The slow pace of the economic recovery over the second half of 2010 combined with uncertainty regarding future growth has again seen firms hold back from their normal seasonal hiring in the December quarter.

Although global growth has begun to recover, and manufacturing activity is showing signs of life, the endemic weakness in the New Zealand economy during the closing stages of 2010 will convince the Reserve Bank to hold back from increasing the official cash rate until September 2011.

With economic activity and inflationary pressures weak, the Reserve Bank will feel comfortable leaving the official cash rate at its current low level of 3%. Once signs of economic strength begin to return, the Bank will increase the official cash rate. However, this is not expected to occur until June at the earliest.

The full report – including information on house sales, house prices, dwelling consents, non-residential building, interest rates and net migration – can be downloaded here.