Unemployment down, Fonterra down, OCR flat

Despite negative business confidence there are some good economic signs, with unemployment down and the OCR being left low by the Reserve Bank with an indication it will stay low through next year and into 2020. This will keep interest rates low. However the news is not so good for Fonterra and their many shareholder farmers.

Employment rates at record high

Today’s record employment rate of 68.3 percent, matched by the lowest unemployment rate of 3.9 percent in over a decade means better lives for thousands of New Zealanders, Minister of Employment Willie Jackson says.

“There are now over 2.66 million New Zealanders in employment which means that 29,000 more people and families are engaged in earning since the last quarterly results were released”.

“The underutilisation result for this quarter has continued the recent downward trend and has fallen further to 11.3 percent. This is an indication that people who want to work, are able to work.

“The reduction in the unemployment rate for Māori to 8.5 percent (down from 9.9 percent) is a further example of our continued focus on improving outcomes for our people and while this is the lowest it has been in over a decade, the work doesn’t stop.

Today’s Household Labour Force Survey release shows a further reduction in the NEET rates for 15-24 year olds from 10.9 to 10.1 percent.  This is a down from the same time last year when our young people not earning or learning were at 11.3 percent.

Unemployment drop another sign of strong economic fundamentals

Today’s drop in the unemployment rate to its lowest level in over a decade is another real example of New Zealand’s strong economic fundamentals, Finance Minister Grant Robertson says.

The unemployment rate fell to 3.9% in the September 2018 quarter, the lowest since June 2008. At the same time, the employment rate rose to a record high of 68.3%.

So that is all good news.

Yesterday from the reserve Bank: Official Cash Rate unchanged at 1.75 percent

The Official Cash Rate (OCR) remains at 1.75 percent. We expect to keep the OCR at this level through 2019 and into 2020.

The pick-up in GDP growth in the June quarter was partly due to temporary factors, and business surveys continue to suggest growth will be soft in the near term. Employment is around its maximum sustainable level. However, core consumer price inflation remains below our 2 percent target mid-point, necessitating continued supportive monetary policy.

GDP growth is expected to pick up over 2019.

Downside risks to the growth outlook remain. Weak business sentiment could weigh on growth for longer. Trade tensions remain in some major economies, raising the risk that trade barriers increase and undermine global growth.

Upside risks to the inflation outlook also exist. Higher fuel prices are boosting near-term headline inflation.

So this is generally looking good, especially for those with mortgages and business loans. Not so good for those with interest earning investments.

While dairy farmers will like the low interest rates not all is well for them.

ODT: Fonterra told it must ‘do better’

Fonterra’s financial performance since its inception has been “unsatisfactory”, a report has found.

The report said the country’s largest dairy co-operative had failed to deliver meaningful returns over and above the cost of capital since inception.

Milk growth over the past 15 years had been an impediment but was now largely past. It had been critical that was addressed to ensure continued supply of milk and capital.

Mr Hurrell told around 300 farmer shareholders at the meeting the company had plans to turn around its financial performance and no longer aimed to produce as much milk as possible.

RNZ: Fonterra’s ‘sorry’ not enough for all shareholders

Fonterra managers met with 400 shareholders in Waikato today to apologise for their nine-figure loss. As Eric Frykberg reports, while many farmers backed the co-operative, others were fuming.

Global dairy prices have been trending down all year – see https://www.globaldairytrade.info/en/product-results/

Mixed confidence news – RNZ:  Consumer confidence drops to lowest level in three years

The ANZ-Roy Morgan consumer confidence index fell three points last month to below its historical average.

The future conditions index was down five points to the lowest level since 2015.

The chief economist at ANZ, Sharon Zollner, said the pessimism about the future has spread from being about the broader economy to individuals’ future financial position.

But consumers were still relatively confident about current conditions, with a net 11 percent feeling better off than they did a year ago.

Auckland Business Chamber – Encouraging signs for business confidence

Auckland’s SME (Small and Medium Enterprise) sector displayed a changing view of business confidence in Auckland Chamber’s latest quarterly survey.

“Confidence amongst Auckland business showed a 10% improvement on last quarter,” said Chamber CEO Michael Barnett.

The survey of more than 700 respondents recorded 48% of respondents expecting conditions to deteriorate over the next six months compared to 54% from the previous survey.

“This in part reflects the move from winter into summer and the start of the holiday season, but it is a positive,” said Barnett.

“Despite this, the survey reveals elements of uncertainty that SME’s are having within a changing business environment.”

So mixed signals there too.

Leave a comment


  1. Blazer

     /  9th November 2018

    Fonterra ‘must do better’…Fonterra ‘sorry’….sounds like a school kids report.
    What happened to the much vaunted efficiency of well remunerated*….executives ,and the holy grail of market forces.
    $8MIL a year …to the CEO…and he was still a flop!
    Have a near monopoly domestically=$6 for 500gms of butter…do me a favour!

  2. David

     /  9th November 2018

    It’s a weird environment, things are ticking along nicely but folk are worried this government if faced with a shock wont know what to do and it makes everyone cautious.

    • robertguyton

       /  9th November 2018


      • David

         /  9th November 2018

        Its across the board I would say with the only nuance being as to if they think Ardern nice but a bit dim and distracted to Ardern being nice but utterly out of her depth along with the whole Labour cabinet and caucus. The reality is better than than how people feel.

        You know what why do I bother engaging with you, I have never seen you post anything of any interest, insight or value on this site. I think they refer to the type of comments you make as trolling.

    • Blazer

       /  9th November 2018

      love to know who National have with this ability to deal with this imagined ‘shock’!

      • David

         /  9th November 2018

        You may not be aware but National, despite winning the popular vote, is not the government at the moment.

        • robertguyton

           /  9th November 2018

          Your “across the board” claim is clearly nonsense, David. Ardern’s popularity is high, her PM polling, high her party’s polling, high and that of the National Opposition, 37% and plummeting.

          • duperez

             /  9th November 2018

            When the public polls come out they can be believed. Putting out some rumoured % is just that.

            A couple of weeks back a mass would never have had Simon Bridges as nice but a bit dim and distracted or being nice but utterly out of his depth along with his whole caucus. They would have had them somewhat different I think.

            These few weeks later they still mightn’t have them like that but they certainly wouldn’t have them where they did have them. While the perceptions might have changed the end support is not necessarily that much changed.


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