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Economy in Brief

Mixed Signals From Down Under
by Louise Curley August 4, 2009

The official policy interest rates in both Australia and New Zealand have been unchanged since May of this year--Australia at 3% and New Zealand at 2.5%, as can be seen in the first chart. In recent news releases, Glenn Stevens, the Governor of the Bank of Australia, hinted that the next move might be an increase while Alan Bollard, Governor of the Bank of New Zealand would not rule out further reductions.

Typical of the cross currents affecting these economies are today's updates of the Haver data bases for the two countries. In Australia, retail sales were down slightly in June, but on a quarterly basis, the second quarter was 2% above the first quarter and almost 8% above the second quarter of 2008. An index of house prices of established homes in eight capital cities increased 4.2% in the second quarter from the first quarter of this year and was only 1.4% below the value of the index in the second quarter of 2008. The quarter to quarter changes in retail sales and house prices are shown in the second chart.

In New Zealand wages and salaries are still rising, both for ordinary hours and for overtime, but the rate of increase has declined in the past few quarters, as shown in the third chart. Employment continues to decline and was 0.75% lower in the second quarter than in the first quarter and more than 3% lower than the second quarter of 2008. Part Time and Full Time employment trends are shown in the fourth chart.

  Q2 09 Q1  09 Q2 08 Q/Q %  Y/Y % 2008  2007 2006
Retail Sales (Millions A$) 58,615 57,426 54,406 2.07 7.67 219,968 211,255 195.254
House Price Index (Q2,2003-Q2,2004=100) 128.1 122.9 129.4 4.23 -1.39 128.0 122.7 110.2
Employment (000) 1355 1365 1400 -0.75 -3.19 1392 1370 1338
Wages Ordinary Time (Q2 2001=1000) 1244 1240 1209 0.32 2.89 1216 1174 1138
Wages Over Time (Q2 2001=1000) 1268 1262 1225 0.48 3.51 1233 1192 1150
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