'We've never seen numbers like these'

ANZ Business Outlook preliminary April reading shows record lows across the board

8th Apr 20, 1:05pm by David Hargreaves

It's the first look at business confidence levels since the start of the lockdown. And it's a shocker.

Tuesday's NZIER Quarterly Survey of Business Opinion, which was conducted just before the lockdown started, provided a sample of what was to come.

Wednesday's early look at the ANZ Business Outlook Survey for April is the main course. And it's huge.

"The preliminary data for April saw every activity indicator plunge. Most hit record lows by a very large margin," ANZ Chief Economist, Sharon Zollner said.

The 'headline' business confidence fell 9 points to -73%.

Arguably the more key figure though is companies' expectations of their own own activity. That reading plummeted 34 points, with a net 61% of firms now expecting lower activity for their firm in the year ahead.

“We’ve never seen numbers like these," Zollner said.

A net 54% of firms expect to cut jobs; a net 50% expect to reduce investment – both record lows.

"It’s an understandable response, given a net 73% of firms expect lower profits, also the worst reading ever," Zollner said.

A net 35% of firms expect lower capacity utilisation, which is the lowest reading since 1991.

Compared to the same month a year ago, a net 53% of firms report lower activity, and a net 28% already report having fewer employees.

"This is clearly a very deflationary shock," Zollner said.

She said companies' expected costs fell 15 points, pricing intentions dropped sharply "into negative territory for the first time ever", and inflation expectations fell from 1.51% to 1.28%, a record low.

"Firms are reeling from the abruptness and ferocity of the storm that has enveloped them, and with uncertainty extreme, planning a way out is very difficult. The quick-fire fiscal and monetary response will have helped, but times just don’t get much tougher than this," Zollner said

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155 Comments

by bw | 8th Apr 20, 1:08pm 1586308095

Mass applications for Kiwisaver Contribution Holidays coming up next?

by ShoreThing | 8th Apr 20, 1:08pm 1586308130

Mass hardship withdrawals more like.

by bw | 8th Apr 20, 1:15pm 1586308507

Good point.
RBNZ to take Kiwisaver Fund equity to provide such? ( On the road to incorporating them into the Government Scheme. A rerun of Poland a few years back)
I can't see them having the cash on hand to make the payouts.

by Hamish | 8th Apr 20, 1:20pm 1586308829

A run on kiwisaver?
In such a scenario, withdrawals start to gain momentum, remaining kiwisaver balances slide (more) as shares slide, feedback loop...

by ShoreThing | 8th Apr 20, 1:46pm 1586310391

Total contributions to Kiwisaver providers (Employee + Employer + Govt) has averaged about $580m per month over the last 12 months. Average Hardship withdrawals are around $9m per month, and average First Home withdrawals are around $95m per month. It will be very interesting to watch these numbers change in the coming months, as both contributions and presumably First Home withdrawals go down, and hardship withdrawals go up.

I appreciate that only a fraction of the total contributions to Kiwisaver providers go towards equities on the NZX, but I would imagine at this stage Kiwisaver Providers have to be among the biggest purchasers of shares in the NZX. I'd love to know how much of the volume they make up. Will be interesting to see what happens to equity prices if they have to start cashing out significantly more than the average value of first home purchases.

by Andrewj | 8th Apr 20, 1:15pm 1586308546

going to bury the economy

by streetwise | 8th Apr 20, 4:26pm 1586320000

VERY INTERESTING INTERVIEW WITH ROCKET LAB’S PETER BECK ( 7 minutes to read )

It’s a pity our journalists don’t access the short-wave networks of private USA radio stations, still plentiful despite the advent of Skype and email.
I dusted down my old SW high frequency valve-receiver the other night at the peak of the coronavirus panic and tuned in to CNYSW and unexpectedly found myself listening in to an interview with Peter Beck the New Zealand founder and CEO of Rocket Lab whose head office is now based in Long Beach, California.
I could barely hear the voices above the crackling and sound static, the background ‘noise’ so familiar to long-time short-wave enthusiasts such as myself. I had just put new batteries in my old “Grundig” portable tape recorder, and this fortuitous act greatly assisted my memory in my subsequent transcription of the interview:
Beck said that although the advent of Coronavirus had meant the indefinite postponement of medium-term satellite launching projects, he has been inspired by Richard Branson’s aerospace company, Virgin Orbit, which had switched from making rockets to Coronavirus-related manufacturing; Virgin Orbit is now making a revolutionary breathing aid product to assist in the fight against Coronavirus.
He also pointed out that the auto manufacturers Ford and General Motors are both now making ventilators instead of cars.
When the interviewer asked Beck whether he too would be manufacturing breathing aids, Beck said no, that he would be trying something he deemed to be even more desperately needed after the latest New Zealand Government’s modelling of the pandemic showed that in a worst-case scenario, most of the population of New Zealand could be wiped out; he said that, being an optimist, he doubted that scenario, but even if the population was seriously depleted some thought had to be given as to what human characteristics and talents would be required as New Zealand rebuilt its population; he said that such a project could beneficially utilize a similar methodology to that used by rocket technology, namely the science of trajectories.
In other words, and in very simplified terms, we would have to begin at ground zero. For example, say 100,000 people remained after the virus had rampaged across the land, those people would constitute ground zero and the population growth curve, or trajectory, would steepen progressively over time, just like a space rocket’s trajectory, until the ultimate destination, the agreed new population level, was reached.
“Well, we at Rocket Lab can assist with the management of that trajectory”, Beck confidently asserted above the radio’s persistent sound distortions.
Beck then said with great emphasis that “what Rocket Lab couldn’t do is determine what human characteristics that new population should have.”
He said it would be up to the remaining populace to choose the human genetics of the new population. They would have to decide what mix of old human traits and new traits would be selected for in developing a new nation. For instance, they could decide whether to retain the old virtues personified by current legends like Colin Meads, Lord Rutherford and Sir Edmund Hilary, or they may decide that these are yesterday’s men and that we should look for altogether new virtues, more beneficial to the predicament the new society would find itself in.
The ability to reproduce rapidly could be just such a virtue and, Beck claimed, we already have in our current ethnic stocks, assuming they survive the pandemic, those who could exponentially ramp up this well-established ability in the new society, although, of course, the new government wouldn’t be in a position to replicate anywhere near its current monetary support for multiple serial reproduction per female.

