Wednesday, July 28, 2010

Shortfall in migrants could cost NZ economy 'over $1b'

New Zealand is threatening to undershoot the number of migrants it needs to keep the economy healthy, say immigration consultants.

Immigration New Zealand has returned its lowest number of "expressions of interest", after a period of six months where selections have been around 30 per cent lower than previous years.

If the trend continues, less than 13,500 applications will be selected this year.

The numbers of skilled and business migrants finally approved could fall far short of the 27,000 to 30,000 people the New Zealand Residence Programme targets, an immigration commentator has said.

Mike Bell, who runs the online move2nz site, says this is the lowest selection since the present rules were introduced in 2005.

"At this rate, it suggests that an additional 5500 people would be required to meet the minimum numbers under the quota," said Mr Bell.

The direct financial impact on New Zealand of fewer skilled migrants coming could be a loss of more than $1 billion, because an average migrant family spends about $200,000 in New Zealand to start their new lives.

But other immigration observers say the impact could be greater, as it would leave New Zealand short of skills in vital industries and stall economic growth.

"This is worrying. There may be concerns for jobless New Zealanders but slashing skilled migration numbers is not the solution," said Dr Henry Chung, senior marketing researcher at Massey University.

Immigration expert Paul Spoonley says the global economic crisis has also resulted in a reduced number considering migration, and this could impact on migration numbers to New Zealand this year.

But head of Immigration Nigel Bickle says it is on track to meet immigration targets, despite the low selection on July 14.

Wage gap with Australia wider

Let open part of the conservation land like 1/4 or 1/8 for mining, increase job opportunity, boost the economy, attract more foreign investor, as the result Nz will be more powerful economically.

Australian workers are being paid even more than their Kiwi cousins since National became the Government.

The Dominion Post newspaper reported that while Economic Development Minister Gerry Brownlee was saying the wage gap had reduced since his party came into office, figures it obtained comparing average weekly earnings in November 2008 and February this year painted a different picture.

They showed New Zealand wages grew by 5.2 per cent compared to 6.17 per cent for Australia.

Australia's ordinary average wage rose from A$1165 to A$1243 ($1433 to $1529) while New Zealand's went from $891 to $947.

On yesterday's currency rates, the gap widened from about $540 a week in December 2008 to around $580 in March this year.

Australia weathered the global financial crisis in better shape than New Zealand, avoiding recession while New Zealand did not.

Yesterday in Parliament Brownlee said it would take time to work out exactly how much the gap would close by after the October 1 tax cuts, but the gap between the two countries "is certainly a lot less" than under Labour.

Closing the gap with Australia was something National campaigned on.

In a May speech reported by NZPA Labour leader Phil Goff ridiculed the Government's pledge to do that.

"To the contrary, wages have risen faster in Australia over the last year. Our unemployment is higher than Australia's by a significant margin for the first time in a decade."

Goff said while Australia was boosting employer contributions to superannuation the Government here had done the opposite.

Australia's top tax was higher than New Zealand and the reason New Zealanders were going to live there was wages, which the Government had not managed to lift.

He said GST, ACC increases, higher power bills, and increasing mortgage rates would also hit New Zealand workers.

At the time Finance Minister Bill English said Labour advocated more debt and higher taxes at a time of financial constraint.


Business confidence falls for third month

Business confidence has fallen for the third consecutive month, and has almost halved since reaching a decade high in February.

There was now a clear change of direction which was beyond what could be put down to "usual monthly volatility," the National Bank says in its latest business outlook survey.

Just 28 per cent of respondents expect business conditions to improve in a year, down 12 points from the previous month.

Leading the decline were the agricultural and manufacturing sectors with business confidence in those areas falling 14 points from June.

"We characterised last month's decline in confidence as the economy merely shifting from a gallop to a canter. Perhaps this month is seeing a shift from a canter to a trot."

Firms' own activity expectations fell seven per cent, but held up better overall, with 32 per cent of respondents expecting better activity in the coming year.

All sectors, bar manufacturing recorded declines in own activity reading.

Just eight per cent of respondents expected to hire staff in the coming year, a fall of five points.

The construction sector fared the best of all the sectors in this area, posting a four per cent increase in the month - something the bank says could be due to the numbers of employees who were moving to Australia, rather than a sign that things are expected to pick up.

