1 00:00:00,160 --> 00:00:04,080 Speaker 1: And signs of optimism among New Zealand's retail sector. The 2 00:00:04,200 --> 00:00:07,800 Speaker 1: latest Ensediar quarterly survey of business opinion shows owners are 3 00:00:07,840 --> 00:00:10,960 Speaker 1: less pessimistic about the economic outlook. So it now sits 4 00:00:10,960 --> 00:00:16,079 Speaker 1: at just five percent five percent expecting deterioration in our 5 00:00:16,120 --> 00:00:20,640 Speaker 1: economic conditions compared to forty percent three months ago. So 6 00:00:20,680 --> 00:00:24,560 Speaker 1: that's a thirty five percentage point turnaround. Indediar says the 7 00:00:24,600 --> 00:00:27,320 Speaker 1: results could make a case for another official cash rate 8 00:00:27,360 --> 00:00:31,360 Speaker 1: cut next week. Christina Jung is the Enzediar Deputychef Executive 9 00:00:31,360 --> 00:00:34,320 Speaker 1: and is with us this evening. Good evening, kyoder. Hey, 10 00:00:34,400 --> 00:00:37,120 Speaker 1: we'll get onto the sentiment data in a couple of minutes, 11 00:00:37,159 --> 00:00:39,240 Speaker 1: because I know that'll come as good news to a 12 00:00:39,280 --> 00:00:40,800 Speaker 1: lot of firms out there. But let's start off with 13 00:00:40,840 --> 00:00:44,320 Speaker 1: the latest trading data. What do your numbers say about 14 00:00:44,360 --> 00:00:45,680 Speaker 1: demand over the last quarter. 15 00:00:46,520 --> 00:00:49,159 Speaker 2: So our latest enda A quarterly serve our Business Opinion 16 00:00:49,240 --> 00:00:52,400 Speaker 2: does show that demand in the September quarter remained weak, 17 00:00:52,440 --> 00:00:55,880 Speaker 2: with a net thirty one percent of firms of reporting 18 00:00:55,920 --> 00:00:58,680 Speaker 2: that day base reduced activity in the September quarter. 19 00:00:59,240 --> 00:01:02,840 Speaker 1: Right, okay, and how is that likely to change over 20 00:01:02,840 --> 00:01:04,080 Speaker 1: the next three months? 21 00:01:04,319 --> 00:01:07,520 Speaker 2: When we look at expectations for the next quarter. Though 22 00:01:07,640 --> 00:01:10,760 Speaker 2: even though right here, right now, across a wide range 23 00:01:10,760 --> 00:01:14,200 Speaker 2: of measures, firms are reporting quite weak demand in the 24 00:01:14,240 --> 00:01:19,320 Speaker 2: September quarter, expectations for the next quarter are looking more positive. 25 00:01:19,400 --> 00:01:22,640 Speaker 2: And that's particularly for the case for sectors such as 26 00:01:22,680 --> 00:01:25,800 Speaker 2: retail and services, to the extent that these are the 27 00:01:25,840 --> 00:01:28,800 Speaker 2: sectors that are more exposed to the household sector, we 28 00:01:28,840 --> 00:01:32,240 Speaker 2: see the impact of law interest rates as having more 29 00:01:32,240 --> 00:01:35,080 Speaker 2: of a positive impact on these areas. 30 00:01:35,240 --> 00:01:37,760 Speaker 1: Yeah, I mean, that's that is a remarkable shift. So 31 00:01:37,800 --> 00:01:41,200 Speaker 1: you've gone from well thirty one percent of firms reporting 32 00:01:41,240 --> 00:01:44,679 Speaker 1: a decline in activity in the in the quarter to September, 33 00:01:45,160 --> 00:01:48,440 Speaker 1: but two percent of firms are expecting weaker activity in 34 00:01:48,480 --> 00:01:50,200 Speaker 1: the next quarter. So you know that that is a 35 00:01:50,200 --> 00:01:53,040 Speaker 1: massive shift. And what about ninety five percent of that 36 00:01:53,120 --> 00:01:53,960 Speaker 1: is down to the oci. 37 00:01:55,600 --> 00:02:00,600 Speaker 2: While we don't dwelve into US firms the reasons for 38 00:02:01,360 --> 00:02:04,360 Speaker 2: how they're expecting or feeling the way they do. What 39 00:02:04,400 --> 00:02:08,040 Speaker 2: we have seen also over the quarter is that when 40 00:02:08,080 --> 00:02:11,720 Speaker 2: we ask firms, particularly we have financial services firms their 41 00:02:11,720 --> 00:02:15,920 Speaker 2: expectations for interest rates. An overwhelming majority of firms are 42 00:02:15,960 --> 00:02:18,800 Speaker 2: expecting low interest rates for the coming year, and the 43 00:02:18,840 --> 00:02:23,399 Speaker 2: fact that we're seeing this recovery and sentiment most apparent 44 00:02:23,520 --> 00:02:26,480 Speaker 2: in the retail and services sector. It does suggest that 45 00:02:26,520 --> 00:02:29,360 Speaker 2: the impact of interest rates are having more of an 46 00:02:29,400 --> 00:02:32,880 Speaker 2: immediate impact on these the house sector, for which these 47 00:02:32,880 --> 00:02:33,840 Speaker 2: sectors will tend to be. 48 00:02:33,800 --> 00:02:37,320 Speaker 1: More exposed, right, So what sectors are less exposed to 49 00:02:37,680 --> 00:02:40,040 Speaker 1: the household sector than it and perhaps feeling a bit 50 00:02:40,200 --> 00:02:41,639 Speaker 1: more downbeat or pessimistic. 51 00:02:42,560 --> 00:02:45,600 Speaker 2: So we do see the building sector and also the 52 00:02:45,639 --> 00:02:49,359 Speaker 2: manufacturing sector remains fairly downbeat. For the building sector, that 53 00:02:49,600 --> 00:02:53,440 Speaker 2: reflects the fact that construction demand is still pretty weak. 54 00:02:53,560 --> 00:02:57,239 Speaker 2: And also when we ask architects what their expectations are 55 00:02:57,320 --> 00:03:00,640 Speaker 2: for construction work based on work in their own office, 56 00:03:00,680 --> 00:03:03,960 Speaker 2: we can see that the pipeline across our housing, commercial 57 00:03:04,160 --> 00:03:08,600 Speaker 2: and government construction work a week for the coming year. 58 00:03:08,919 --> 00:03:12,400 Speaker 2: There are signs of an improvement beyond the coming twelve months. Though, 59 00:03:12,720 --> 00:03:15,440 Speaker 2: when we are ps architects in two years time what 60 00:03:15,480 --> 00:03:18,440 Speaker 2: they're expecting in terms of that pipeline of construction work, 61 00:03:18,480 --> 00:03:21,920 Speaker 2: there's actually an improvement. Expectations of improvement for housing and 62 00:03:21,919 --> 00:03:22,840 Speaker 2: commercial construction. 63 00:03:23,240 --> 00:03:27,280 Speaker 1: Okay, is that just down to the lag in the 64 00:03:27,480 --> 00:03:30,440 Speaker 1: monthtary policy cycle? You know, basically it takes the time 65 00:03:30,440 --> 00:03:32,680 Speaker 1: for the full weight of those and distrate cuts to 66 00:03:32,680 --> 00:03:33,840 Speaker 1: be felt across the economy. 