Posted on Apr 05, 2011
Whilst the quarterly economic activity numbers which officially tell us how our economy is performing are important, we prefer to rely on other measures to form our opinion. These other measures we find to be more reliable, and in particular don't contain that time lag which usually exists between action and measurement.
Our most important economic activity measuring tool is the TTQ (time to quote) which measures the time it takes a tradesman to appear to measure up to quote on a job, and then how long it takes to actually get the quote. Our experience is that the TTQ indicator is an accurate and timely reflection of the extent of activity in the economy. The measurement ranges from immediate (as in "I'll be right over") to never (as in "I'll call back next week to arrange a time")
Whilst there are certain factors which can cause statistical blips, and no single result can indicate the state of the economy, in general terms a shortening of the TTQ indicates less economic activity (put simply this means there is less work around, so businesses will be more active in chasing it) and a lengthening of the TTQ means more economic activity ( there is more work around so tradespeople are not so concerned about chasing new work )
The last month has brought a very marked lengthening of the TTQ. Not only is it taking longer to get businesses on site to quote, then getting the actual quote is taking longer. And there are significant numbers of "I'll call next week to arrange a time" - which of course never happens until they are reminded 3 times. Whilst we might bemoan the shortsightedness of businesses who want the business when there isn't any, and don't care when there is plenty, the effect of the recent trend is obvious - there is plenty of work around.
History tells us that a pick up in this sector is generally a pre-cursor to an increase in activity in the economy generally. If tradesmen are flat out laying carpet, laying concrete and fixing broken windows , then before long they will buying new utes and vans and using them to take home massive flat screen TV's and home theatre systems. Now we do recognise that the lengthening of the TTQ could be a geographical anomaly. When all the water sloshes to one side of the boat it appears that the other side is dry, but in reality it is only a momentary illusion - until it sloshes back. In the same way,perhaps all the tradesmen have gone to Christchurch chasing the golden dollars insurance companies will be doling out as a result of the earthquake, only to return when Christchurch is rebuilt with Auckland style leaky homes. However, we believe that the real reason is that there actually is work around.
The conclusion from this is that we forsee a general pickup in the economy- double dip doomsayers notwithstanding - and that the first half of 2011 could well see increased demand for industrial real estate. Increased earnings from export commodities will help. The Rugby World Cup will help. And then of course , as happens every three years, activity will stall three months out from the election. Quite why a short term event as RWC should promote such a frenzy of activity mystifies us about as much as the reasons people stop spending when an election is imminent.
Ultimately, however, whether we have a great 2011 or another mediocre year will depend on whether we collectively decide to get out and find the business and make it happen.
Have a happy and safe festive season from all of us at Expedio.