Investment intentions fell five points, while profit expectations fell 10 points to a net nine percent of business who expect to see an improvement in their bottom line in the next year.

Interestingly, just 31 per cent of respondents expect to be putting prices up, down from 39 per cent in June, in the next year.

The result was surprising given the impending GST hike, the bank said.

"Perhaps this is an indication of the tough demand environment firms are facing, and the reality that there will be a lot of consumer resistance to price rises, no matter what the cause."

The bank said most respondents were resigned to the fact the Reserve Bank will lift the Official Cash Rate again tomorrow.

"But with signs that the economy is not surging away and momentum is levelling out, we find it difficult to envisage rates will move up every six weeks."

Thursday, July 22, 2010

Weak pound lures Kiwi investment

New Zealand has climbed up the rankings of countries investing in Britain, taking advantage of a weak pound.

It was among the top 20 investors into Britain, ranking 16th - up from 19th last year, with 24 NZ companies setting up in Britain in the last year.

Inward investment from New Zealand bucked the global trend, which saw figures drop around the world.

The United Kingdom High Commission says the number of investment projects in Britain fell by 7 per cent last year but investment into Europe dropped by an average of 10 per cent and global investment flows declined by around 40 per cent.

Dollar figures for investment were not available but New Zealand firms had invested in 24 "projects" in 2009-10, up from 18 the previous year.

The UK High Commissioner to New Zealand, Vicki Treadell, said the strong results from New Zealand showed Britain was a natural European investment destination for New Zealand.

"For many Kiwi companies the UK is the best place to start their international business experience. We work the same way and talk the same language," she said.

"The continued strength of the Kiwi dollar, as well as the UK's overall attractiveness as a destination for foreign investment, means it's a great time for Kiwi businesses in the UK."

Leading the number of investment projects last year was the United States with 484, followed by Japan with 107.

The New Zealand dollar was worth 46.8p last night.

By Grant Bradley

Money: Cheques dying a slow death

New Zealanders wrote one-third fewer cheques last year than they did six years earlier, as consumers opted for quicker payment methods.

Latest estimates from the New Zealand Bankers' Association (NZBA) show cheques now account for just six per cent of all New Zealand domestic payments (excluding cash), and the rate in which they are declining is between seven and nine per cent per year.

Preliminary figures due out shortly show just 134,065,977 cheques were processed in New Zealand during 2009, down from 206,018,930 during 2003.

New Zealand Bankers' Association chief executive Sarah Mehrtens said consumers were increasingly swapping the "cumbersome" cheque book for the convenience and ease of electronic transactions.

Not only was swiping a card a lot quicker, it was also a considerably safer form of paying, she said.

Preliminary figures show eftpos use almost doubled in the six years to 2009, while internet banking trebled during the same period and last year overtook cheques as a more popular payment method.

Mehrtens said anecdotal evidence suggested cheques were most commonly used by people over 60 years of age, and mainly for paying utility bills.

Other significant users were businesses for payments such as supplier invoices and dividend payouts, she said.

Internationally there was a move towards phasing out cheques, with the United Kingdom and Ireland set to remove them from their economies by 2018, the association said.

Mehrtens said it was too early to say if, or when a similar move might be adopted here.

"As an industry banks are continually reviewing the range of payment methods available, and cheque payments are part of that process."

NZBA members were closely monitoring these developments and were "looking for lessons that may be applied to New Zealand," Mehrtens said.

Oil giants BP and Shell both said they stopped accepting cheques several years ago, while Foodstuffs, which operates Pak 'n Save, New World and Four Square, said the vast majority of its stores still accept this form of payment.

Progressive Enterprises said cheques accounted for less than five per cent of all transactions in stores.

The company has no plans to phase them out, a spokesperson said.

BP New Zealand spokesperson Neil Green said the company stopped accepting cheques eight years ago as the rate of use declined, coupled with the introduction of ATMs in stores.

The decision to stop accepting cheques also reduced the risk of fraud, he said.

Foodstuffs general manager of retail Rob Chemaly said most stores accepted cheques when provided with satisfactory ID and a fee of 25c.

