Here are the key things you need to know before you leave work today (or if you already work from home, before you shutdown your laptop).
MORTGAGE/LOAN RATE CHANGES
Nothing to report again today.
TERM DEPOSIT/SAVINGS RATE CHANGES
Nelson Building Society today trimmed its 1, 2 and 3 year term deposit rates.
SELLERS PLENTIFUL, BUYERS ELUSIVE
House prices slid in March as the housing market finishes summer on a soft note. Low sales volumes, falling prices and high stock levels suggest it's going to be a difficult winter for the housing market.
SHADOWS GROW
Sales rate at last week's residential property auctions dipped to 28%. Auction activity is easing back as the housing market heads deeper into autumn.
OUR PRODUCTIVITY ISSUE GETS WORSE
Productivity is falling. We are committing more resources for the level of output we are achieving. In the "measured sector", overall productivity fell an alarming -2.2% in 2023, and that was after a -0.1% fall in 2022. Since this proper measure of productivity was established in 1997, we have never before had two consecutive years of decline in those 27 years. Not even after the GFC. Interestingly, labour productivity declined far less than capital productivity, -0.9% in 2023 vs -3.8% for capital. Clearly many organisations have pulled back in modernising their equipment relying of 'labour' to stay in the game. The decline in labour productivity should not be a surprise, given that unemployment fell to very low levels, so the extra people being encouraged into our workforce probably had the least skills. It will be an irony that when the jobless rate rises, the least productive will tend to be laid off first which will bring a boost to labour productivity. The capital productivity issue is unlikely to get a similar boost. Old equipment doesn't deliver the same effect. Investment is required. But investment won't happen if the prospect of future returns aren't there. And then there is the unmeasured sector ... (or non-market sector as it is called in Australia). That includes health, education, Public admin & safety. Owner-occupied dwellings and unallocated taxes are also excluded. They are excluded because Stats NZ don’t have a good way of measuring output.
EYES ON DAIRY PRICES
There is another GDT dairy auction tomorrow. Prices over the past few weeks have held fairly stable for both WMP and SMP. But given fast rising on-farm costs, "stable prices' won't cut it for farmers for very long. There will be a nervous watch on this auction signals even though probably all the 2023/24 season is probably sold. The signals for the remaining volumes being offered are setting the stage for the 2024/25 season which doesn't start until after September.
EYES ON CPI INFLATION
A year ago, overall CPI inflation was running at 6.65%. Tomorrow we get the Q1-2024 CPI rate update and the average of the various analysts is a 4.1% rate (3.9% to 4.2% is the range). By any measure that is too high, and still far above what the RBNZ needs to take its foot off the brake. Of course, it will be the recent change that analysts will look closely at, and the monthly price indexes suggest a cooling over the past 13 weeks. But will that be enough for the RBNZ? It seem unlikely. As at today, financial markets have fully priced in only one -25 bps rate cut this year in October - and the conviction levels for this are easing away. Also, see this.
UNCOVERING BRIBERY
The Serious Fraud Office has filed bribery and corruption charges against a former Auckland Council building inspector and a director of an Auckland building company. Nicholas Bright faces many charges of corruption and bribery of an official. The building company director has interim name suppression. Following an Auckland Council internal investigation, the SFO alleges that between 2018 and 2020 Nicholas Bright received bribes in the form of cash and other benefits in connection with his work as a building inspector.
INCONSISTENT CHINESE DATA
In China, electricity production rose just +2.8% on March from a year ago, a huge retreat from the +8.0% frise in December. This is an important background data that should be reflected in China's economic activity (GDP). But Beijing reported Q1-2024 GDP rose +5.3% (up from 5.2% in Q4-2023) and this was despite retail sales only rising +3.1% and national real estate investment falling -9.5% in official data. They say industry expanded +4.5% (and down from the +6.8% rate in December). While we have raised our eyebrows at how they can deliver a credible GDP result just 16 days after the quarter end (no-one else can), few of the major components show expansions at the level of the claimed overall growth, and readers can draw their own judgements on the credibility of the rising 5.3% growth in Q1. Certainly ex-Premier Li Keqiang did.
