this is highlighting that we haven't as an
• 4:41
  Speaker 3: economy yet found what the new economic normal looks like,
• 4:45
  Speaker 3: what's the Goldilock zone, because we really don't have a
• 4:47
  Speaker 3: good reference point, and so it's a bit tough to
• 4:49
  Speaker 3: say with the economy. It's better than last year, you'd hope,
• 4:52
  Speaker 3: So at this point it's not as good as when
• 4:55
  Speaker 3: you know, inflation was running gangbusters, but I don't really
• 4:57
  Speaker 3: want to go back to that point either, and so
• 4:59
  Speaker 3: the fear for twenty twenty six. Is you want the
• 5:01
  Speaker 3: momentum to tick up to enough of a pace that
• 5:04
  Speaker 3: jobs start to get going, that investment keeps moving, but
• 5:07
  Speaker 3: not so much that you then start to overheat the economy,
• 5:10
  Speaker 3: because we've already seen those thoughts around interest rates needing
• 5:14
  Speaker 3: to rise, so there's a little bit of tempering all
• 5:16
  Speaker 3: of that. You want better economic growth. You don't want
• 5:19
  Speaker 3: it to become a runaway train.
• 5:21
  Speaker 1: Yeah, absolutely, we don't want it to become a runaway train.
• 5:24
  Speaker 1: Brad Olson, thank you very much for joining us and
• 5:27
  Speaker 1: joining us on many occasions at sea. Merry Christmas, and
• 5:30
  Speaker 1: we always appreciate your analysis.