CTU Monthly Economic Bulletin - No. 224 (November 2020) - NZCTU
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CTU Monthly Economic Bulletin
No. 224 (November 2020)
Thanks to everyone for your support and feedback. My contract finishes soon and Craig Renney –
the ‘chipper Georgie’ and finder of $5 billion hole1 – takes up the Bulletin writing from next
January.
Labour, Houses, and the Reserve Bank
Summary
What a wild ride the last year has been.
I look back to my first Bulletin in January – I had NO IDEA – and that wasn’t just that I was coming
out of tax and in to labour market things. It is trite to say that Covid has changed everything but
in some ways, it hasn’t changed anything.
Unemployment and underemployment is still structurally female, Māori and Pasifika. House
prices are still rising; the cost of living for low income people is still higher than for high income
people and the labour share of GDP resumes its downward fall.
So with this in mind as a final (from me) bumper issue2 this month’s Bulletin is in three parts:
• Discussion of the Labour Market Statistics and GDP (Income) that came out this month;
• Discussion of interest rates, the Reserve Bank and house prices; and
• The usual indicators.
How much do employees keep from what they produce?
The GDP (Income) data came out last week. From that we get information on things like
household savings but also information on how much of the income, earned by the people and
capital in the country, went to those of us earning wages.
Short answer – not enough.
1 https://www.stuff.co.nz/national/politics/300139041/election-2020-labour-connect-the-data-analysis-tool-that-boosted-
jacinda-arderns-campaign
2 But lot’s of graphs and pictures – so, I hope, a reasonably easy read.
1 CTU Monthly Economic Bulletin –November 2020
Long answer – not as much as was previously the case and its proportion is falling again.
The measure used by the CTU compares the amount received by employees to the amount
received by businesses before they pay employees – ie the total return or value added. As the
calculation is only to March 2020 it has yet to substantively feature the effect of the wage
subsidy or any possible reduction in income from businesses from the lockdown period.
Also, any return to self-employed labour remains in the denominator.
Labour (compensation of employees) share of
GDP (Income - Nominal)
Annual to March
50.5% 50.3%
50.1%
50.0% 49.8% 49.7%
49.6%
49.4%
49.5% 49.1%
48.9%
49.0% 48.7%
48.5% 48.5%
48.5%
48.0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Stats NZ: SNE087AA
What about unemployment?
For those of you who have been following along, the June 2020 labour market statistics showed
a reduction in unemployment but a rise in those wanting more, or facing barriers to, paid work –
underutilisation. Namely 4% unemployment and 12% underutilisation.
The 4% unemployment was as much a feature of only counting people ‘actively seeking work’
during a period where we were locked down as much as the application of the wage subsidy – so
I was hanging out for this month’s figures.
At Budget time, Treasury was expecting unemployment to peak in the September quarter at just
under 10%3 and just before the election were looking at unemployment peaking in March 22 at
7.8%. That is a lower peak but a longer period at those levels.
3 https://www.treasury.govt.nz/publications/efu/budget-economic-and-fiscal-update-2020-html#section-4 Figure 1.3
2 CTU Monthly Economic Bulletin –November 2020
Not exactly a good thing – lower levels but for longer.
So all things considered, the actual results – 5.3% unemployment; 13.2% underutilisation – are
really not bad. This is the same as was the case in 2016 - 7 years after the Global Financial Crisis.
Although it is not clear if globally, we are coming out of the pandemic recession – or going into it
once the global government support comes off.
But as always – it is what is going on under the hood – how those figures are made up that tells
the story.
First of all, women’s employment has fallen faster than men’s employment over the last year.4
Male v Female Employment
1,130.00
1,110.00
(000)
1,090.00
1,070.00
1,050.00
2019Q3 2019Q4 2020Q1 2020Q2 2020Q3
Source: Stats NZ HLF267AA
Total male employees Total female employees
4 This graph does look less extreme that the one I produced in the August bulletin. This is because Stats NZ have recalibrated the
information from the Household Labour Force Survey and not a mistake I made – which was my first thought.