67 00:03:34,639 --> 00:03:36,800 Speaker 2: We would say part of that is the reason. Also, 68 00:03:37,640 --> 00:03:39,400 Speaker 2: for example, if we look at the fact that we're 69 00:03:39,440 --> 00:03:43,160 Speaker 2: firms asking them about hiring and investment intentions, despite the 70 00:03:43,160 --> 00:03:46,560 Speaker 2: fact that their firms are expecting demand to pick up 71 00:03:46,560 --> 00:03:49,520 Speaker 2: in the next quarter. When we ask them about their 72 00:03:49,560 --> 00:03:54,640 Speaker 2: intentions expansion plans, for example, in investment, we can see 73 00:03:54,640 --> 00:03:57,320 Speaker 2: that firms remain quite cautious. For example, a quarter of 74 00:03:57,360 --> 00:04:00,680 Speaker 2: firms are expecting to reduce investment in buildings over the 75 00:04:00,760 --> 00:04:05,440 Speaker 2: coming year. So that does suggest that while there is 76 00:04:05,440 --> 00:04:09,600 Speaker 2: that expectations or hope optimism that things will improve in 77 00:04:09,640 --> 00:04:13,240 Speaker 2: the next quarter when it comes to actually putting in 78 00:04:13,240 --> 00:04:18,880 Speaker 2: place expansion plans. Until that our firms are feeling more 79 00:04:18,920 --> 00:04:22,880 Speaker 2: conviction of a sustained improvement in demand, we do expect 80 00:04:22,920 --> 00:04:25,880 Speaker 2: that that caution towards towering and investment will remain. 81 00:04:26,080 --> 00:04:28,559 Speaker 1: So go back to that headline figure net five percent 82 00:04:28,600 --> 00:04:32,159 Speaker 1: of firms expected deterioration in general economic conditions over the 83 00:04:32,160 --> 00:04:35,680 Speaker 1: coming months. Compare that though the net forty percent from 84 00:04:35,760 --> 00:04:38,000 Speaker 1: the Dune quarter. What does this mean for the oc 85 00:04:38,160 --> 00:04:39,120 Speaker 1: artists next week? 86 00:04:40,279 --> 00:04:45,960 Speaker 2: So in terms of the rebound we can in terms 87 00:04:45,960 --> 00:04:49,039 Speaker 2: of that recovery and business confidence, it is looking quite 88 00:04:49,080 --> 00:04:52,200 Speaker 2: a more postive picture for the news and economy. Also 89 00:04:52,240 --> 00:04:55,719 Speaker 2: the fact that in this latest end are call less 90 00:04:55,760 --> 00:04:59,960 Speaker 2: about business opinion. We're seeing a continue easing in inflation indicators, 91 00:05:00,240 --> 00:05:03,760 Speaker 2: and that's particularly the case when it comes to pricing pressures. 92 00:05:03,960 --> 00:05:06,400 Speaker 2: That's driven by the fact that in this week, demand 93 00:05:06,520 --> 00:05:11,280 Speaker 2: environment booms in the manufacturing, building and retail sectors report 94 00:05:11,360 --> 00:05:15,880 Speaker 2: that they cut prices in the September quarter, with the 95 00:05:16,000 --> 00:05:19,240 Speaker 2: Reserve Bank highlighting that the change in price setting behavior 96 00:05:19,400 --> 00:05:21,680 Speaker 2: was one of the factors that provided them with the 97 00:05:21,760 --> 00:05:26,880 Speaker 2: comfort to start the easing cycle. We do see this 98 00:05:27,320 --> 00:05:31,960 Speaker 2: overall picture cautious optimism, but in an easing inflation environment 99 00:05:32,040 --> 00:05:34,279 Speaker 2: as supporting the case for food the OCO cuts. 100 00:05:34,400 --> 00:05:36,560 Speaker 1: Yeah, twenty five or fifty, What do you reckon, Christina. 101 00:05:37,520 --> 00:05:40,760 Speaker 2: I've been asked that a lot, and I would say, 102 00:05:41,640 --> 00:05:44,800 Speaker 2: based on today's results, you could argue the case for 103 00:05:44,920 --> 00:05:50,040 Speaker 2: eager move. Really, certainly it's encouraging to see that continue 104 00:05:50,400 --> 00:05:54,560 Speaker 2: decline in inflation indicator. We are expecting a twenty five 105 00:05:54,600 --> 00:05:57,719 Speaker 2: basis point decline at the upcoming meeting, and that more 106 00:05:57,720 --> 00:06:02,400 Speaker 2: reflects the fact that just with the commencement of the 107 00:06:02,440 --> 00:06:05,080 Speaker 2: easing cycle that we're just seen in August, we're already 108 00:06:05,080 --> 00:06:09,560 Speaker 2: seeing such a rebound in expectations. We feel it's prodent 109 00:06:09,640 --> 00:06:12,560 Speaker 2: to be a more measured in the easing cycle in 110 00:06:12,640 --> 00:06:15,120 Speaker 2: order to be able to assess the impact of the 111 00:06:15,200 --> 00:06:16,440 Speaker 2: moves that it's done today. 112 00:06:16,720 --> 00:06:18,880 Speaker 1: Yeah right, that makes sense. Hey, thank you so much. 113 00:06:19,120 --> 00:06:21,960 Speaker 1: Christina really appreciated that. As Christina Lung, who is the 114 00:06:21,960 --> 00:06:27,080 Speaker 1: Deputy Chief Executive of the enzed AA, speaking of optimism 115 00:06:27,080 --> 00:06:29,640 Speaker 1: in the retail sector in Australia, that there's real reason 116 00:06:29,680 --> 00:06:33,839 Speaker 1: for optimism. So retail sales have actually rebounded up almost 117 00:06:33,880 --> 00:06:37,560 Speaker 1: a percent compared to expectations, so almost double the expectations, 118 00:06:37,600 --> 00:06:39,640 Speaker 1: which and less over there actually just putting down to 119 00:06:39,680 --> 00:06:42,279 Speaker 1: the weather they reckon it's been so warm throughout August 120 00:06:42,279 --> 00:06:45,279 Speaker 1: and Australia that actually retail sales have been almost twice 121 00:06:45,279 --> 00:06:47,240 Speaker 1: as good, or the growth in retail sales has been 122 00:06:48,080 --> 00:06:50,560 Speaker 1: almost twice as good as they had been anticipating. So 123 00:06:50,560 --> 00:06:52,680 Speaker 1: we're going to catch up with Paul Bloxam from HSBC 124 00:06:53,040 --> 00:06:55,479 Speaker 1: before seven o'clock. Yet his thoughts on that one says 125 00:06:55,560 --> 00:06:58,720 Speaker 1: Jack the final quarter of the year for US retailers 126 00:06:58,760 --> 00:07:01,480 Speaker 1: is historically cyclically. That makes a lot of sense heading 127 00:07:01,480 --> 00:07:04,640 Speaker 1: into Christmas and the holidays. What we're after is the 128 00:07:04,680 --> 00:07:08,360 Speaker 1: standard annual cycle to be a positive boost augmented by 129 00:07:08,360 --> 00:07:11,440 Speaker 1: interest rate cuts to give us a macroeconomic acceleration and 130 00:07:11,480 --> 00:07:14,600 Speaker 1: get us rolling into twenty twenty five. Yeah, obviously a 131 00:07:14,640 --> 00:07:17,280 Speaker 1: lot riding on that call next week. Well, I think 132 00:07:17,320 --> 00:07:19,680 Speaker 1: it's the second to last call for the Reserve Bank 133 00:07:20,640 --> 00:07:23,920 Speaker 1: for this year. Twenty five or fifty basis points seem 134 00:07:23,960 --> 00:07:25,960 Speaker 1: to be the pick between most economists. I think the 135 00:07:26,000 --> 00:07:28,200 Speaker 1: majority at the moment probably picking twenty five, but still 136 00:07:28,240 --> 00:07:29,920 Speaker 1: a bit of data to come out before that decision 137 00:07:29,960 --> 00:07:32,360 Speaker 1: is final. Right now, it's quarter past sixty with Jack Tame. 138 00:07:32,440 --> 00:07:35,880 Speaker 1: This is News talks 'B. For more from Heather Duplessy 139 00:07:35,920 --> 00:07:39,040 Speaker 1: Allen Drive, Listen live to News talks 'B from four 140 00:07:39,080 --> 00:07:42,440 Speaker 1: pm weekdays, or follow the podcast on iHeartRadio.