Weekly Commentary 030826 report 03Aug26 1

WEEKLY ECONOMIC COMMENTARY 3 Aug 2026 | Westpac Economics Team | westpac.co.nz/economics |

Holding the line, but Key views Last 3 Next 3 Next momentum is hard to find. Global economy months months year

NZ economy The indications are that the New Zealand economy has Inflation held its ground through this year’s oil shock, though it has 2 year swap struggled to build on the momentum that was growing through late 2025 and early 2026. The agricultural sector 10 year swap remains a leading light for the economy, though with an NZD/USD eye to the risks stemming from supply-side disruptions NZD/AUD and the weather. This Wednesday’s labour market surveys are expected Westpac GDP nowcasts to show that the economy continues to operate with a %qtr %qtr substantial amount of spare capacity. The final input 0.9 0.9

to our forecast was last week’s Monthly Employment 0.8 June quarter 2026 0.8

Indicator (MEI), which showed a 0.1% increase in filled 0.7 September quarter 2026 0.7

jobs in June. This measure tends to be overstated on 0.6 0.6

the first release, so we’d put this down as more of a flat 0.5 0.5

outcome (the 0.3% increase in May was revised down 0.4 0.4

to 0.2%). 0.3 0.3 0.2 0.2 The MEI is drawn from income tax data, so it provides a 0.1 0.1 fairly comprehensive record of the number of jobs. While Source: Westpac 0.0 0.0 there are some conceptual differences between this and 02-Mar 02-Apr 02-May 02-Jun 02-Jul the quarterly HLFS (most importantly the distinction between jobs and workers), any major differences Key data and event outlook between the two will most likely reflect sampling error in the household survey. Date Event 5 Aug 26 Labour market surveys, June quarter The MEI points to around a 0.1% rise in employment over the June quarter. That’s not enough to keep up with 11 Aug 26 RBA Monetary Policy Decision the growth in the working-age population (an already- 17 Aug 26 NZ Selected price indexes, July reported 0.3% rise for the quarter), which suggests that 2 Sep 26 RBNZ OCR Review & Monetary Policy Statement we’ll see some combination of higher unemployment and 16 Sep 26 FOMC meeting (17 Sep NZT) lower participation. We expect the unemployment rate to 17 Sep 26 NZ GDP, June quarter tick up to 5.4%, matching the cycle high that was reached 18 Sep 26 NZ Selected price indexes, August at the end of last year. For more details see our June 29 Sep 26 NZ Govt Pre-election Economic & Fiscal Update quarter labour market preview. 29 Sep 26 RBA Monetary Policy Decision 6 Oct 26 NZIER QSBO Survey, September quarter

1 Westpac New Zealand Economics

Monthly Employment Indicator filled jobs Making hay while the sun shines. Million % 2.45 2.5 Last week we released our latest Agri Bites report, Monthly % change (right axis) 2.40 2.0 highlighting that New Zealand’s agricultural sector is well 2.35 Number of jobs (left axis) 1.5 positioned for the year ahead, with favourable commodity 2.30 1.0 prices across most categories. While geopolitical and 2.25 0.5 climate risks have increased uncertainty, global supply 2.20 0.0 constraints and resilient demand are expected to 2.15 -0.5 keep farmgate and export returns elevated over the 2.10 -1.0 coming year. 2.05 -1.5 Sources: Macrobond, Stats NZ The principal near-term risk is the Middle East conflict, which has increased volatility in energy, freight and fertiliser markets. Although supply chains remain operational, higher fuel and input costs could raise farm The other notable data release last week was ANZ’s expenses and reduce some of the benefit of strong business outlook survey. There was a solid lift in business commodity prices. Fertiliser markets remain exposed to confidence in July, almost returning to its pre-conflict sanctions, trade restrictions and shipping disruptions, levels. (There were similar results in their consumer although stronger urea supply has helped to contain confidence survey.) However, the speed at which price increases. things have been evolving in the Middle East means that even relatively frequent indicators may struggle to Climate conditions are another source of uncertainty. remain timely. Later responses during the month were Forecasts point to an increasing likelihood…