Wednesday, August 5, 2020

Point of Order: Robertson chirpy while business leaders anxious about economic outlook

As Auckland business leaders and the city’s economic development agency hold a day-long summit to thrash out a Covid-19 economic recovery plan, Finance Minister  Grant Robertson is singing from a different song- book.

He reckons NZ’s economy is doing well and
“ … as we look ahead, there are a number of areas where the government’s support will continue, including investing in our people through policies to close the skills gap, creating jobs, preparing for the future, supporting small businesses and entrepreneurs, and positioning NZ globally to continue to trade with the world”.
While  Auckland  business  leaders  are  concerned  at the fragility of  the  city’s  economy  with 150 Auckland businesses a day  contacting a Covid-19 support line asking for help, Robertson  cites consumer  confidence  surveys  which show consumer confidence remained steady in July after resurgence through May and June.
The  Finance  Minister, responding  in  Parliament to  a   ‘patsy”  question from  Auckland   MP   Deborah Russell,     referred  her   to   small-business employment and revenue data for June,  released  by  Xero   which, he  said, showed many Kiwi small businesses are recovering from the impacts of Covid-19.
 “The data showed that compared with Australia and the UK, NZ has seen the strongest early rebuilding phase so far, despite having the largest drop in small-business revenue when lockdowns were introduced. June 2020 small-business revenue is on par with revenue in June 2019, recovering from significant drops in May and April. In Australia, revenue remains down 8% on June last year, and in the UK, it’s down 18%t. At the end of June, the NZ small-business sector had 3.6%  fewer jobs than pre-crisis levels. This compares to 6.8% fewer jobs in the Australian small-business sector and 8.5% in the UK.
 “ While we know that many small businesses are doing it tough right now, this data underscores the benefit of the less restrictive business environment that Kiwi small and medium sized enterprises are now operating in, thanks to the hard work of the team of 5 million”.
Robertson  thinks it’s encouraging to see a net 31% of consumers expect to be better off financially this time next year.
And  he  gives    himself  a  congratulatory   pat  on the back:
We can see that our decision to go hard and early in both our health and economic response to Covid-19 has given Kiwi households confidence coming out of the lockdown”.
 Almost   as  an  afterthought,   he  adds:
“ … it’s also clear that with the virus raging overseas and many areas reimposing restrictions, there is less certainty in the consumer environment. That’s why we’re committed to supporting NZ firms and workers to adapt to this one-in-100-year shock, and we have made significant investments to back this up”.
Will it  be  enough  to   pull  those  Auckland   businesses   through?.
ATEED says 70% of its jobs were being supported in mid-July by wage subsidies. It is predicting 40,000 to 50,000 Aucklanders may lose their jobs in the pandemic recession.
And  there  isn’t    much  joy    in the  latest    unemployment  statistcs, even  though the headline unemployment rate unexpectedly fell to 4%, due to measurement issues as a result of the lockdown.  Adjusting for this, unemployment rose to 4.6%   in  the  June  quarter.
Robertson  of  course  put  a  positive spin on  the figures. He said the numbers showed the government’s decision to move quickly to put the wage subsidy in place to protect jobs was the right thing to do.
“Our response has protected both lives and livelihoods. The success of the team of five million with our health response, and investments to cushion the blow for businesses and households with policies like the wage subsidy, means that NZ now has economic opportunities other countries do not have.”
ANZ   economists,  in  their commentary  on   the  job  statistics,  say  both the adjusted measure and headline unemployment rate showed a very steady increase over the quarter, reaching 6.2% in the final week of the quarter, “though sampling errors are very wide”.
Under-utilisation increased from 10.4% to 12.0%, with slack emerging in the labour market, “which is only set to increase”. Wage growth was also very modest (up 0.2% q/q), despite the minimum wage rise.
This picture and the outlook for the labour market to deteriorate significantly from here will be concerning for the Reserve  Bank”.
ANZ  expects more stimulus next week.
Point  of  Order  thinks  Robertson  will  keep   singing  from  his  song-book  at  least  through to  the election.  Voters  will have to decide whether he has  got the tune  right.
Point of Order is a blog focused on politics and the economy run by veteran newspaper reporters Bob Edlin and Ian Templeton.

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