HOUSING RETREAT WORSENS
Meanwhile, China's new home prices dropped by -2.2% in the year to March, faster than the -1.4% fall in February. It was the ninth straight month of decline and the steepest pace since August 2015, despite multiple support measures. For second-hand dwellings none of the 70 largest cities reported any rises, and the average fall over this set is now -5.9% year-on-year.
'NATIONAL SECURITY' - IT'S ALL GOOD & "GETTING BETTER"
Today is National Security Education Day in China, and every year we get some examples of model espionage cases. We also get reminded that it is crime there to undermine the positivity of the country's growth and prospects. In China, everything is 'national security'. There is an emphasis this year to bring Kong Kong's "education" up to speed.
ITS NATIONAL EMBARRASSMENT DAY IN THE US
An ex-president is in court today facing criminal charges. Shares in the company DJT fell -18.4% today, have fallen -28.7% in the past week, and -59.8% since they peaked on March 27, 2024.
SWAP RATES UP AGAIN
Wholesale swap rates are likely to be back up today probably more than cancelling yesterday's modest falls. Our chart below will record the final positions. The 90 day bank bill rate is down - bp to 5.64%, a level it has hovered around for 30+ days. The Australian 10 year bond yield is up +9 bps at 4.36%. The China 10 year bond rate is holding at 2.29%. The NZ Government 10 year bond rate is up +6 bps to 4.94% and the earlier RBNZ fix was at 4.82% and up +5 bps. The UST 10yr yield is up +8 bps to 4.61%. Their 2yr is up only +1 bp at 4.92%, so the curve is down to -31 bps.
EQUITIES SINK EVERYWHERE
In late trade today, the NZX50 is down -1.0%, taking the two day retreat to -0.8% and giving up all of Monday's surprising late gain. The ASX200 is down -1.9% in its growing risk aversion mood, down -2.4% for the first two days of the week. It is even tougher in Tokyo which has opened down -2.1% to be down -2.9% for the two days. Hong Kong is down -1.4% at its open. Shanghai is down -1.3%. Singapore has opened -0.9% lower. The S&P500 fell -1.2% on Wall Street in its Monday trade.
Oil prices have risen +50 USc to just over US$85.50/bbl in the US while the international Brent price is now just over US$90/bbl.
GOLD RISES AGAIN
In early Asian trade, gold is up +US$29 from yesterday, now at US$2384/oz.
NZD TUMBLES
The Kiwi dollar has extended its retreat from this time yesterday to 58.8 USc and more than a -½c fall from an already low level. It was last at this level on November 14, 2023. Against the Aussie we are holding at 91.7 AUc. Against the euro we are almost -½c to 55.4 euro cents. This all means the TWI-5 is under 68.7 in a general retreat away from commodity currencies.
BITCOIN RETREATS
The bitcoin price has fallen today from this time yesterday, now down to US$63,234 and a -3.7% retreat. Volatility of the past 24 hours has been high at just over +/- 3.6%.
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82 Comments
Former PM Helen Clark is raising concerns about New Zealand's apparent increasing closeness with AUKUS, questioning why NZ should join an alliance aimed at countering our biggest trading partner in China Full interview https://youtube.com/watch?v=mESthr Link
Feels good to be extremely heavily in NZD.
Selling my crypto on 31 March was pretty fortunate. Reduced tax bill (33% not 39%) and gave myself a big savings. Plus the onboarding for all the finance funds etc I'm looking at will at a week or two while equities take a hammering. Might get some bargains soon!
Listening to Shane Jones blithering today, I was wondering if NZ would be better off just shouting him a hotel room, a supply of videos and some kleenex.
My grandchildren would thank us for sidelining such stupidity, I'm fairly sure.