When the interviewer asked if Beck thought the new population would include those highly educated types who would be necessary if the likes of Rocket Lab and other high-tech companies were to be sustained, Beck said that he didn’t think so as the new society would have to go through a very primitive early stage in its early development whereby survival would solely depend upon brute, impulsive strength, a quality that had been bred out of his highly educated employees over the millennia in favour of intelligence. It would probably take at least a further millennium for such intelligence to naturally develop again, if at all. Throughout these last few sentences, I could sense in Beck’s tone the upwelling of a despairing emotion and even anger in his voice as if he suddenly realised that the new society would never again achieve its current level of civilization.
At this point, the interview was almost completely drowned out by the interference ‘noise’ and even though I later replayed the tape through some old RCA filters I could only make out the following few intermittent phrases despite the tone of Beck’s voice becoming more and more agitated and strident:
…………..…….’law of the jungle’………………………’dog eat dog’………..’the fall of Rome all over again’…..’descent into brutality and squalor’……….……..
At that moment the crackling interference to the radio signal completely overwhelmed the voices and I had to switch off my receiver.
Still, once again, I would recommend that all the journalists of Interest.co and elsewhere try and listen in to SW radio broadcasts if they can; there’s choice content to be had that you would be hard pressed to find elsewhere. I have seen SW receivers advertised now and again on Trade Me as old baby boomers’ estates are wound up. I can still remember purchasing mine at the now defunct SOS radio shop, in the 1960s, just up Queen Street from the Civic Theatre.

by Basil brush | 8th Apr 20, 4:12pm 1586319172

Smart chap is Peter but I'd suggest he was misheard in using an assumption of only 100,000 people would be left alive in NZ after the virus passed as that would imply a death rate of around 98%.

by Keen Observer | 9th Apr 20, 2:39am 1586356797

Well the static noise really bad..

by Beach Tunneler | 8th Apr 20, 1:16pm 1586308595

"This is clearly a very deflationary shock". Fortunately, local government (e.g., Otago Regional Council's 9.1% rate increase) are courageously fighting on our behalf.

by J.C. | 8th Apr 20, 1:19pm 1586308794

The NZ local council paradigm and bureaucracy is built and primed for bubble economics, not the new reality.

by Good Samaritian | 8th Apr 20, 11:57pm 1586347068

No doubt about that.

They dont understand value for money or how to budget. Its been a cost plus exercise, where politicians and their executive leverage up the balance sheet, sell off assets that generate positive cashflow, then capitalise their less than commercial decisions on the poor ratepayers.

by RCD | 8th Apr 20, 1:54pm 1586310845

No Worries the RBNZ can buy up as many bond issues as the local council dares to make, no need for any rates increases this year

by Rob | 8th Apr 20, 2:07pm 1586311671

Councils are going to have to take paycuts, which occurred after the GFC. But they didn't stay low for too long from memory.

by Andrewj | 8th Apr 20, 3:49pm 1586317740

they need restructuring and return to core services.

by Good Samaritian | 9th Apr 20, 12:00am 1586347211

No easy fix...Its the blind leading the blind.

by Audaxes | 8th Apr 20, 1:19pm 1586308761

“Pricing and cost indicators also dropped sharply This is clearly a very deflationary shock.

Swapping the minority rentier class's savings from one form to another hardly addresses this issue.

by CN | 8th Apr 20, 1:19pm 1586308780

“We’ve never seen numbers like these," Zollner said.

We've also never seen a virus, without a vaccine, go as global as this one for over 100 years.

by Voiceofreason | 8th Apr 20, 1:48pm 1586310497

You forget about HIV/AIDS: 25+ million dead. Took many years before effective treatment.

by CN | 8th Apr 20, 1:54pm 1586310891

Fair point. However the viruses I had in mind were the ones that can be caught by a similar transmission method as the current coronavirus.

by Independent_Observer | 8th Apr 20, 2:36pm 1586313379

Is that why community transmission is so low in Nz?

by AKLCrusader | 9th Apr 20, 9:44am 1586382266

Perhaps it isn't.
Medicos keep refusing to test people who don't meet the strict definition of what they were looking for - definite links to known cases. They even turned away people with symptoms and a general connection to known cases (Marist).
On that basis, one could assume that we have turned away actual Coronavirus sufferers, who went on merrily infecting others. We won't know that until we widen our testing regime.
Look at the clusters, some now reaching 100. Yet we have 2% community transmission (20 people), meaning that there are 20 infections (each a potential cluster on their own) with no known source (and 14% where we haven't identified the source yet)

by alittle | 8th Apr 20, 3:02pm 1586314928

Many HIV was infected by their own doing and not as infectious unless one indulge in......and pay a price for their activity but corona virus.......