Shell petrol stations no longer accept cheques and haven't done so for six years.

"One of the things that our customers value the most is speed of transaction - they quite rightly don't want to be standing in a queue waiting for people to fill out cheques, write their details on the back, provide ID and fill out the stubs.

"Our customers want to get in, get what they want and get out quickly to get on with their day," spokesperson Jonathan Hill said.

Interesting cheques are the only payment method the Department of Building and Housing accepts for residential tenancy bond payments, but is set to move to an online system in the next year or so.

Spokesperson Jeff Montgomery said the move was purely customer driven.

"The feedback we have had from landlords is that the only reason they use their chequebook is for bond payments."

Montgomery said the DBH used to accept cash for bond payments, but this posed a significant security risk.

2009 preliminary figures

Eftpos: 1,191,761,110
ATM: 207,653,954
Credit card: (all NZ issue credit cards used globally): 242,352,783
Credit card: (all credit card transactions in NZ): 248,452,661
Internet banking: 143,074,467
Electronic credits: (includes automatic payments and direct credits): 366,059,140
Direct debits: 120,231,525
Cheques: 134,065,977

By Susie Nordqvist

Saturday, July 17, 2010

Inflation now 1.8pc - lower food prices offset tobacco hike

The consumers price index (CPI) rose 0.3 per cent for the June 2010 quarter, Statistics New Zealand said today, which means annual inflation is now running at 1.8 per cent.

This morning's inflation numbers are slightly lower than what many expected, with economists and the Reserve Bank picking 0.5 per cent for the quarter - a 2 per cent annual inflation rate.

This follow a 0.4 per cent rise in the March quarter, when the CPI annual rate rose 2 per cent.

Higher tobacco, transport, and housing prices were partly offset by lower food prices prices in the latest figures.

Statistics NZ manager Chris Pike said cigarette and tobacco prices rose 8.7 per cent, reflecting excise duty increases.

Food prices fell 0.9 per cent, reflecting lower prices for meat, poultry, and fish (down 3.3 per cent) and fruit and vegetables (down 2.6 per cent).

The transport group rose 0.9 per cent in the June 2010 quarter, reflecting higher prices for petrol (up 1.4 per cent) and second-hand cars (up 2.4 per cent).

The housing and household utilities group rose 0.5 per cent, with higher prices for rentals for housing (up 0.5 per cent) and electricity (up 1 per cent).

The average pick among market economists polled by Reuters was for the CPI to rise 0.5 per cent, which would keep the annual inflation rate steady at 2 per cent. That was also the Reserve Bank's forecast.

Goldman Sachs JBWere economist Philip Borkin said the "downside
surprise" for the Reserve bank was a pleasant one, ahead of what is arguably going to be a challenging period for policymakers.

"At a time when the domestic economic recovery is lacklustre (with data and various industry anecdotes nothing but mixed) and risks remaining around the pace of global recovery, in our eyes the Reserve Bank is going to have to contend with inflation likely rising over 5 per cent year on year on the back of government charges and a hike in GST - a somewhat uncomfortable scenario."

The Reserve Bank, said Borkin, was assuming that "the coming temporary increase in inflation is assumed to have an only limited impact on medium-term inflation expectations".

"We do not feel today's data has any major implications for monetary policy. We see the Reserve Bank is rightly more concerned about medium-term inflation and there are still a number of question marks on this front; in particular, whether inflation expectations remain anchored."

Borkin said he thought the Reserve Bank would pause in its move towards raising the Official Cash Rate before the end of this year, though he did still expect a 25 basis point hike at the end of this month.

"But as the recent domestic data attests to (and the soft CPI today supports at the margin), we believe there is a risk that this pause comes earlier than our current forecasts."

ANZ Bank senior economist Khoon Goh described today's CPI numbers as "soft across the board - especially when you consider that most of the increase in the headline number was due to a large increase in tobacco excise taxes."

If the tobacco tax increase was excluded, underlying CPI was up just 0.1 per cent in the quarter.

This morning's subdued CPI would be " the last for a while", said Goh, " as various government related policy changes is set to lead to large increases in the CPI over the coming quarters."

Nonetheless, the starting point was better than what the Reserve Bank was expecting. Goh said he expected to see another increase in the Official Cash Rate - 25 basis points (0.25 per cent) later this month.