3 CTU Monthly Economic Bulletin –November 2020
4
People (000)
-10
-8
-4
-2
0
2
4
6
8
10
-6
12
Paid employees (000)
-30
-20
-10
0
Agriculture, Forestry, and…
Manufacturing and…
Construction
Years
Wholesale Trade
Retail Trade and…
Transport, Postal and…
Information Media and…
Years
Male
Financial and Insurance…
Rental, Hiring and Real Estate…
Professional, Scientific,…
Auckland
Years
Public Administration and…
Men
Education and Training
Health Care and Social…
Years
Arts, Recreation and Other…
Women
Wellington
…with the primary impact being in Auckland for women.
Agriculture, Forestry, and…
Source: HLF267AA
Manufacturing and…
Year to September 2020
Years
Construction
Year to September 2020
Aged 15-24 Aged 25-34 Aged 35-44 Aged 45-54 Aged 55-64
Source: Stats NZ HLF210AA
Wholesale Trade
Canterbury
Retail Trade and…
Over
Transport, Postal and…
Aged 65
Years and
Change in paid employment by age and gender
Information Media and…
And this has impacted older women and young people disproportionately…
Financial and Insurance…
Female
Rental, Hiring and Real Estate…
Ages
Total All
Professional, Scientific,…
Change in paid employment by industry, gender and region
Public Administration and…
Education and Training
CTU Monthly Economic Bulletin –November 2020
Health Care and Social…
Arts, Recreation and Other…
However, since June, the fall in part time and casual work seems to be reversing but with a drop
in both male and female permanent employment.
Employees by employment relationship
120 1,040.00
Permanent employees (000)
Casual, fixed term or temporary
100 1,020.00
1,000.00
80
980.00
employees (000)
60 960.00
40 940.00
2019Q3 2019Q4 2020Q1 2020Q2 2020Q3
Source:Stats NZ HLF276AA
Male casual, fixed term or temporary employee (LHS)
Female casual, fixed term or temporary employee (LHS)
Male permanent employee (RHS)
Female permanent employee (RHS)
Although it is unclear how permanent the increase will be as perceived job security is much
lower for part time and casual work than it is for permanent employees - with the average being
about 21%.
Job security
High or medium perceived chance of losing job in
next 12 months
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
Temporary Casual Fixed-term Permanent Overall Union Not union
employee & temp employee member member
agency
Source: Stats HLFS Table 7 Supplementary information
Moving now to unemployment and underemployment.
5 CTU Monthly Economic Bulletin –November 2020
Pākehā men and women have broadly the same levels of unemployment at about 4%, while
Māori and Pasifika men and women have double those levels at 8%.
Unemployment rates by gender and ethnicity
10
8
Percentage
6
4
2
0
European Maori Pacific Peoples European Maori Pacific Peoples
Male Female
Source: HLF123AA
2019Q3 2019Q4 2020Q1 2020Q2 2020Q3
On the face of it while Māori, Pasifika and female unemployment is structurally higher than
Pākehā men’s unemployment; the increases are much lower than could have been expected
given we are currently living with a global pandemic – even with the benefit of the wage subsidy.
But unemployment involves actively looking for paid work and getting none. Other permutations
such as not enough paid work or having barriers to taking up employment are not included in the
unemployment statistics.
They are, however, included in the underutilisation statistics in addition to the unemployment
numbers. In terms of rates, we see Māori women, followed closely by Pasifika women, with
Māori and Pasifika men next in line, as having had the structural levels of high underutilisation
made worse in the last year.
Underutilisation rate by gender and ethnicity
25
20
Percent
15
10
5
0
2019Q3 2019Q4 2020Q1 2020Q2 2020Q3
Source: Stats NZ HLF280AA
Male European Male Maori Male Pacific Peoples
Female European Female Maori Female Pacific Peoples
6 CTU Monthly Economic Bulletin –November 2020Underutilisation by gender and ethnicity
140
People (000) 120
100
80
60
40
20
0
European Maori Pacific European Maori Pacific
Peoples Peoples
Male Female
Source: HLF280AA
2019Q3 2019Q4 2020Q1 2020Q2 2020Q3
And why all this matters is every number in the graph above is a person. Stats NZ recently
published their wellbeing survey. Two in particular caught my eye.
