ATA GLANCE
Momentum across the labour market has pushed the number of jobs beyond preCovid levels. There were about 2.24 million filled jobs in April, up more than 2.5 per cent from April last year. The Treasury is now forecasting unemployment will edge up from 4.7 per cent in the three months to the end of March to 5.2 per cent this quarter and peak at 5.3 per cent in the September quarter, before gradually dropping back to 4.2 per cent in three years. It had previously forecast that unemployment would peak much higher, at 6.8 per cent during April to June next year.
The
economy swung back into recovery in the three months to the end of March, with GDP jumping 1.6 per cent despite Auckland’s alert level 3 lockdown and the lack of international tourists. That is much stronger than the 0.8 per cent rise expected by economists, and significantly ahead of the 0.6 per cent drop picked by the Reserve Bank.
The consumer price index rose 0.8 per cent in the three months to the end of March, up from 0.5 per cent in the December quarter and in line with banks’ expectations but shy of the Reserve Bank’s 1 per cent forecast. It leaves annual inflation marginally higher at 1.5 per cent, versus 1.4 per cent for the year to December. The Reserve Bank is tasked with keeping inflation within 1 to 3 per cent over the medium term.
Household living costs rose 0.9 per cent in the three months to the end of March compared with the December quarter last year. Costs rose faster for beneficiaries, up
1.1 per cent, and for Ma¯ori, up 1 per cent.
Factory activity has expanded every month this year, hitting a high in March and remaining elevated through April and May. The BNZ-Business NZ Performance of Manufacturing Index touched 63.6 in March, and sat at 58.3 in April and 58.6 in May, ahead of the long-term norm of 53.1. A reading above 50 indicates expansion. Factories are struggling to keep up with higher demand due to difficulties in getting raw materials, with added problems of freight costs, shipping, labour and project delays.
Home-building consents hit 42,848 in the year to April, a record. Economists expect building activity will remain strong over the next year but the longer term outlook for the construction sector is more clouded as policy changes are expected to dampen prices, and population growth plummets due to the border closure. An inability to source building materials during supply chain issues combined with pent-up demand poses big challenges.