6% aye. Higher than market expectations. Pretty inline with what we suspected here.
After 18 months of recession the unemployment rate had to be higher, it just wasn’t making sense. Now it is.
More details to come methinks.
I haven’t picked a number yet. I’m going 6.1% (seasonally adjusted). I know, that is a huge increase on 5% in March, and it would take us past Australia’s 5.8% rate. But unless I see the unemployment rate really moving then I don’t see this recession as (relatively) all that serious.
Lots of people are picking 5.5%, median pick is 5.7% (I think), RBNZ has 5.8% 5.9%. If it is under 5.5% then it is one hell of a strong result. If it is over 5.8% the market won’t be very happy. If it is over 6.1% I will be extremely confused.
Let’s see what happens.
Given concerns about future retirement funding, I thought that this cartoon from the excellent Basic Instructions site hit on some important issues:
If the dollar incorporates correct expectations of milk price increases like this then I don’t think we should be banging on about it being “too high” (Not that I think we should bang on about it in the first place).
I mean in terms of prices, aluminium has recovered strongly from its lows, beef has been holding firmish, lamb is at record high levels, and there is this indication that dairy prices could rebound. All this is occuring as manufactured goods “inventories” and “capacity” overseas are overblown.
Rising export prices and weak import prices implies higher incomes for NZ, and a higher NZ dollar – one that we shouldn’t complain about. Very interesting.
Update: Homepaddock links to the following graph. Here is the graph from the previous month.
So when Homepaddock includes the latest price, it shows that prices are back to about April levels, but are still well down on last year. The real interest is the trend going forward – with the world recovering will we see prices keep rising? Will input costs stay down (shipping and fertilizer appear to be for now)?
The RBA just left rates unchanged and they said:
Inflation is gradually moderating, given the earlier decline in energy and commodity prices, and the effects of weaker demand on prices and labour costs. Given the current prospects for demand and output, this moderation should continue over the year ahead. The higher exchange rate over recent months will assist this moderation, at the margin.
So the higher exchange rate is helping them moderate inflation.
Now our Reserve Bank keeps saying that they are worried that the exchange rate will hurt growth. For this to fit inside our monetary policy story they must be concerned that, if they don’t cut the interest rate, inflation will fall below the target band. So why don’t they just say that?
No matter how much I bang on about it, it seems that no-one wants to believe me that GST is a neutral tax and so any increase in GST that is match by a decrease in income tax WITHOUT changing the degree of progressivity will not impact on low income people per see (ht Kiwiblog)
Changing the GST rate hurts people who are currently net savers, and benefits people who are currently net borrowers. If we think that people with low incomes tend to be net borrowers then such a change is actually likely to benefit them.
Now, for a full discussion of this issue (and links to about a million other posts on tax) go here 🙂