Left to his own devices, a few backsheeshers are going to pile a few digitis into their bank's computers, and feel bigger. Temporarily - because Jones' approach leaves an empty global resource bank-account - and therefore invalidates theirs. Short in so many ways....
"I gotta remind you, as we stand here this week, this month, we are burning Indonesian coal". RNZ 16.04.2024.... Any truth that Indonesian coal is cleaner burning or superior to NZ coal ? Or is it cheaper to obtain than NZ coal? I think there is some validity to the points raised , the other issue it highlights is our limited capacity to generate during times of high need. Fact is that if coal can meet that gap until generation output rises... then what choice do we have?
Yes there is Truth that NZ Coal is the world's best Met Coal for Steel Making. Two sources of info:
1. Bathurst CEO who two years ago explained that it is so good that the Chinese buy it to reduce the Carbon emissions when they blend it with the Aussie Met coals for steel. Our coal is very pricy hence blended.
2. The British Navy in the 1880's. Their steam fired Battleships demanded West Coast Coal because it was so good. There Navy could travel further before resupplying at resupply depots.
Sadly both these true narratives not taught by New Zealand teachers. Our Education system designed to avoid educating.
Sadly we import poor quality coals from Indonesia to boil off the water in milk; then sell it the powder to the Chinese. We also use their coal to heat water for electricity.
Read: Black Gold for the History of British Coal and reference to NZ.
Shane Jones is very shortsighted. I work in business and we take corporate social responsibility seriously. We do need mined materials and seafood, but industry needs to conduct itself in a way that causes minimal impact. Shane Jones’ glee in the destruction of native species is disappointing and bizarre. He does not represent modern business thinking. His approach puts NZs’ global brand at risk. I will not be eating NZ caught fish unless cameras remain on boats and they do everything they can to avoid non target species. I will switch to other protein sources or catch my own. I do agree it is better to burn our coal (if we have to use coal) but we need to mine responsibly and with due care to environmental impact.
Have a read through this article if you want to make yourself angry
https://www.thepost.co.nz/politics/350242260/caught-out-cameras-boats-r…
The decline in labour productivity should not be a surprise, given that unemployment fell to very low levels, so the extra people being encouraged into our workforce probably had the least skills.
Reaching a bit here David! The decline in labour productivity for the year ending March 2023 is entirely concentrated in the goods-producing sector (manufacturing; electricity, gas, water, and waste services; and construction). The dominant factor here was the closure of Marsden Point, which dropped the aggregate output of the manufacuturing sector massively without making much difference to total hours paid.
Just as a dirty anecdote, it's become fairly evident in the past 5 years or so that apprentices are being thrown into the mix as a cheaper head count of a 'whatever' (i.e. plumber/welder/engineer/sparky etc). Which isn't how people should learn the ropes, they should be worker under someone qualified. These workers are slower, and more prone to errors, which an experienced worker has to come and remediate.
This creates a number of issues:
- productivity drops
- costs more to do the same thing
- there's a lot of unidentified issues falling through the cracks
So we called our regular plumber, they also are gas fitters, as there was obviously a leak in the attachment to the 9kg outside that supplies our kitchen hob. Using the old detergent brushing we had located the regulator as being faulty and this we told them. Arrived on time and inspected and confirmed it was the regulator. Didn’t have one with them. Went back to base and returned with requisite regulator and replaced, fitted and tested in less than ten minutes. Won’t tell you what the charge was. But it charged the gas fitters time at his rate plus his accompanying apprentice at a lesser rate for travel time there and back plus work for an hour or part thereof and then a reduced standard rate for both for the second visit. Absolute rip off. Let loose over the phone told them I would pay for one worker and not another who did not need to do anything, the components supplied, and travel time there and back once and if they didn’t like that - see you in court. Settled as such. No longer our regular plumber. But since when are customers expected to pay for on the job training of apprentices?
I'm not really much of a defender of plumbers charging practices (mine charges me a health and safety fee).
But someone has to pay for an apprentice, and if we're expecting a steady stream of tradies to do the things we can't (or won't), I guess that ultimately has to be us.