by Foreign buyer | 8th Apr 20, 1:21pm 1586308889

We have flattened the curve now loosen the lockdown or face obliteration of the economy.

by Yvil | 8th Apr 20, 1:36pm 1586309805

FB, I was objecting to a full lockdown for a long time because of the effects on the economy (= real businesses closing real jobs being lost). But now that we have done 2 weeks, we have to be team players and see the full LD through for the 4 weeks, not doing so would undo the last 2 weeks efforts.

by Narrabeen Boy | 8th Apr 20, 1:52pm 1586310721

Yvil.I've got a fixed loan coming up for renewal on 15th April...what sort of rate should I be looking to get either 6months or a year.

by bw | 8th Apr 20, 2:11pm 1586311877

I'd be more worried about the lender casting an eye over the 'value' of their collateral than the cost ( interest rate) of the loan....
"LVR 80% you say?. Not according to our latest figures, So be a good chap and chip in the missing 10% to make our equations balance. Now. About that rate...."

by Narrabeen Boy | 8th Apr 20, 2:26pm 1586312781

Oh Dear!!!!

by guwop | 9th Apr 20, 8:24am 1586377474

I think about two months ago I've said that the bank gives you an umbrella when the sun shines. And takes it back when it rains.

Well, folks, it pours!

by Kezza R | 8th Apr 20, 2:32pm 1586313166

Yes our risk appetite isn't large at present.

by CN | 8th Apr 20, 3:04pm 1586315075

Also, if the LVR has increased (due to fall in property prices) and breaches a certain threshold then the capital charge in the bank capital calculations may also rise.

by Nzdan | 8th Apr 20, 3:14pm 1586315698

Wonder how many investors are sitting at 65% - 70% LVR Interest Only? Will the banks still be as generous in refinancing Interest Only going forward? I recall a couple of commentators on here are "in business" with their bank managers, whom reissue interest only lending at the drop of a hat. Is this still the case? Waiting with bated breath.

by CN | 8th Apr 20, 8:52pm 1586335929

How many property investors are in the following circumstances?
Situation A:
1) own negative cashflow investment property
2) just lost their job
3) has insufficient cash reserves

Situation B:
1) own positive cashflow investment property, (financed with a high LVR mortgage)
2) just lost their job
3) their tenants are not paying the rent, the tenant is paying reduced rent, the investment property is now vacant, as the tenant has moved out due to the tenant losing their income and inability to pay rent - so leading to the property becoming cashflow negative.
4) has insufficient cash reserves

Situation C:
1) own positive cashflow investment property, (financed with a high LVR mortgage)
2) now the property is no longer earning sufficient income to meet mortgage payments - due to loss of tenant, inability to rent out property on Airbnb.
3) has insufficient cash reserves

by Houseworks | 8th Apr 20, 9:30pm 1586338218

A1 no 2 no 3 no and ditto B and C
Any other hypotheticals CN?
out of 10 tenancies all have paid in full including one commercial

by CN | 9th Apr 20, 7:47am 1586375268

Houseworks,

Congratulations to you.

1) what is your overall LVR?
2) what is your interest coverage ratio?
3) where are your investment properties located?

by Houseworks | 9th Apr 20, 11:05am 1586387116

Auckland and Hamilton. Been renting for decades now so very close to zero debt. How about yourself CN

by CN | 9th Apr 20, 5:06pm 1586408786

Zero debt.

Congratulations to you Houseworks.

You are in a very strong position.

Just wondering, how many of those residential properties did you build yourself, and are holding onto for a minimum of 10 years due to tax purposes?

by Yvil | 8th Apr 20, 2:53pm 1586314399

Hi NB, It's hard to say without knowing your borrowing situation. If your LVR 80% and cashflow is good, I would go for 1 year at 3.05% as 6 months have a premium of at least 0.5% which is quite high. To be better off with 6 months at a premium of 0.5% you'd have to expect rates to be lower than 2.55% in 6 months time, unlikely IMO.

by Narrabeen Boy | 8th Apr 20, 3:41pm 1586317312

Thanks yvil!!!I'm at about 40 percent lvr so even if my property's value halve I'll still be ok.this property is about 50 percent lvr but still owe quite a bit on it so want the best rate!!!!I've got resource consent to build four apartments on the front section but I'm thinking I'll shelve them untill building prices come down a bit.thanks for the advice yvil and stay positive☺

by Houseworks | 8th Apr 20, 5:23pm 1586323433

We got 3.6 floating at bnz. Could have gone lower with fixed 1 year but need the flexibility.

by The best statu… | 8th Apr 20, 1:40pm 1586310028

Maybe that is the idea. Control economy coming. Jacinda's childhood dream coming to reality.

by muzled | 8th Apr 20, 2:28pm 1586312881

That's much more likely to be Ximons or Juans dream that Jacinda's.

by Fritz | 8th Apr 20, 1:47pm 1586310438

Deflation. Cut OCR to -0.25?

by Whatwillhappen | 8th Apr 20, 1:58pm 1586311099

I agree with Michael Reddell - is it time for naming and shaming the banks who aren't ready for negative OCR despite a decade to get ready since the last major downturn?? Some of them apparently are, but we're stuck with .25% because of the ones that aren't.