The first was overall life satisfaction. People had to rank their satisfaction on a scale of one to
ten. One being very low life satisfaction and ten being the highest possible. People who are
unemployed, underemployed or face barriers to paid employment recorded much lower life
satisfaction when compared to the total population. And while this is exactly as could be
expected, it is good to see it recognised formally.
Overall life satisfaction
September 2020 quarter
35.0
30.0
25.0
20.0
%
15.0
10.0
5.0
0.0
0 to 6 7 8 9 10
Source: Stats NZ: HLFS Wellbeing Table 9
Total population Underutilised people
7 CTU Monthly Economic Bulletin –November 2020The second was quality of housing. People who were underemployed, unemployed or face
barriers to paid employment are twice as likely to have major problems with damp or mouldy
homes or with heating or keeping warm in winter.
Housing quality - Major problems
September 2020 quarter
10.0
8.0
6.0
%
4.0
2.0
0.0
Dampness or mould Heating or keeping warm in winter
Source: Stats NZ HLFS Wellbeing Table 9
Total population Underutilised people
What about wages? How are they doing?
On a simple comparison to the consumer price index, while the increases are lower than this
time last year, they are still higher than the CPI.
Average hourly wage increases v CPI
4.7
% change from same period previous
4.2
3.7
3.2
2.7
year
2.2
1.7
1.2
2019Q3 2019Q4 2020Q1 2020Q2 2020Q3
Source: Stats NZ QEX047AA CPI035AA
Private Sector Total public and private sector Consumer Price Index
Although as we have discussed before, the CPI relates to an average basket of goods.
8 CTU Monthly Economic Bulletin –November 2020For people with the lowest 20% of incomes in New Zealand; their ‘inflation’ with the exception of
the last quarter is significantly higher than the average. People with the highest 20% of incomes
have consistently lower ‘inflation’ than the lowest income group and the average CPI.
Annual change in prices
3.0%
Percentage change on same month
2.5%
2.0%
previous year
1.5%
1.0%
0.5%
0.0%
2019M09 2019M12 2020M03 2020M06 2020M09
Source: Stats NZ HPI001AA CPI009AA
Consumer Price Index Lowest 20% by income Highest 20% by income
Housing is a key driver of this difference. With high rents being a disproportionate expense for
the lowest incomes and low interest rates being a greater feature of high-income people’s
expenditure – this helps explain a lot of the difference.
Allowing for the different types of ‘inflation’ this means that the effect of the higher wages in
raising living standards has been less for those with lower incomes, compared to their living
costs, than people with higher incomes.
But there seem to be some positives from a gender and ethnic perspective. Weekly earnings
received by women have increased by region…
9 CTU Monthly Economic Bulletin –November 202010
0.0%
2.0%
4.0%
6.0%
8.0%
0.0%
2.0%
4.0%
6.0%
8.0%
12.0%
14.0%
-8.0%
-6.0%
-4.0%
-2.0%
10.0%
Forestry and Mining
Manufacturing
and by industry.
Electricity, Gas, Water and Waste
Services
Construction
Men
Wholesale Trade
Retail Trade
Accommodation and Food Services
Transport, Postal and Warehousing
Auckland Regional Council Area
Male
Canterbury Regional Council Area
Information Media and
change
Telecommunications
change
Female
Financial and Insurance Services
Rest of NZ
Rental, Hiring and Real Estate
Source: Stats NZ QEX009AA
Year to September 2020
Services
Source:Stats NZ QEX007AA
Year to September 2020
Professional, Scientific, Technical,
Administrative and Support…
Public Administration and Safety
Women
Wellington Regional Council Area
Education and Training
Health Care and Social Assistance
Average weekly earnings (employee) by gender and region -
Arts, Recreation and Other
Average weekly earnings (employee) by gender and industry -
Services
Total All Industries
CTU Monthly Economic Bulletin –November 2020Except these numbers reflect the incomes of the people still in work. If low paid women have
been removed from the calculation – as appears to be the case from the previous discussion on
unemployment and underutilisation – it isn’t the positive story as it may appear and simply a
function of how averaging works.5
And for completeness, particularly in light of Jennifer Laulala’s plea to address the ethnic and
gender pay gap in the Ministry of Justice - here is the most recent gender wage gap by sector 6.