Today's figures, along with other recent data, suggested " some waning in growth momentum", said Goh.

CTU Economist and Policy Director Bill Rosenberg said the Reserve Bank should be holding interest rates down in light of the lower than expected inflation rate announced today.

"The Reserve Bank overestimated inflationary pressure and underestimated the grounds for concern at the state of the economy," he said.

"The main concern now is about the impact of GST on inflation heading into 2011 and the pressure this puts on workers and families who missed out on decent tax cuts and have had low or no wage increase."

Inflation has averaged just under 3 per cent over five years, held up by the non-tradable sectors (where prices are not disciplined by international competition or exchange rate) averaging close to 4 per cent.

The Reserve Bank forecasts annual non-tradables inflation of 2 per cent in the June quarter, but that is as good as it gets. It expects it to be back above 3 per cent in a year.

The impending GST rise is expected to add 2 per cent to the CPI, and the emissions trading scheme will impact on fuel and electricity prices, adding 0.3 per cent.

The Reserve Bank in its June monetary policy statement said it expected the slack in the economy generated by the recession to be eliminated by early next year and that increased pressure on domestic resources would result in higher non-tradable inflation.


Google earnings rise - but miss target

SAN FRANCISCO - Google's second-quarter earnings missed analysts' target as higher expenses and the fallout from the European debt crisis dragged down the internet search leader.

The letdown stemmed from Google's expanding payroll and a run-up in the US dollar that has been driven by fears that the euro will crumble if governments in Greece, Spain, Portugal and Italy default on their perilously high debts.

The worries hurt Google because about one-third of the company's revenue comes from Europe, and customer payments made with the euro translated into fewer dollars than a year ago.

Google added nearly 1,200 employees in the second quarter to end June with more than 21,800 workers.

Despite the currency squeeze and rising expenses, Google's net income and revenue still rose at a fast clip. But the earnings growth wasn't quite as robust as analysts had hoped, a factor that seemed to amplify investor concerns that had already been weighing on Google's stock price.

Google shares fell US$19.79, or 4 per cent, in extended trading Thursday after the release of results. Earlier, the company finished the regular session at $494.02, up $2.68.

The report wasn't entirely bad news. In a positive sign for the overall economy, marketers were willing to pay more for the online ads that generate virtually all of Google's income, and people are clicking on the commercial messages more frequently.

Those trends provide another indication that more companies and shoppers are feeling a little better as they recover from the worst economic downturn in more than 70 years.

Google, which is based in Mountain View, earned $1.84 billion, or $5.71 per share, in the April-June period, up 24 per cent from $1.48 billion, or $4.66 per share, a year ago.

If not for expenses covering employee stock compensation, Google said it would have made $6.45 per share. That figure was below the average estimate of $6.52 per share among analysts polled by Thomson Reuters.

Revenue climbed 24 per cent to $6.82 billion, from $5.52 billion a year earlier. After subtracting commissions paid to its ad partners, Google's revenue stood at $5.09 billion - about $10 million above analyst projections.

- AP

By Michael Liedtke

Friday, July 9, 2010

Facebook credits to be sold in Kiwi stores

Facebook is partnering with a Malaysian company to sell credits at retail outlets across Asia, New Zealand and Australia for the first time, aiming to make it easier for millions of people to purchase virtual goods and play games on the social networking site while boosting revenue for developers.

Electronic payments company MOL - part of the business empire of tycoon Vincent Tan - will offer the online currency from Aug. 1 at more than 500,000 outlets including 7-Eleven stores and Internet cafes in five Southeast Asian countries, India, Australia and New Zealand, company spokesman Nor Badron said Friday.

The move is targeting people who don't have a credit card, particularly younger Facebook users, and those who don't want to take the risk of making payments online.

"Asia has a huge gaming community, and it's typically young people," Nor said. "The penetration for credit cards is very low... so the developers are not making money and missing this opportunity."

Nor said MOL already sells prepaid credits for other online games at its established network of stores, but it will be the first time that consumers can buy credits for Facebook's applications, including such popular games as Mob Wars and FarmVille, without credit cards.