by Beach Tunneler | 8th Apr 20, 2:39pm 1586313598

Geoff Bascand explained recently that negative interest rates in NZ aren't a goer because our banks' backward IT systems can't handle them. Embarrassing but not surprising!

by ShoreThing | 8th Apr 20, 3:50pm 1586317821

Sounds like our saving grace to me - why on earth would anyone want negative interest rates?

by Beach Tunneler | 8th Apr 20, 5:02pm 1586322127

Zero's just a number :)

by RickStrauss | 9th Apr 20, 9:10am 1586380219

To keep using the general hoi polloi to prop up property portfolios?

by Yvil | 8th Apr 20, 1:30pm 1586309441

Who would have thought, a country gets shut down and business outlook tanks

by CourtJester | 8th Apr 20, 1:34pm 1586309641

Out of curiosity, do you still think the lockdown was a bad idea?

by Smalltown | 8th Apr 20, 1:41pm 1586310065

NZ is the envy of the western world re control of this virus. Lots to be proud of Kiwis.

"NZ is smashing the curve"

Not the time to relax the lockdown.

by The Lark | 8th Apr 20, 1:50pm 1586310634

You really believe the govt figures? You gotta be kidding me.

by CourtJester | 8th Apr 20, 2:18pm 1586312316

I'm sure your figures are based on a much more thorough research.

by GB | 8th Apr 20, 3:24pm 1586316243

Yes. TwitFace is so much more reliable.

by John | 8th Apr 20, 1:39pm 1586309978

Unfortunately only time will tell.

by Yvil | 8th Apr 20, 1:47pm 1586310478

Ha CourtJester, I answered your question above at the same time you asked (see above).

I'll elaborate, yes I was against the full LD because of the effects on jobs & businesses. Now that we're half-way through, we have to go all the way or the first 2 weeks would have been in vain.
The way NZ is tracking, it looks like the goal of the full LD has shifted in a very major, beneficial way. The original goal of the LD was to "flatten the curve" so that the hospitals can cope with the huge influx of emergency cases. The question I repeatedly asked was: what happens whenever the LD finishes (4 weeks, 6, 8….) and there was no answer, no plan. Now that things are nowhere near as bad as media made them out to be, our goal has shifted from "flattening the curve" to "eradicating" CV. This is a monumental shift in a very positive way. If NZ can indeed eradicate CV, I will admit loud and clear that I was wrong opposing a full LD, if NZ fails to eradicate CV with full lockdown, I think a soft LD which would have allowed for businesses to remain open would have been better. Out of the 2 outcomes, I really hope I will have to admit being wrong.

by Fritz | 8th Apr 20, 1:48pm 1586310501

I am the same Yvil.

by The Lark | 8th Apr 20, 1:55pm 1586310925

The careful handling by the govt of the actual figures is about keeping everyone calm, and clearly it's worked. Same msm approach regards economy. The flattening of the curve is in direct correlation to the testing done/available.

by Fritz | 8th Apr 20, 1:59pm 1586311141

Should the MSM be keeping us calm, or providing objective analysis?

by youngdumbandbroke | 8th Apr 20, 3:19pm 1586315962

Theyre whatever their clients want them to be. Usually theyre alarmists but recently theyve put on the calmists hat

by Fritz | 8th Apr 20, 3:52pm 1586317925

Mr Dann always tends to put a positive spin on things.

by Noncents | 8th Apr 20, 4:38pm 1586320725

Yes - but remember their clients are advertisers - not the viewers.

by Doris | 8th Apr 20, 3:07pm 1586315241

I don't agree with that at all. If our numbers were low because of insufficient testing and actually it's running rampant in the population, we would have many more people in hospital with Covid pneumonia.

by dollar_bill | 8th Apr 20, 6:28pm 1586327333

So where are the cases then? Where are the overflowing ED's? Deaths? oh thats right - you're making it up - plonk!

by Foreign buyer | 8th Apr 20, 2:02pm 1586311358

Its a nice idea but if NZ eradicates the virus but the rest of the world goes to herd immunity, NZ will be like the south americas pre spanish invasion. The whole world would have the antibodies exept for us. Our options are to get vaccine, get immunity or get a giant wall built. We need to stop congratulating ourselves too early and be careful what we wish for.

by Lapun | 8th Apr 20, 2:39pm 1586313576

I like the wall. I think Germany is planning for a certificate that states you have survived Covid-19. If we trust it then we get a select set of tourists.

by Yvil | 8th Apr 20, 2:59pm 1586314763

I have good news, we can save the cost of building a big wall, we're islands

by Brock Landers | 8th Apr 20, 4:19pm 1586319584

The problem is that it only takes one.

by Basil brush | 8th Apr 20, 4:24pm 1586319873

vaccine is a near certainty at some point within the next 12-18months.

by CourtJester | 8th Apr 20, 2:03pm 1586311385

While I agree that we should have clear(er) plans for post-lockdown (or rather, post-first-4-weeks), I don't agree with this:
"Now that things are nowhere near as bad as media made them out to be" - It's not as bad as it is in other countries, most likely exactly because of the lockdown and people actually following the lockdown rules. 17 thousand people have died just in Italy already, 1 person in NZ. The biggest difference is the way we curbed tranfers within the community.

by murray86 | 8th Apr 20, 2:03pm 1586311389

I agree as well Yvil, however i think eradication of COVID won't happen. Not unless vaccination technology can work off the unchanging part of the virus, else it will continue to plague us through it's mutations. I do believe international trvel will need to change significantly though, and the business model around it.

