Economy: Economy Firing On Two Cylinders
September 3rd, 2010
Fears of a double-dip recession in the US are seeping across the Pacific and the downbeat attitude of financial markets has reached NZ’s shores – and its market watchers. Economists are paring back their expectations for recovery after BNZ’s manufacturing survey shrank for the first time since the depths of the global financial crisis, while its services sector index weakened. It’s bad news for the Govt, to the relief of a shaky Labour Opposition, whose finance spokesman David Cunliffe is getting some traction with his accusations the Govt doesn’t have an economic plan.
Finance Minister Bill English says the economy saw a 1.5% expansion early this year from a 1.5% contraction in the second half of 2009 but John Key’s troops are clearly smarting from the inability to show any gains in catching Aust. Manufacturing is the most disappointing economic indicator, as new orders fell in July, based on the BNZ index, to 47.6, below the 50 level which separates contraction from expansion. The weaker pace of recovery has forced economists to revisit their forecasts for the pace of monetary tightening by the Reserve Bank, with the phrase ‘take a pause’ creeping into their language.
Copyright © The Main Report Group