Although it has fallen since this time last year in both the public and private sector; it is unclear
how much of this is driven by the reduction in the number of low paid women from the
calculation.
Gender wage gap by sector
September 2020 year
21% 19%
18%
19% 17% 17% 17%
17%
15% 14%
13% 13%
13% 12% 12%
11%
2019Q3 2019Q4 2020Q1 2020Q2 2020Q3
Source: Stats NZ QEX002AA
Public Sector Private Sector
So what to do all about it?
While the wage subsidy has done its job in supporting the economy and employment generally –
it is time for targeting. When the Prime Minister was recently asked about the gender and ethnic
5 For example, if there are two people in paid work one who earns $1000 and another who earns $100 – the average wage is
$550. If the low paid person loses their job – the average becomes $1000. While there has been an increase of 82% in the
average wage – no one is better off and in fact the low paid person is worse off as they now have no income.
6 https://www.nzherald.co.nz/nz/politics/why-have-we-been-forgotten-prime-minister-urged-to-take-action-on-gender-pay-gap-
for-maori-and-pasifika-women/F4FL5VONZ7UM7C2EKNTVMMMSOI/
11 CTU Monthly Economic Bulletin –November 2020disparities in the unemployment and under-utilisation figures she said that her hope was that the flexiwage scheme would be of use in reducing the disparities.7 Now there is a lot to like about the flexiwage scheme8. It is a subsidy for employers to help with training and mentoring a new staff member who comes from WINZ. For the employee to be eligible they need to be on a main benefit - JobSeeker, Sole Parent, Supported Living - or WINZ are helping them find a job. And in terms of targeting those on a benefit – potentially long term – it is a great initiative. For women though, if they have a partner who earns the fulltime minimum wage, they are not eligible for a main benefit. They may have been eligible for the Covid Income Relief Payment but if Māori or Pasifika they were twice as likely to have their application declined than Pākehā.9 So then the other eligibility criterion of having ‘asked [WINZ] for help with getting or keeping a job’ becomes all the more important. If the flexiwage scheme is going to have an impact on the structural nature of un, and under, employment for Māori, Pasifika, and women this criterion needs to be extensively promoted. What’s the deal with the Reserve Bank and House Prices? As discussed in the February Bulletin, the Reserve Bank currently has a joint mandate – inflation based on the consumer price index to be within 1 to 3% within the medium term and maximum sustainable employment. 10 Maximum sustainable employment while ostensibly a new measure had been conveniently interpreted to mean the Non-Inflationary Rate of Unemployment – or NAIRU – which they call full employment – also known as 4% unemployment or 111,000 people, seasonally adjusted as at December 2019, actively seeking paid employment and getting none. Plus of course the 90,000 who wanted more paid work and the 84,000 who want a job but face barriers to employment. That’s right – full employment.11 The Reserve Bank’s main tool for keeping down inflation and holding up employment is interest rates. In the days when we had higher interest rates it was able to reduce them through cutting 7 https://www.stuff.co.nz/business/industries/123302797/prime-minister-pledges-311m-to-help-workers-made-unemployed- due-to-covid19-get-into-jobs 8 https://www.workandincome.govt.nz/products/a-z-benefits/flexi-wage.html 9 https://www.rnz.co.nz/news/te-manu-korihi/429746/unfair-outcomes-for-maori-seeking-covid-income-support 10 https://www.union.org.nz/wp-content/uploads/2020/03/CTU-Economic-Bulletin-217-February-2020.pdf 11 In other words, this kind of monetary policy requires 110,000 people to be unemployed – if one finds a job it requires another to lose theirs. So cut out the punitive rhetoric of people on benefits not wanting jobs and pay them proper compensation for taking on unemployment in the public interest. Or change the policy! 12 CTU Monthly Economic Bulletin –November 2020
the OCR. This is the rate that the Reserve Bank pays on settlement balances Banks hold with the
Reserve Bank.
