Wednesday, 12th June, 2019

It was a week of contrasting fortunes for Antipodeans. At 0.4% qoq, Q1 Australian GDP data undershot already subdued expectations, with the 1.8% annual growth the lowest in ten years. April retail sales figures didn’t provide much cause for cheer either, unexpectedly going backwards. Data on this side of the Tasman provided some welcome sunshine. Not only did Q1 figures confirm that NZ’s Terms of Trade continue to trend higher (with more to come), but construction activity was revealed to have boomed 6.2% over the quarter. We’ve lifted our Q1 NZ GDP pick by 0.2 percentage points to 0.6% qoq (2.4% yoy) as a result, well above that of our Trans-Tasman neighbours.

This week sees the release of more partial NZ GDP inputs ahead of Q1 GDP (released June 20), and a selection of data that will shed light on the activity pulse beyond that. Trade headlines, market gyrations and a selection of offshore data releases - US inflation, Chinese activity and Australian labour market data – will be scrutinised for how quickly global growth is slowing. Our view of the risk profile suggests a new record low for the OCR awaits (1.50%).