by Averageman | 8th Apr 20, 3:08pm 1586315335

Agreed. We can eradicate, but then star Our borders need to stay closed. Anyone coming in is shipped to Waiouru and put in a camper van isolation for 2-3 weeks and is tested.

by 1986 | 8th Apr 20, 11:28pm 1586345327

send them to Somes Island!

https://www.doc.govt.nz/parks-and-recreation/places-to-go/wellington-ka…

by Nzdan | 8th Apr 20, 3:19pm 1586315951

I don't think eradication was ever the goal. The idea is to spread out the infections "break the chain" so that you don't end up with 2000, 5000, 10000 people all in hospital at the same time needing ventilators that don't exist. Instead you might get that figure over the course of 3 months, 6 months, 12 months?

by Houseworks | 8th Apr 20, 6:04pm 1586325858

10000 in hospo lol you have really gone utterly overboard with the fear nzdan check out sweden gone full herd immunity and has 640 serious hospital cases with over twice the population. Cases in the hundreds not thousands

by Speechless | 8th Apr 20, 6:11pm 1586326303

You think house prices grow exponentially but the virus doesn't, we get it. Everyone with a basic grasp of stats understands the situation, why can't you?

by Houseworks | 8th Apr 20, 7:19pm 1586330390

Give over with the dumb accusations, what about your beliefs that the sky is falling and covid has been caused by 5G internet. Why cant you get a grasp of reality even the backward govt is ahead of yourself. Better you stay speechless

by CN | 8th Apr 20, 9:07pm 1586336839

"Everyone with a basic grasp of stats understands the situation"

Some people don't have a basic grasp of stats perhaps?

by Nzdan | 8th Apr 20, 7:06pm 1586329595

No fear at all, the 2000, 5000, 10,000 was just arbitrary numbers pulled out for dramatic effect but I think the risk of overburdening the health system is still there. It's also easy to say with the benefit of some hindsight.

by Robt | 9th Apr 20, 9:09am 1586380155

Yes check out Sweden. Get your facts right 8 and a half THOUSAND confirmed cases 696 DEATHS.Not so great https://www.google.com/search?client=firefox-b-d&q=sweden+coronovirus+n…

by RickStrauss | 9th Apr 20, 9:12am 1586380353

Wow...that's quite the statistical difference.

by Kate | 8th Apr 20, 5:32pm 1586323972

And it's not just the hospitals being overwhelmed. A largely uncontrolled rampant spread also means that your ability to trace contacts for all known infections gets absolutely overwhelmed as well. If you just look at the clusters being traced presently, in some clusters, nearly no one was spared. The wedding in Bluff had some 70 guests - 55 of which were infected (the last I heard). That's a yikes. Just think how many more weddings, meetings, sports fixtures and other gatherings we'd have had in the last 2 weeks had we not locked down 'hard and fast'.

Now the new infections have less than a handful of contacts that need tracing (follow up) and testing.

Can't wait until they start surveillance testing, if that ends up equally as hopeful - we'll be the envy of the world.

by easymoney | 8th Apr 20, 1:38pm 1586309928

Yikes..this is not cool...not cool at all .

by Fritz | 8th Apr 20, 1:49pm 1586310570

Most people, including those who should know better in the MSM, are still underestimating the damage.

by CourtJester | 8th Apr 20, 2:05pm 1586311544

Many people are still expecting a V-shaped recovery, a bounce back to ''''''''''''normal'''''''''''' (whatever normal means to them). They're overly optimistic fools. There is no way to make up for a complete shutdown of entire economic sectors.

by Houseworks | 8th Apr 20, 2:22pm 1586312566

Watercooler talk will suddenly change from buying a rental to moving into one.

by Kezza R | 8th Apr 20, 2:35pm 1586313335

Don't forget the money stress break ups...

by RickStrauss | 9th Apr 20, 9:36am 1586381802

Moving into a cheaper one or one shared with others, perhaps.

by Fritz | 8th Apr 20, 3:22pm 1586316126

Talked to two different mates in different engineering consultancies. One firm down to 3 day weeks, the other 4 day weeks. A 40% reduction of income is brutal. Still better than the dole though...
This is getting ugly and will get uglier.

by Houseworks | 8th Apr 20, 3:35pm 1586316933

I will go one better and give a 50 percent reduction to parliamentarians and local govt Mayors esspecially those socialists who sit on huge guaranteed salaries. Take Robertson and Goff for example. One points the finger saying you MUST negotiate. The other HRH tells ratepayers to go jump.

by Houseworks | 8th Apr 20, 1:39pm 1586309991

Business confidence had it for at least "Four more years mate"

by The best statu… | 8th Apr 20, 1:45pm 1586310329

Yes George

by Takere | 8th Apr 20, 1:48pm 1586310522

Globally I'm guessing the sentiment is the same? So the tide goes out for all 'boats'. Whats the difference in real terms? There will be winners and losers? Nothing different in the whole scheme of things other than the size and scale.

by The Lark | 8th Apr 20, 1:58pm 1586311124

You'll find the winners are the same as before, the losers are the same as before, just greater in number on the losers side, smaller in numbers on the winners. Likewise the winners gains are larger, and losers losses are equally larger.

by Justa comment | 8th Apr 20, 1:51pm 1586310713

Business confidence surveys ? Is this a joke ? Of course business confidence is very low.
I hope no one wasted too much time on this survey.