When they got to an OCR of 0.25% but with falling inflation and employment, they needed
another tool. Here is where the Large-Scale Asset Purchase Programme (LSAP) also known as
Quantitative Easing comes in. The Reserve Bank buys bonds held by Banks and pays for it with an
increase to the Bank’s settlement account with the Reserve Banks. This is money creation and is
also known as printing money.
The effect of the Reserve Bank providing extra demand for the bonds is that the bonds’ yields fall
which in turn lowers the prevailing interest rate in the market.
How this is supposed to help is by12:
• Lowering the exchange rate as New Zealand dollar denominated bonds become less
valuable with a lower interest rate as people are less likely to want New Zealand dollars.
A lower exchange rate should help New Zealand exporting businesses who, with sales in
foreign currencies, could effectively charge higher NZD prices or at least receive more
NZD for same amount of foreign currency and therefore be able to take on (or at least not
lay off) staff.
• Lowering the ‘hurdle rate’ for business investment, making it more likely businesses
expand/not fall over and take on (or at least not lay off staff).
• Increase the value of other assets with the effect that their owners feel richer and spend
more – aka the wealth effect – aka trickle down.
All of which assume that the Banks will pass the lower interest rates on to businesses and
households.
What has actually happened is this:
• Housing loans have continued to climb,
• commercial property loans are up,
• agriculture loans have plateaued, and
• other business loans have fallen.
All of which makes sense as with the current business uncertainty and rising house prices –
residential loans are a much better bet than lending to business.
12For a more fulsome explanation Chapter 6 https://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/monetary-
policy-handbook/Monetary-Policy-Handbook.pdf?revision=4922a7fe-d539-4cab-a0d6-9bd47fb152fa
13 CTU Monthly Economic Bulletin –November 2020Coomercial property, Agriculture
Bank Lending by Purpose
80,000 295,000
and other Business loans
Housing loans $NZD
70,000 285,000
275,000
60,000
265,000
NZD $M
50,000
255,000
40,000 245,000
30,000 235,000
Sep 2017 Sep 2018 Sep 2019 Sep 2020
Source: RBNZ Banks: Assets- Loans by purpose - S31
Total Commercial Property Loans Other Business Loans
Total Agriculture Loans Housing Loans
While the exchange rate might be a channel for keeping investment and employment up –
although with New Zealand doing a better job in its Covid response than most countries and
every else doing QE – there may not be much happening in that area. Having said that, the
markets took the effect of Minister Robertson’s letter – discussed below – to mean that interest
rates would not fall further, and the exchange rate strengthened.
NZD exchange rates
0.7020 0.9530
0.7010
0.9520
0.7000
0.9510
AUD/NZD
USD/NZD
0.6990
0.6980 0.9500
0.6970
0.9490
0.6960
0.9480
0.6950
0.6940 0.9470
23 Nov 2020 24 Nov 2020 25 Nov 2020 26 Nov 2020 27 Nov 2020
Source: RBNZ - hb1 - daily
USD (LHS) AUD (RHS)
Business loans are falling – but maybe they would fall by more with higher interest rates?
But the stellar performer is housing loans and house prices.
14 CTU Monthly Economic Bulletin –November 2020A 2017 research note by Martin Wong at the Reserve Bank13 found a 1% increase in consumption
for every 10% increase in house prices with a weaker correlation post 2005.14 That is, the
increase in house prices is not a ‘bug – it’s a feature’.15
However, the graph ends in 2016. What is the current effect of house prices on demand?
