Anyway, why am I so sure that the tentative green shoots I\u2019ve been writing about for the past month are finally taking hold?<\/p>\n
Well, first up, the Reserve Bank<\/a> of New Zealand (RBNZ) went as close as it possibly could to calling it officially over with its Monetary Policy Statement last week.<\/p>\n Unless something horrible happens (see earlier columns<\/a> about AI bubbles and Wall Street meltdowns), interest rates are forecast to stay on hold for the next year.<\/p>\n And the first move after that is forecast to be upwards.<\/p>\n The RBNZ was saying with its forecasts that it believes that, on balance, its job of stimulating economic growth is done.<\/p>\n The central bank is confident there is more than enough monetary policy stimulus still to flow through the economy in the coming months as Kiwis refix their mortgages at lower rates.<\/p>\n Westpac economists estimate that over the next year, 75% of all fixed-rate mortgages will come up for repricing, with most of that coming in the next six months.<\/p>\n Anecdotally, I\u2019d say an awful lot of people seem to be due to fix before Christmas.<\/p>\n These are some of the larger-than-usual proportions of mortgage holders who have gone on to floating rates in an effort to fix long at a low point of the cycle.<\/p>\n If you ask me (and people certainly do), the RBNZ has sent a strong signal that now is the time to lock in.<\/p>\n It is a signal that actually risks pushing fixed rates up<\/a> sooner than they might have moved.<\/p>\n Markets had priced in much stronger odds of a cut in February than eventuated, and wholesale rates (two-year swap rates) have actually risen already.<\/p>\n The RBNZ was aware of that risk<\/a> and decided the economy was strong enough to handle it.<\/p>\n Meanwhile, the upside is that if more people lock in lower rates sooner, we\u2019ll see more cash flowing into consumers\u2019 pockets faster.<\/p>\n After this surprisingly definitive RBNZ call, we\u2019ve had some really promising economic data.<\/p>\n It has backed up the bank\u2019s confidence in the strength of the recovery and should ensure that outgoing Governor Christian Hawkesby can sleep soundly this weekend.<\/p>\n New Stats NZ retail spending figures were the first to drop on Thursday morning.<\/p>\n \u201cRetail spending levels charged higher in the September quarter, with the volume of goods sold rising by a solid 1.9%,\u201d said Westpac senior economist Satish Ranchhod.<\/p>\n \u201cThat was much stronger than our own and market forecasts for a rise of around 0.5%.\u201d<\/p>\n That was followed by an ANZ Business Outlook<\/a> that showed confidence is now at an 11-year high.<\/p>\n An 11-year high sounds quite dramatic. Back in 2014, New Zealand\u2019s economy was on a roll.<\/p>\n HSBC\u2019s Australian economist, Paul Bloxham, had just called us a rock star economy. We\u2019d shaken off the GFC and the worst fallout of the Christchurch earthquakes. We were really starting to cash in on the free trade deal with China.<\/p>\n We were also, in Bloxham\u2019s view, doing better than Australia.<\/p>\n Rock star economy went on to become such a popular phrase that it has entered the Kiwi cultural lexicon. I should probably ask him to provide the nickname for our long downturn.<\/p>\n All of which is to say that things clearly aren\u2019t as good as that right now.<\/p>\n It\u2019s important to keep confidence surveys in context. These surveys are primarily asking people if they think things are going to get better or worse.<\/p>\n What is heartening is the trend. Over the past few months, more businesses have been feeling confident and there was a big jump in November.<\/p>\n As ANZ chief economist Sharon Zollner pointed out, the really encouraging bit was that \u201coptimism seems rooted in recent experience\u201d.<\/p>\n Firms reported that their own past activity leapt from +5 to +21, the highest reading since August 2021. Past employment lifted eight points to -2.<\/p>\n In other words, this isn\u2019t just business people assuming conditions are getting better; it\u2019s them reporting that they have.<\/p>\n Consumer confidence has been much slower to recover in the past few months.<\/p>\n People have remained reluctant to spend while they\u2019ve juggled job insecurity and ongoing cost-of-living issues.<\/p>\n The labour market is typically the last big piece of the puzzle to drop in a recovery.<\/p>\nANZ chief economist Sharon Zollner says “the stars are aligning for better times ahead”. Photo \/ Corey Fleming<\/p>\n