by Fritz | 8th Apr 20, 1:56pm 1586311000

Ha! Very little material of any real insight comes from the bank economists. Zollner has fast become the 'celebrity bank economist' replacing Tony.
Really silly and trivial interview with her in the Herald today. Little substance.
Toplis is good.

by Voiceofreason | 8th Apr 20, 1:55pm 1586310916

Among other things, this is the pin to pop the NZ property bubble. It’s not the cause but the catalyst. Homeowners should be prepared to lose 30% or more value per property over the next few years. Alas, many will not be able to absorb that.

by Whatwillhappen | 8th Apr 20, 2:00pm 1586311255

As long as everyone else's house price goes down as much as mine has I don't mind. Have to say though, having put an offer on a house in the upward market and my house not getting any offers until after lockdown, I hope it will be a gradual depression, not a crash.

by J.C. | 8th Apr 20, 2:47pm 1586314030

Good luck. It won't be the fall in house prices that will hurt, it will be the secondary effects. House prices alone don't make an economy. They fuel the wealth effect, which in nominal terms, will be associated with the greatest deleveraging in NZ's history.

by ShoreThing | 8th Apr 20, 2:48pm 1586314099

The "wealth effect" is a crock, it's been part of economic dogma for decades but is not backed up by observations. Studies show it is either non-existent or statistically insignificant. The only thing that actually matters is the "income effect", if people have higher incomes they tend to spend more - although marginal propensity to consume does decrease as incomes increase. So, you are right but for the wrong reasons.

by J.C. | 8th Apr 20, 3:36pm 1586316968

There's a great correlation between house price growth and sales of luxury cars in Australia. Ignore the wealth effect by all means, but don't be surprised if those 'nice to have' FMCG products on the supermarket shelves see greater declines than bread, eggs, and store brands. As for incomes, the growth is largely derived from consumer spending, which comprises approx 70 pc of GDP. Bubble economics drives incomes, not the other way around.

by ShoreThing | 8th Apr 20, 3:47pm 1586317640

Correlation, sure. There's also a strong correlation between those items and declining interest rates. I'm not ignoring the wealth effect, I'm denying it's existence. I won't be surprised when consumption drops, because a huge amount of people are going to experience a sizeable drop in their incomes.

by J.C. | 8th Apr 20, 4:57pm 1586321824

Wrong. Luxury car sales in Australia have collapsed in the past 3 years while interest rates have fallen. The coefficient between house price growth and sales volume is much stronger.

by J.C. | 8th Apr 20, 4:58pm 1586321934

Wrong. Luxury car sales in Australia have collapsed in the past 3 years while interest rates have fallen. The coefficient between house price growth and sales volume is much stronger.

by Whatwillhappen | 9th Apr 20, 12:35pm 1586392558

If my house had sold for what the market was indicating it would in February (it is on the market now), I had planned on spending most of the $60k capital gain left over after my next house purchase was accounted for across a wide swathe of the economy. It was going to be a real effect for me. Now I'll be lucky to break even (probably $20k net loss) and the spending will definitely not take place just when it needed to happen.

by RickStrauss | 8th Apr 20, 3:25pm 1586316313

Wealth effect...Basically living off more debt, pulling wealth forward from the future.

by Foreign buyer | 8th Apr 20, 2:30pm 1586313015

MSM seems to go very quiet when the property story is not about 'record high prices'. I wonder why that is Bindi?

by ShoreThing | 8th Apr 20, 2:50pm 1586314229

Bindi is probably busy queuing at MSD, no time to write up her fluff pieces.

by Houseworks | 8th Apr 20, 4:21pm 1586319694

Shoulder to shoulder with other spruikers. They deserve each other

by Squishy | 8th Apr 20, 2:07pm 1586311626

I'm surprised at the resilience of sport media. No one has kicked or hit a ball in a month and likely won't for a few more but that hasn't stopped the "Sport" section on the six o'clock news every night. They are bravely soldiering on despite it being an act of utter futility.

by paashaas | 8th Apr 20, 2:19pm 1586312340

"despite it being an act of utter futility.""
How is this different from before ?
To quote the Simpsons : " .. the road to the Superbowl is looong - and pointless".

by Foreign buyer | 8th Apr 20, 2:20pm 1586312410

I know a joke about denial !

by Independent_Observer | 8th Apr 20, 2:33pm 1586313216

Yip - I watch the news until then sport section. Then I get my sport fix watching Joe Exotic wrestle tigers and hunt Carol Baskin.

by RickStrauss | 8th Apr 20, 3:29pm 1586316593

There's still some excellent sports coverage going on if you know where to look:
https://www.youtube.com/watch?v=QTVYLdKqxcI

Some great overtaking moves happen in this one.

by dollar_bill | 8th Apr 20, 6:41pm 1586328077

Just signed up to 12 months Sky Sport Now for the discount - 3 months Neon as a concession for no sport - debit facility might be unavailable next month - be interesting to see what they do over an unpaid account - waive the 12 month contract? Not holding my breath on that outcome.

by Andrewj | 8th Apr 20, 2:25pm 1586312731

https://ci6.googleusercontent.com/proxy/HYSIfIZQRMqa73-Fe7b-TbqB6GE4FAZ…

by Independent_Observer | 8th Apr 20, 2:41pm 1586313692

Slightly unrelated, but any news of bank staff taking pay cuts yet? I've noticed that John Key has been critical in the media about the pay cuts that Fletcher's have announced (or lack of by senior management) - but isn't he chair of the board for ANZ? And as far as I understand they have announced no/zero pay cuts at all - and they're the ones who have made record profits pumping a credit bubble? Anyone seeing any hypocrisy with this?