While it is not easy to directly correlate the two – what we do know from the most recent
Treasury Economic Update16 is:
Total electronic card spending in October was up 2.9% on the same month last
year and retail card spending was up 8.2%. Spending at restaurants, cafes and
takeaways was up 8.8% compared to October 2019. This is the second highest
spend in this industry in over 20 years.
13
https://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Analytical%20notes/2017/an2017-
03.pdf?revision=5c0378fd-d843-4a6f-b6a0-a73a665d8b2f
14 Page 5
15 https://thekaka.substack.com/p/q-and-a-who-is-to-blame-for-the-housing
16 https://www.treasury.govt.nz/publications/weu/weekly-economic-update-13-november-2020-html
15 CTU Monthly Economic Bulletin –November 2020So yes – as much as we might not like it – there does seem to be a correlation between house prices, consumer spending – and higher than expected levels of employment. Which makes the Minister of Finance’s announcement that he had written to the Governor of the Reserve Bank to perhaps think about considering factoring in house prices when setting monetary policy quite interesting.17 Unless there is a further mechanism for increasing consumption – it could be that employment is traded off for house prices. But that other mechanism could be something as simple as increasing benefits18, raising wages in the public sector or bringing forward the commitment to paying the living wage to contractors in the public sector. Because the more that stimulus is targeted at the lower income people; the more likely it will be spent rather than saved. All without increasing house prices. Double duty indeed. 17 https://www.beehive.govt.nz/sites/default/files/2020-11/Letter%20to%20RBNZ%20Governor.pdf 18 https://www.cpag.org.nz/news/?m=202011 16 CTU Monthly Economic Bulletin –November 2020
As always, I welcome feedback to andreab@nzctu.org.nz. I am still here until mid-December.
Kia Kaha
Andrea
The NZIER consensus forecast was released on 14 September 2020
Annual Percentage Change (March Year) 2019/20 2020/21 2021/22 2022/23
GDP 1.7 -7.2 6.7 3.5
CPI 2.5 0.4 0.9 1.6
Private Sector average hourly wage 3.4 1.8 1.4 1.9
Employment 1.5 -5.2 3.1 2.8
Unemployment rate (% of labour force) 4.2 7.8 6.8 5.8
17 CTU Monthly Economic Bulletin –November 2020Economic Indicators – November 2020
As I prepare these indicators, I am reminded that the reason I started was to show that even
though employment was down and income support from the Government was up; rents, house
and share prices were also all down.
This was the outcome with the Global Financial Crisis and is what could be expected normally
when there is as large a shock to the world’s economy as there has been with a global pandemic.
But other than for a brief moment, in March and April, this has proved not to be the case. While
unemployment – as discussed in the commentary – has not been as high as expected; the capital
markets have increased more than anyone could have expected.
This month the total number of people receiving income support from the Government has
reduced by over 3,000 predominately because of the decline in numbers of people on the Covid
Income Relief Payment. The wage subsidy has now run its course.
Rent and Food continue to increase faster – or much faster in the case of rent – than the
Consumer Price Index. Rent and food price rises continue to be the reason for the Household
Living Cost Price Index for low income to exceed that of high-income people. Also high income
people are benefiting from very low interest rates which are much less of a part of expenditure
than for low income people.
And while the Bond market has fallen slightly, house prices and share prices continue to be at
record levels.
1) Jobseeker Support and Covid-19 Income Relief Payment19
As at 13 November there were 135,937 people on the Jobseeker Support – work ready and Covid
Income Relief Payment. In addition, there were 74,806 people on Jobseeker Support – Health
Condition and Disability. This gives a total of 210,743 people.
This is a reduction of 3,945 people from last month of which 3,119 people have gone off the
Covid Income Relief Payment. It is unclear how many of those people have gone into paid
employment and how many have simply had the payment come to an end.
19https://www.msd.govt.nz/documents/about-msd-and-our-work/publications-resources/statistics/benefit/2020/income-
support-and-wage-subsidy-weekly-update/income-support-weekly-update-13-november-2020.pdf
18 CTU Monthly Economic Bulletin –November 20202) Wage Subsidy
From a peak of 1.7 million jobs – there are now no jobs being supported by the wage subsidy.
