0 The good news continues unabated

Commercial motor vehicle sales are a very good indicator of business confidence. So we reckon business confidence must be at a pretty good level right at the moment; Scoop Business reports:

Best Month Ever for Sales of Light and Heavy Commercial Vehicles

David Crawford, Chief Executive Officer of the Motor Industry Association says “The strong New Zealand dollar, competitive pricing and New Zealanders confidence that the economy is heading in the right direction have all combined to help drive sales of new vehicles skywards as records continue to fall.”
“June sales of 12,519 new passenger and commercial vehicles is up 17% on June 2013 and 14% YTD on this time last year. Registrations of 4,002 new commercial vehicles for the month of June were phenomenal, not only being the strongest June sales since the MIA began collecting records for commercial vehicles in 1981, but the strongest month of any monthly commercial sales”.
There were 8,517 passenger vehicles sold during June, up 975 units (13%) on June 2013.
Year to date registrations of passenger vehicles is 4,550 units (11%) ahead of 2013.
Commercial vehicle registrations of 4,002 units were up 821 units (26%) on June 2013.
Year to date registrations of commercial vehicles is 3,134 units (21%) ahead of June 2013, reflecting a continued strong market for commercial vehicles.

This, in combination with a record Labour Force Participation Rate as at the end of March is yet another sign that businesses are optimistic about the direction New Zealand is headed in economically. Economic growth is strong, and forecast to remain strong, unemployment is forecast to drop to around 4.5% and business owners have the confidence to invest in their businesses.

The economy is humming along, despite the best efforts of Labour and the Greens to talk it down. A change of government on 20th September would run the risk of the economic recovery being stopped in its tracks, and that is the last thing New Zealand needs.

0 Bubble? What bubble?

Apparently, the New Zealand economy is a bubble about to burst. Well, that's what a lone "expert" thinks, but his views have been swiftly dismissed; Stuff reports:

The Government is playing down predictions published by powerful US business magazine Forbes that New Zealand is on the path to economic disaster.
Economic analyst Jesse Colombo yesterday labelled New Zealand's economy a bubble which will pop devastatingly.
The current housing bubble was creating a mortgage bubble, he said, with almost half of outstanding mortgages currently having floating interest rates.
Rising interest rates would eventually pop this bubble, banks would experience losses on their mortgage portfolios, "the country's credit boom will turn into a bust" and over-leveraged consumers will default on their debts, Colombo said.
"Not only is New Zealand's banking system dangerously exposed to the country's property and credit bubble, but so is the entire economy."
Acting Finance Minister Steven Joyce last night dismissed 28-year-old Colombo's theories as "alarmist" and described him as a "bubble-ologist".
"His view on life is that the whole world is pretty much in a bubble and there's no place he doesn't pick on," Joyce said. "I wouldn't be paying too much for that level of analysis. He's a little bit like [earthquake forecaster] Ken Ring. He's out there predicting catastrophe at every turn." 

Whilst of course Labour and the Greens would secretly love to see Colombo's prediction come true (for political purposes only), it's not likely to happen. Colombo has appeared to cherry-pick his data, to produce his prophesy of doom and gloom, as is duly noted:

Infometrics managing director Gareth Kiernan said Colombo had picked out all the high-risk metrics he could find to build an "end of the world scenario".
If his predictions ever came to pass then the economy would be in trouble, but no one was really forecasting that to happen, he said.
"You would need a bit of a catalyst to kill off the housing market so sharply and I don't think, given the outlook for economic growth over the next few years, a lift of a couple of percentage points in interest rates is going to do that."

Even Bernard Hickey, no friend of the current Government thinks that Colomo has over-inflated his bubble; read on:

Interest.co.nz contributing editor Bernard Hickey said many of the risks identified by Colombo were real but they were old news to those who ran the economy.  
"For him to come out and say we've got a bubble, therefore it's going to burst, which will lead to a crisis is a little bit simplistic," he said.
Kiwis had already seen the Reserve Bank step in to curb the risk of rising house prices by introducing a new loan-to-value ratio, he said.
"Should we all be running for the hills with our hands in the air screaming the end is nigh? Probably not."
Hickey added that it appeared Colombo's article had not been published in Forbes magazine proper, which was important when judging its credibility. Instead it was published on the Forbes website with a disclaimer saying Colombo's opinions were his own. 