by waymad | 8th Apr 20, 2:49pm 1586314175

"any news of bank staff taking pay cuts yet?"
Or Gubmint/public sector?
Or Councils?

by Lapun | 8th Apr 20, 3:10pm 1586315426

Council salaries are driven by the private sector. We don't see councils going bankrupt and sacking everyone but they ought to match the downwards trends. Except for librarians because I love all librarians and the gardeners at the Auckland Wintergardens because they are geniuses nor the bin collectors because that is one tough job - but all the admin staff can take a generous pay cut.

by ShoreThing | 8th Apr 20, 3:07pm 1586315262

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/atta…

"The Board has fully supported the CEO’s recommendation that annual short-term incentives for 2020 be cancelled for the CEO and the Group Executives."

by bw | 8th Apr 20, 2:44pm 1586313866

What's remarkable about the lockdown isn't the hue and cry about the economic damage--it's the absence of any critical curiosity as to how our economy became so fragile. While everyone is busy screaming about the damage done by the lockdown, nobody's asking why costs are so high that few can survive a few weeks on their own means. If costs weren't so crushing, more households and enterprises might have savings. Empires don't collapse because everyone ran out of money; they collapse when the costs exceed earnings.

http://charleshughsmith.blogspot.com/

by Fritz | 8th Apr 20, 3:27pm 1586316438

Housing costs are a massive part of the problem. Most people have no fat in their budgets because of our horrendous housing costs.

by RickStrauss | 8th Apr 20, 3:31pm 1586316680

Highlights the stupidity of governance in the last 10+ years in NZ in treating property as a sacred cow.

by Foreign buyer | 8th Apr 20, 3:47pm 1586317630

John Keys legacy

by ShoreThing | 8th Apr 20, 3:48pm 1586317703

Governments of all stripes have contributed to this problem.

by middleman1 | 8th Apr 20, 4:10pm 1586319028

Wrong. John Key is solely responsible for this mess. And Max, he must somehow also be implicated. Anyone born with that much privilege is guilty by association, especially if they are male. And white. Bronah seemed nice but married a banker which shows she must have her own personal demons. Worse than the Addams family that lot.

by Plutocracy | 8th Apr 20, 7:09pm 1586329766

Key campaigned on lowering house prices and then proceeded to piss away 9 years pumping the bubble. He should own this. Clark deserves some stick too.

by RickStrauss | 9th Apr 20, 9:39am 1586381963

And then Bill English compounded the problem by increasing banks' risk (on the taxpayer) and denying the Reserve Bank a DTI tool to avoid inflating the bubble further.

by Dale Smith | 8th Apr 20, 7:54pm 1586332466

Yes, and quality of housing(plus schools, offices, hospitals, etc) are also partially responsible for conditions that are ideal for virus activity.

We have paid why over the top for houses that are Petri dishes.

by alittle | 8th Apr 20, 3:09pm 1586315378

Happy realization.

Once the corona virus storm passes will understand the carnage it has caused to economy not just in NZ but world over.

No one, not even the experts are able to fathom what is going to follow as this type of event of world shutting and the entire world population lock down in their home has never happened before.

At the moment government, fed are doing and throwing all that they can to survive and rightly so but every action has reaction so free and cheap money will all come at a cost.

by Lapun | 8th Apr 20, 3:12pm 1586315550

What do you mean? It happens every Xmas day. Just this time it lasts longer.

by LoveSIslandNZ | 8th Apr 20, 2:59pm 1586314780

It is wonderful that the statistics of Covid 19 in NZ show 1200 cases and only 1 died.Well done NZ, BUT We must get the economy back working as how many people might commit suicide from failed businesses or worry how to cope financially into the future!NZ should keep all most at risk people in Lockdown and let the fit and healthy back to work.What happens if the rest of the world becomes herd resistant to the virus and we don't?We must rely then on a vaccine

by Foreign buyer | 8th Apr 20, 3:08pm 1586315280

We are going to get left behind. Chinas already left the starting blocks. We are going backwards.

by bw | 8th Apr 20, 3:27pm 1586316451

China 'left the starting blocks' in all likelihood because the residents of Wuhan were going to starve to death if they didn't get 'let out'. China still has strict quarantining measures in place - and they are only the ones we are told about.
New Zealand isn't 'going backwards'. On the contrary. If any place on the planet is going to be sort out to live in, after in this lot, will it be New Zealand.
Our challenge won't be about 'Going Forward" It will be to decide "who goes forward with us?" and if we have any sense, it will be primarily those who are here already. The next question then becomes "Who else should we let in?" and the answer to that will come after many years of compensating those who are already here; have done the hard yards and who deserve to be repaid, and will be as few in number as we need for sustainability.

by Lapun | 8th Apr 20, 3:40pm 1586317236

Plus any PI country with no cases and a quarantine system approved by NZ - eg Cook Islands and Tonga (direct flights only).

by Averageman | 8th Apr 20, 4:10pm 1586319019

You are more than welcome to move there.Take some masks...?

by Lapun | 8th Apr 20, 3:21pm 1586316061

Our stats look good but Taiwan looks better - 16 cases per million, 0.2 deaths per million. We could have learned from them whereas they had only unreliable and downright wrong advice from China and WHO. Jacinda didn't do badly but if our govt listened to Taiwan instead of China we would have been acting far earlier - number of test kits ordered, ventilators, enforced quarantine and earlier lockdown alert stages. We need Taiwanese input to the Royal Commission that must follow this crisis.