3) Rent, Food and CPI.
Rent – stock – is up 0.2% for the month of October and up 3.2% for the year to October 2020.
Food has declined by .66% in the month but increased by 2.7% in the year. In the last year the
cumulative impact of price rises for food over the last ten years exceeded the cumulative effect
of general price rises.
Given the higher weight food plays in the consumption of lower income people – as seen in the
Household Living Cost Indexes – than higher income people; it is heartening to see the
Government’s review into competition in the Supermarket Industry.20
20 https://www.beehive.govt.nz/release/supermarkets-announced-government%E2%80%99s-second-market-study
19 CTU Monthly Economic Bulletin –November 2020Annual Change in Cost of Rent and Food v. CPI
8% Rent - stock
Percentage Change on Same Month
Food
6% CPI
Previous Year
4%
2%
0%
-2%
2013M10
2010M10
2011M10
2012M10
2014M10
2015M10
2016M10
2017M10
2018M10
2019M10
2020M10
Source: Stats NZ CPI009AA, CPI045AA and CPI004AA
Rent and Food Indexes v. CPI
140
Index Rebased March 2010 = 100
135 Rent - stock
Food
130 CPI
125
120
115
110
105
100
2010M10
2011M10
2012M10
2013M10
2014M10
2015M10
2016M10
2017M10
2018M10
2019M10
2020M10
Source: Stats NZ CPI009AA, CPI045AA and CPI004AA rebased to 2010
4) Household Living Cost Price Indexes
Continuing the trend, as food and rent have gone up faster than the consumer price index and
interest costs have gone down, the cost of living for low income people is much higher than that
for high income people. This is both on a ten-year cumulative basis and also in the September
2020 quarter.
20 CTU Monthly Economic Bulletin –November 2020Annual Change in Household Living-Cost Price Index v. CPI
Percentage Change on Same Quarter Previous 6% CPI
Lowest 20% by income
5%
Highest 20% by income
4%
3%
2%
Year
1%
0%
-1%
2011Q3
2010Q3
2012Q3
2013Q3
2014Q3
2015Q3
2016Q3
2017Q3
2018Q3
2019Q3
2020Q3
Source: Stats NZ CPI009AA and HPI001AA
Household Living-Cost Price Index v. CPI
125 CPI
Lowest 20% by income
Index Rebased Q1 2010 = 100
Highest 20% by income
120
115
110
105
100
2010Q3
2011Q3
2012Q3
2013Q3
2014Q3
2015Q3
2016Q3
2017Q3
2018Q3
2019Q3
Source: Stats NZ CPI009AA and HPI001AA rebased to 2010
5) The sharemarket
As at 23 November, the sharemarket at 12,504 was again higher than its late February 2020 peak
of 12,073. 21
21 https://www.bloomberg.com/quote/NZSE50FG:IND
21 CTU Monthly Economic Bulletin –November 20206) Bonds22 While lower, it is not materially lower than its August peak. 22For bonds, usually it is the yields that are tracked rather than the price of the bonds and so it can be difficult to find out what is happening to the price. As a proxy I am looking at the exchange traded fund for New Zealand bonds. https://www.nzx.com/instruments/NZB 22 CTU Monthly Economic Bulletin –November 2020
7) House prices23 The brief Lockdown 1.0 price drop is now over and house prices as at October continue to increase steadily. The decline I had hoped for in March continues as a memory. 23https://www.reinz.co.nz/Media/Default/Statistic%20Documents/2020/October/REINZ%20Monthly%20HPI%20Report%20- %20October%202020.pdf https://treasury.govt.nz/publications/weu/weekly-economic-update-13-november-2020-html 23 CTU Monthly Economic Bulletin –November 2020
Notes This bulletin is available online at http://www.union.org.nz/economicbulletin224. For further information contact Andrea Black 24 CTU Monthly Economic Bulletin –November 2020
July 2020 (latest data as at 6 July 2020) 8 Parliamentary Library, Research and Information February 2020 (latestdata as at11February 2020)
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