Metal merchants and consumers across New Zealand and Australia are reporting a general slowing as a result of downward pressure on pricing, complications with shipping and reduced consumption. Many merchants are considering holding on to material at current levels for a variety of reasons, including reduced demand. The market remains more bearish in its outlook, as do the wider economies.
New Zealand’s Reserve Bank has again put up its official cash rate, now to 2%. This monetary policy is an attempt to soften inflation which, at 7.3%, is at its highest level in 32 years. More specific policies, such as reducing the excise duty on petrol, are having only very minor impacts on inflation. The job market remains incredibly tight, with “hiring now” signs seemingly everywhere.
Economists are forecasting that inflation will continue to surge in Australia despite a retreat in commodities; it is projected to reach around 6% by the end of the year, with higher fuel, food and housing costs all making a contribution. As a result of a tight job market, wage growth is also contributing to the spiral effect. The Reserve Bank is widely expected to increase the official cash rate at the end of July, with more rate rises forecast before the end of the year.