by paashaas | 8th Apr 20, 7:56pm 1586332614

I fear there is no "danger" of the rest of the world becoming herd resistant any time soon.

by Houseworks | 8th Apr 20, 3:22pm 1586316158

Outlawed during the 1980s, Capital punishment has been reintroduced to punish greedy specuvestors. "Orf with their heads Mr Executioner"

by bw | 8th Apr 20, 3:27pm 1586316428

Indeed it has. But they were only 'doing as they were told' after all.
The Tax System firstly, will need addressing so that unsuspecting greedy investors ( I prefer the term, badly informed and hoodwinked citizens) don't get caught up in any new wave of euphoria.

by middleman1 | 8th Apr 20, 4:00pm 1586318435

Economists using sophisticated models not available to we armchair crystal ball gazers are predicting GDP contraction of 7-10%. Which will result in severe hardship but not the ending of civilisation portrayed by more than a few int.co commentators. Zespri intriguingly reports its premium priced kiwifruit is in strong demand in the usual markets, meat exporters moved with agility to secure new markets for product rendered surplus by the wuhan shutdown and dairy auctions have not collapsed.

by Somebloke | 8th Apr 20, 4:04pm 1586318649

We are very lucky to be born in this time and place. In medieval times half the population would have died. We have all the cheap knowledge skills and tools we need to reinvent ourselves if we have to. Can do.

by Foreign buyer | 8th Apr 20, 5:08pm 1586322526

In medievil times most people were dead by 50 so it probably wouldnt have been so bad afterall.

by bigblue | 8th Apr 20, 4:13pm 1586319184

The Level 4 lock down needs to run for at least 6 weeks total followed by a Level 3 for another 6 weeks.
All citizens should be required to wear a face mask outside of their own homes until a vaccine has been found.
There should be zero commercial passenger flights into or out of NZ until a vaccine has become available.
Anyone arriving back in on repatriation flights over next 6 weeks should go in to military style quarantine.
We cannot afford to let Covid back in to NZ once we have eliminated it - just not worth risking a second wave
In the meantime a universal wage until the economy is back on its feet.
We need to postpone the election until Sept 2021 and have a 4 year term thereafter. There is no need for a standard style government for the next 12 months.
Short term pain for long term gain.

by middleman1 | 8th Apr 20, 4:19pm 1586319572

Bblue. The govt seems to have got your message, with a survey showing overwhelming support for tighter screening, testing and quarantining of incomers to NZ. We have just this one shot to make elimination work, level 3 would be difficult to police and reliant on voluntary compliance, thus likely to be ineffective.

by Houseworks | 8th Apr 20, 4:27pm 1586320065

I dont know if junk food devotees including me would agree with that am missing my kfc and dominoes.

by Robt. | 8th Apr 20, 4:31pm 1586320263

How will NZ pay for our holiday? It will be either by cutting govt services or by increasing taxation or - most likely- both. When it comes to increasing taxation there will be two highly visible targets: CGT on private and residential rental properties and superanuation.

by Fritz | 8th Apr 20, 4:50pm 1586321402

Land tax. Yesterday.
Gst 20%
Increase top personal tax rates.
Stamp duty.
And slash the Wellington bureaucracy.

by Rob | 10th Apr 20, 2:27am 1586442443

Rates are essentially a land tax already, and that gets charged GST, which is a tax on a tax. To again tax the land by central government IMO is double taxing.

by Independent_Observer | 8th Apr 20, 5:30pm 1586323800

What's the point in putting a capital gains tax on assets that are likely to be losing value for the next few years (decades?)

Land tax might be the way to go.

by Averageman | 8th Apr 20, 7:11pm 1586329902

Yep land tax. Simple, paid quarterly. 5x the going rate for no resident owners declaring taxatjons in a foreign jurisdiction.

by CN | 9th Apr 20, 1:05am 1586351137

"What's the point in putting a capital gains tax on assets that are likely to be losing value for the next few years (decades?)"

That's environment makes it acceptable to the voting public.

by powerdownkiwi | 9th Apr 20, 3:57pm 1586404671

No to land tax. That was Bernard Hickey's nonsense idea years ago.

The whole point is that land is being used unsustainably now. We don't need to be getting more out of it, we need to be getting less. We need to be paying for it to revert to native, to go fallow, to be made more biodiverse.

A land tax would force people to try and make money out of a static (stock, not flow) item.

by Houseworks | 8th Apr 20, 5:37pm 1586324243

I JUST HEARD THE NEWS HEADLINE. "We are told to prepare for level 3 and new guidelines" Yes! Yes Yes Yes!!! Here it comes.

by Keen Observer | 9th Apr 20, 3:03am 1586358193

The Zollner, JK/ANZ/Blue RE team just about to ramp up from last year last quarter result of lighting up the FIRE economy again, courtesy of exception on capital outflow by CCP, alas even the mainland master did not foresee this Covids, now.. what a mess, back to agriculture, fresh produce.. aka what NZ good at traditionally to survive. Any FIRE economy beneficiary here in NZ expecting the rosy BAU with the new motherland back-bone economic ties... dung dung dung.. 2021 watch how those angry Americans react though,.. 'either you with us or against us' - History told us the Pearl Harbour moment, some touted the same now, as their death toll rises. Blue team, you better sure how strong this new back-bone for NZ.