Kiwi data show a tentative return to a - post-COVID - normal

Recent Google searches by New Zealanders for “unemployment benefit” give hints to the abruptness of the hit from COVID-19 to the country’s labour market.

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The government’s wage subsidies extension starts to roll off from mid-August, at which time the real damage will become evident, but measurement and classification difficulties will plague employment data for some time.

"New Zealanders have generally been chirpier than their Aussie cousins in recent years, having experienced higher real wage growth, lower unemployment, and lower debt loadings.”

Banks have seen an influx of deposits resulting from the wage subsidy scheme, funded by Reserve Bank of New Zealand (RBNZ) bond purchases via quantitative easing.

At the same time, borrowing demand has slowed as households cast a wary eye towards the future. Together these two things have seen the ‘funding gap’ – the gap between the banks’ domestic fund raising and offshore borrowing requirements – reduce abruptly.

Household deposits and lending

Perhaps reflecting the different COVID-19 situations, consumer confidence continues to rebound in New Zealand but is faltering in Australia.

That said, New Zealanders have generally been chirpier than their Aussie cousins in recent years, having experienced higher real wage growth, lower unemployment, and lower debt loadings. (And of course the crushing superiority of the All Blacks.)

Keeping an eye over the ditch, Melbourne’s secondary lockdown puts Australia back near the top in terms of restrictions on people’s lives in order to control COVID-19 but Victoria is not alone in re-tightening as cases rise in many parts of the world.

Standardising the main activity indicators out of the ANZ New Zealand Business Outlook survey to account for their different averages and variability makes it easier to see the suite remains very subdued across the board, despite the vigorous bounce.

Reflecting the dire global situation, export intentions are the odd man out in terms of having run out of steam already.

Apple mobility data provide a snapshot of segments of Australasia: Auckland, a tenuously post-COVID city, Sydney, a socially-distancing city, and Melbourne, a city back in lockdown.

Driving is the new black and public transport is out of fashion even where the COVID threat is now negligible. However, a decent chunk of this is explained by persistent working from home, with Auckland attendance at workplaces still down around 13 per cent from the baseline.

Aucklanders also seem to have inexplicably gone right off parks.

New Zealand Google searches show ‘masks’ got the early jump back in January, followed by ‘hand sanitizer’ (yes, annoyingly, many more kiwis searched for the US spelling) and then ‘toilet paper’ got on a roll, no longer on the bottom, surging well ahead of any lockdown announcement.

A second surge for ‘hand sanitizer’ was accompanied by a strong run from ‘alcohol’ that showed staying power as April begun, but then ‘flour’ came into the mix, with a massive break from the pack, leaving everyone eating its dust.

As we speak, ‘toilet paper’ and ‘hand sanitizer’ are languishing in the basement but ‘masks’ may be making a late comeback.

Watch this space.

Sharon Zollner is New Zealand Chief Economist at ANZ

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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