I don't mind paying a lower rate for an apprentice. If they're standing around not doing anything, that's definitely irksome.
Replace 2 broken panes 0.9m x 0.7 each cost me over $800, no actual apprentice even. I rang another glazier for the cost of glass which was $351 so I think they are rip-offs. It was my own fault for not shutting the door properly and a huge gust of wind slammed it shut. You'd think the LL would cover it through his insurance.
Two glaziers were repairing a busted window in a shop frontage. It was hot and at smoko one said to the other, the next person who comes along and says something stupid, I’m going to fire back. Sure enough a little old lady arrives and asks sweetly - what are you young men selling today. The one gets ready to explode but the other says don’t swear, don’t swear. Ok says the one we are selling, and spells out “a r s e h o l e s.” The other smirks and laughs. The little old lady thinks and says - and it’s such a nice day and you two are doing really well, why you have only two left.
This happened to me. Local water company came to fix a pump for me. When the plumber tuned up he asked if I minded his apprentice observing the job. I agreed as I didn’t mind him watching. I was billed for both the plumber and trainee. I queried it and was told that they had to charge or how else would they pay trainees. I paid as I didn’t want a bad credit reference, but will never use this company again.
Or kiwis are just getting lazier, as the hardworking and ambitious leave.
Theres a lot of talk about capital but our general personnel output is woeful as everyone comes and goes as they pleases, goes out for coffee and shirks from home regularly. Almost impossible to fire people so they just glide on under-achieving.
Add in penal rates for overtime and no wonder cities are empty at 4pm
PMI has been trending down for almost 3 years and has been contracting since Dec 22. More of NZ Inc being hollowed out.
MP as a cause may be reaching a tad. The graphs show a similar look now to back in a similar point in time around the GFC. So I guess we know what's coming.
https://www.stats.govt.nz/information-releases/productivity-statistics-…
(More crunching required though.)
I was trusting Stats NZ on the Marsden point reason. I am presuming their raw data tells them more than they publish.
My view is that the changes (as per GFC) are to do with wages catching up with prices, and wage as share of income etc. Bilut haven't crunched the numbers to work it out yet.
House prices slid in March as the housing market finishes summer on a soft note
Today's REINZ data shows prices being up both compared to March 2023 +2.7% NZ, +2.3% NZ excl Auckland and +5.0% Auckland and to February 2024 +1.1% NZ, +0.1% NZ excl Auckland and +2.9% Auckland.
REINZ sales number also shows more sales in March 2024 than in March 2023 +5.8% - +8.9% and in February 2024 +6.3% - +10.0%
Not judging, I'm simply sharing the data they published today.
Barometer for housing in the US - retail sales results for furniture and home furnishings - is looking dreadful. Even worse than 2008. And this is just volume sales, not value sales.
Clear signs of a looming set of problems. Central banks have a bad habit of holding off rate cuts for far too long. Looking similar to the GFC now. One wonders what will crack first? (CRE doesn't look big enough, to me anyway, to do it. But contagion may.)
No wonder gold, silver, crypto, etc. are rocketing away.
CPI data will be in tomorrow. Probably will come in at 4% (a fraction higher than RBNZ forecast) which will send swap rates up, and commenters predicting Higher For Longer. If it comes in lower than 3.8%, then more people will question the sustained OCR of 5.5%, and the rhetoric that it needs to stay at that number all year. In any case, regardless of the exact number of the CPI, the main issue is imported inflation, and a 5.5% OCR won't have any effect on that.
Fed's reverse repo facility plummets to lowest level in nearly three years. Down almost $2 Trillion. Let's hope that something doesn't break.
https://www.reuters.com/markets/us/feds-reverse-repo-facility-shrinks-r…
The Fed's reverse repo facility exists to put a floor underneath short-term rates, taking in cash from eligible firms in loans collateralized with Treasuries held by the central bank. Inflows have been contracting for some time as the Fed withdraws liquidity from the financial system by allowing its holdings of bonds to shrink.