MOL, which last year bought social networking site Friendster, announced the partnership with Facebook in a press release Thursday.

"We view this agreement as a major opportunity to broaden the availability of a simple, unified currency that can be used in games and applications across Facebook," said Vaughan Smith, director of business and corporate development at Facebook, in the press release.

"Working with MOL means we can offer the benefits of Facebook Credits to millions of people in Asia using a payment system that is already widely used and trusted," he said.

In Southeast Asia, the credits will be sold in Malaysia, Thailand, Singapore, Indonesia and the Philippines.

More than 70 percent of Facebook members use applications, and payment transactions and volume have seen a double-digit increase over the last quarters, according to MOL.

Tuesday, July 6, 2010

Consumers feeling comfortable financially - survey

I really doubt about the survey which was publish by NzHerald. Are the surveyor asking the right people ? Almost everything in our daily lives have increased but not our wage though. We should be more worried financially.

Consumers are feeling more comfortable about the economy and their personal finances than they were in February, a poll by UMR Research has found.

The Consumer Comfort Index (CCI), carried out last month, found 48 per cent of 1100 New Zealanders surveyed believed the economy was either excellent or good, up from 32 per cent in February and 37 per cent in April.

As a result, the index improved to minus 1 per cent, compared with minus 18 per cent in February and minus 12 per cent in April.

The CCI was based on how people felt about the economy and their personal finances, and how they rated their ability to buy the things they wanted and needed.

The latest result meant the number of respondents feeling negative about financial aspects of their lives only just outnumbered those feeling positive, UMR said.

The US CCI currently sat at minus 43 per cent, compared with minus 49 per cent in February.

Asked about their personal finances, 58 per cent of respondents rated them as either excellent or good, up three percentage points since February.

Forty-one per cent said now was a good time to buy the things they wanted and needed, up six percentage points since February.

Respondents across the country were more positive, with Auckland's CCI now at plus 1 per cent, up from minus 19 per cent in February, and Christchurch now at plus 2 per cent, up from minus 9 per cent.

Wellington consumer comfort leapt from minus 18 per cent in February to plus 7 per cent now.

The rest of the North Island was at minus 4 per cent, up from minus 22 per cent, and the rest of the South Island was now on minus 9 per cent, up from minus 16 per cent.

Men were more positive than women, at plus 7 per cent (up from minus 14 per cent in Feburary), and women at minus 8 per cent (up from minus 22 per cent).

The poll of 1100 people was carried out June 16-22 and had a margin of error of plus or minus 2.95 per cent.


Auckland house prices slump in June

Auckland house sales slumped last month as winter malaise set in among buyers amid declining demand in the property market.

The number of sales sank 16 per cent to 665 in June from a month earlier, and was down 23 per cent from a year ago, according to Barfoot & Thompson, Auckland's biggest real estate firm.

The average sale price dropped 3.6 per cent to $523,058 month-on-month, and was up an annual 0.2 per cent.

"Housing market activity is likely to remain very weak throughout the remainder of 2010, reflecting waning demand," said Jane Turner, economist at ASB Bank.

"Given the weakening fundamentals we expect to see house prices decline slightly this year, however, the low level of supply, as indicated by weak consent issuance and the low level of new listings, will limit the degree of downside pressure on house prices."

House prices are expected to fall at an annual pace of 2 per cent for the next two years with several years of subdued sales volumes, according to Westpac Bank.

That comes after the government clamped down on tax benefits for property investors in its May Budget, while the Reserve Bank embarked on tightening monetary policy.

Barfoot chief executive Wendy Alexander said the Budget contributed to lower sales, but didn't have much impact on prices.

The firm added 1,194 new listings in June, down 13 per cent from May, and had 5,794 properties on its books at the start of July. At the start of June, it had 6,023 properties on its books, and on July 1, 2009, it had 5,597. ASB's Turner said new listings had been "very subdued" for some time.

Barfoot's average weekly rent rose to $403 last month from $398 in May and $388 a year earlier. It rented out 690 properties in June, up from 649 a month earlier, though down from its 735 in 2009.

Turner said anecdotally, landlords have been lifting rents in response to the budget's tax changes, though "the ability to increase rents may be limited by prospective tenants' ability to pay given the weakness in wage growth over the past year."