Those doom and gloom merchants who have an interest in talking down New Zealand's economic recovery will be salivating at the prospect of a bubble bursting. But it is not going to happen any time soon, and we think Steven Joyce's Ken Ring (the Moon Man) analogy is pretty accurate. 

Mr Colombo have have alarmed a few people unnecessarily with his doomsday scenario, but we're not buying it, just as we didn't buy Ring's theory that he could predict earthquakes from the phases of the moon.  

0 Easter good news #1

The Easter weekend is just hours away. And it's great to head into the weekend on the back of some welcome good news; Stuff reports:

The labour market is taking off, with more jobs advertised in March, continuing a run of rises for three months in a row, a bank survey shows.
A strong economy is now being accompanied by rising employment, that will provide a backbone to household income growth over the months ahead.
The latest ANZ job ads survey points to unemployment falling from 6 per cent at the end of last year to 5.7 per cent at the end of March and dropping even more in coming months.
The number of job advertisements lifted 1.1 per cent in March, seasonally adjusted.
"This bodes well for an ongoing downward trend in the unemployment rate." ANZ said. 

This is the news that New Zealand needs to hear. Job growth is the last remaining plank of the economic recovery to become firmly embedded, but there are some definite signs of that happening. We expect the March Household Labour Force Survey which will be released in early May to confirm that unemployment has fallen below the 6% mark.

The Government has a very good story to tell when it goes to the hustings in a few months. The economy is recovering strongly, the budget will be back in surplus next year, growth right across the economy is strong, and employers have the confidence to create new jobs and invest in their businesses.  

Why would any sensible voter put that at risk?

0 Unrelenting good news

The tide of good economic news is unrelenting. This morning, there's good news about New Zealand's service sector; NBR reports:

New Zealand services sector activity, which accounts for about two thirds of the economy, rebounded in March to reach 2007 levels, after a drop off in February.
The BNZ-BusinessNZ performance of services index rose to a seasonally adjusted 58.3 in March, from February's 53.1 and up from 55.2 a year earlier. A reading above 50 indicates expansion. Last month the PSI snapped nine consecutive months of growth in expansion as new orders had the biggest drop since the survey began in 2007.

This is excellent news. And as the commentary continues, it is clear that this expansion is broad-based, across a range of sectors; read on:

"The expansion is not only deepening but widening too with growth being experienced across a number of sectors including construction, agriculture, manufacturing, tourism and retail," Doug Steel, Bank of New Zealand economist, said in a note. "While the very fast pace of service sector growth in March might partly be a bit of catch up from the moderate pace in February, the overarching point is that trend growth in the service sector is currently strong."
All five sub-indexes which make up the PSI were in expansion in March, led by new orders/business with a reading of 62.1, followed by activity/sales with a reading of 60.7. Stock/Inventories rose 6.5 points to 55.3. Employment rose 0.8 points to 54.3 and supplier deliveries advanced 5.3 points to a 55.5 reading.
"Buoyant new orders are positive for the future," Steel said. "This will be on factor giving firms in the service sector confidence and encouraging them to take on more staff."
The seasonally adjusted BNZ-Business NZ performance of composite index, which combines the PSI with the performance of manufacturing index and represents more than three quarters of the economy, increased 3.4 points from a year earlier to 58.3 on a GDP-weighted index, and 4.2 point to 58.2 on a free-weighted index.
Across New Zealand all regions were above 50, with Northern up 1.7 points to 59.4, Central falling 0.5 points to 59.2. Otago/Southland rose 5.4 points to 59.4 and Canterbury/Westland rebounded to 58.5 from 43.4.

Once again, the underlying message from this report is that employers are feeling far more confident about economic conditions going forward, and are looking to hire new staff. Jobs will be the key to the economic recovery, and there have been plenty of signs in recent months that the job market has taken off.

Labour and the Greens of course will talk this down; that's their job. But New Zealand's economic recovery is well underway, and it is genuine, as surveys such as  the PSI and its companion the PMI (which shows 19 consecutive months of expansion) demonstrate. No amount of "woe is us" talk from Labour and the Greens can change that.