Economists at the country's biggest bank say based on their bank's card data there has indeed been a post-lockdown 'bounce' in spending - but it's only a lacklustre one, and "actually pretty modest".
And they say there's been no sign of Kiwis playing 'catch-up' with their spending to make up for lost time during the lockdown restrictions.
ANZ NZ senior economist Liz Kendall, in a NZ Insight research note said there were now welcome signs of a bounce in activity.
"But don’t be fooled; while the disruption is easing, the recession is just beginning," she said, echoing remarks made in ANZ's latest Business Outlook Survey, also released on Thursday.
Based on ANZ card data, Kendall said: "The recent bounce in spending looks lacklustre, especially once you factor in how much spending was 'lost' during lockdown. We don’t expect the current buying flurry to continue, with the full impact of economic weakness yet to be felt."
She said a short-term bounce in activity was to be expected, reflecting pent-up demand, "but we expect spending to settle at a much lower trend".
ANZ card data, showed that daily spending had returned to "normal" since lockdown conditions were eased (figure 1.
But there was no sign of catch-up to make up for the output lost based on spending since March (figure 2).
"Seen in this light, the bounce so far has actually been pretty modest, especially given how much spending has been “lost” as a result of the lockdown. There is a queue for appointments at hairdressers, certainly, but no one is getting two haircuts to compensate for their previous shabbiness."
Kendall said the recession was "going to be nasty" and this is just the beginning. She noted that the Reserve Bank has estimated this will be the biggest drop in GDP in at least 160 years, reflecting the unprecedented lockdown measures that shut down large chunks of the economy.
"Economic activity is past its lockdown lows, but the broader fallout is only just starting to be felt. And it’s the longer-lasting impacts that hurt the most.
"Persistent impacts on firm cash flow, household incomes and wealth positions will determine the extent of job losses, firm failures and cancelled investment. The extent of these impacts has not been fully borne out yet, but unfortunately will be large."
44 Comments
That part of Waipukurau is very dry still, we are still in a drought, no creeks flowing and empty dams. It's just getting cold and frosty , my italian rye is growing but everything gets so slow from now till the end of August.
Great to get raw A2 milk from a local source. I see Mpi dicked then around but backed down. My wife left the door down on the dishwasher, children mucking around tripped and landed on it, apparently that's common and always fatal for the machine.
Those of us with delicate little scottish hearts struggle with waste and needless spending, wife's often balance us out, there's always another hour in the day.
Yes I can’t see what might help pull NZ out of this mess.
Very little tourism, less oil and gas, most farming commodities predicting reduced incomes, very little manufacturing in NZ anymore.
What is going to be NZs next big industry that will earn us foreign dollars?
My .2c worth..
- Went to the barber...line out of the shop
- Where my 20 year old daughter works (high end women's fashion in an Akl Mall) record sales numbers
- Looking at getting a new heat pump and ventilation system for home....they're so busy I cant get someone to quote
- I need a roofing repair - cant get anyone to come and look as too busy, the one who did is booked solid with a 5-6 week lead time
Obviously n =1 and some verticals (Bars, Tourism) are much much more heavily affected but its not all doom
Thats the thing. 80% of people are still working and life still goes on.
For example. Both my wife and I are lucky enough to still be working 100% salary. Neither of us were essential, and neither of our companies were eligible for the wage subsidy. We just swapped the office for home.
Then our Microwave broke on day one of L4 (It was old, so can't really get annoyed) but over the 4 weeks of L4, lawnmower gave up, phone got damaged, kids clothing/shoes got worn out/outgrown. It's all just stuff that you can get when required. Only under L4 and L3 you couldn't.
So we get them when we can. Which means purchasing all at once this month, rather than spreading them out as and when they happened over the last 6 weeks.
But on the whole our spending will drop. L4 provided a unique opportunity to reassess how we live. Unfortunately it is the local sector that will suffer due to our choices. Cafes, Fast food, and other luxury services have happily been replaced by more cost efficient and family oriented options.
https://www.stuff.co.nz/travel/back-your-backyard/121651419/wildwire-wa…
Before Covid-19, Wildwire Wanaka was heavily reliant on overseas tourists. However, the company has offered deals to local travellers, and been so overwhelmed by bookings, it's even had to hire new guides.
My .2c is the opposite. I am balls deep in a reno and suddenly everyone is free and available to work for me ASAP, that's architects, planners, drains, gas fitters, tilers, windows, joiner, builders. I have been twiddling my thumbs for much of the last year trying to get trades onsite (had to wait months just for a geo-tech survey) and suddenly they're all free at once! 6 months ago I was chasing them, now they're chasing me.
Yes i have had people follow me up for quotes i got 6 months ago. They could not be bothered at the time. This might be a good wake up call for arrogant building and trade businesses. Most of them didnt even bother to return calls last year or sent quotes out on time. Hopefully some sense comes back into pricing
Still seems like many businesses are semi-shut down and working at reduced capacity.
I’m not talking about social distancing either, but office jobs who can work from home are still on holiday and apparently can’t answer enquires or make sales.
I am in the position where I am trying to spend money on some major purchases for my farm and my house in town and businesses don’t seem interested in even answering enquiries or giving quotes.
None of the businesses I am dealing with are laying off staff, and it seems like they really need to be hiring more staff if anything.
Not much point putting any weight on those figures, so many businesses are still fundamentally shutdown or producing very little throughput. I'm still dealing with all the deferred tasks from before lockdown so I am not adding anything new in terms of output either. It will take 3 months to get a clearer picture. On that note I have used less than 2 full tank loads of premium petrol in my vehicle in 3 months. That undelines the situation nicely I think!
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