BNZ Chief Economist Tony Alexander writes:
Good evening everyone – although where I am in Canary Wharf in London it should be good morning. Reading the Financial Times each morning and speaking with many people over the past week one thing is clear – this part of the planet is weak and there is no reason for believing that this situation will change in the coming year. The UK economy has just slipped back into recession as has Spain, manufacturing sector indicators for the Euro-Zone have plunged, the French Presidential election may produce a Socialist winner intent on raising taxes and boosting government spending even further, the Greeks may soon elect a Government opposed to austerity measures, the Dutch Government has just collapsed, and the much vaunted fiscal pact aimed at making the Euro-Zone workable could be falling apart.
Considering the situation here, the underlying doubts about labour and housing markets in the United States, and weakness which next week is likely to force the Reserve Bank of Australia to ease monetary policy again, it is unsurprisingly that the NZ dollar remains strong. We look less bad than the rest. That is the case even though the employment data released in NZ this week show jobs growth slowing to 0.2% in the past three months form 0.3% in the three months before that and 0.4% before that.
At least construction prospects look good and over here companies are hiring people to work on engineering designs for the Christchurch CBD rebuild.
It seems very clear that strong global economic growth is some years off. Decades of unsustainable spending and debt is catching up.