Welcome to the July 2024 Economic Bulletin.
In our monthly feature we discuss the child poverty reduction targets announced by the government recently. Under the Child Poverty Reduction Act 2018, the government is required to set “intermediate targets” for child poverty reduction every three years. Strikingly, the targets announced for the three years to 2026/27 are less ambitious than the targets announced for the three years to 2023/24. The government has decided that it is happy to accept a higher rate of child poverty in New Zealand than previously targeted.
In our regular updates, we examine the employment and wage data for the June quarter. Unemployment and underutilisation are both rising steadily in the current economic downturn. Nominal wage growth slowed in the private sector, though was high in the public sector. Real wage growth, however, has been lacklustre in many industries due to high household living-costs inflation. We also provide an analysis of how real wages have fared from their peak in December 2020 through the inflationary shock of 2021 onwards. When deflated by the household living-costs price index, wages are still below their December 2020 level – New Zealand workers are, on average, receiving a lower real wage than they were three-and-a-half years ago.
We also look at consumer inflation and household living-costs inflation for the June quarter. Consumer inflation has continued to fall rapidly, coming down to 3.3% for the year ending June, which is close to the Reserve Bank’s target range of 1–3% per annum. With the economy weakening faster than many expected, this may mean that the Reserve Bank begins to cut interest rates sooner than previously thought. Household living-costs inflation – a measure which includes the cost of interest payments – remained very high, at 5.4%.
Finally, we also look at the benefit data for the June 2024 quarter, and examine the latest migration, trade, consumer and business confidence, and housing statistics.
For the latest GDP data, and the most recent Crown accounts, please see the June Bulletin.