Monday is the deadline for most U.S. tax returns and a key settlement date for Treasury debt auctions, which can influence activity at the reverse repo facility. Scott Skyrm, executive vice president at money market trading firm Curvature Securities, says money is coming out of reverse repos to deal with financing the Treasury's debt issuance. Link
Whats left of Trumps brain is actually just becoming mush
The proper measure of productivity could be as inept as the measure of GDP when evaluating desired outcomes.
Part of the issue is the share of productivity returns to labour or capital, and particularly towards the alleged "lower" levels of labour. Note the widening gap between the highest paid and the lowest paid over recent decades.
What is capital productivity? Is it just more financial return and does it benefit many or only a few? Is it why we've required more and more debt to plug the holes?
Homes cannot be measured for productive output as they don't "do" anything.
"Not everything that can be measured matters and not everything that matters can be measured"
Homes house workers. More expensive homes usually house more expensive workers - or are in closer proximity to higher paying employees/businesses.
Capital productivity mostly benefits the owners of the capital, although usually the more expensive and complex the capital, the more you have to pay someone to maintain and operate it.
Outside of that, and in reference to viewing measurements and figures, you're right, they ignore a definite qualia of things. But this is something very hard to convey in easily digestible format.
The best way to improve productivity is through technology, and you have to be smart to build or use the latest technology, hence the widening pay gap. Technology is providing us with opportunity, but not enough of us are taking that opportunity compared to other countries, so I fear we will keep going backwards.
The best way to improve productivity is through technology
This really depends how you define "best". The most cost effective way to improve productivity is to operate as efficiency as possible. This could be something as simple as a company culture, or decent operating and management procedures. Our work culture is mostly heading in the opposite direction.
Technology can be an industry in and of itself, and of high value. But the capital requirements and payoff time can be extreme, if ever. Most business I interact with (and even my own) will invest in and adopt more productive technology, if there's a business case for it.
Being an economy involving a lot of kinetic processes, this is harder to come by. Being small, the lack of scale opportunity in NZ means many businesses can't justify the significant capital outlay.
"The most cost effective way to improve productivity is to operate as efficiency as possible. This could be something as simple as a company culture, or decent operating and management procedures. Our work culture is mostly heading in the opposite direction."
Really?
100 guys digging a ditch. Awesome company culture, exceptional operating and management procedures.
Then ... 1 guy turns up with digger.
The difference? Guess what ... It sure ain't the 'work culture'.
Unless the digger is really expensive, and the labour is very cheap, then any rational business owner should be able to justify the capital expenditure in the digger. That's not really a good example to disprove what I said.
I see plenty of businesses throw expensive technology (ineffectively) at productivity when the core foundations of how they operate are dysfunctional. 2 guys at one firm can output the same as 5 in another - you've never noticed any variance in the efficiency of companies you've worked with/for?
Technology may improve the means of productivity but it doesn't necessarily justify the widening pay gap. There's the idea, the capability to convert said idea into matter, and the workers required to assemble. Without the workers, the idea is meaningless. It could be reasonably suggested they deserve a higher proportion of the returns. This is what I allude to with regards to the ratio being imbalanced. Looking at history when the ratio of CEO's to employees pay was closer the inequality gap was also less.
When technology is applied within a business to improve output, is that return being distributed more evenly or is it being siphoned upwards?
Then there's the productivity in property investment that doesn't necessarily improve the productivity of building houses, or improve output. It may be highly productive for a banks credit creation but not beneficial for the wider community. So there's a question of beneficial productivity or negative productivity outcomes.
There's many studies suggesting that after 6 hours productivity diminishes so it would make more sense to have 2 people doing a six hour shift than one person doing a 12 hour shift. This also allows the employee to be more productive in their personal life towards health and personal pursuits, that most likely improves their productivity in the workplace.
There's also the idea that extending democracy to the workplace, that the workers owning a stake in the business may improve productivity, working conditions and balance out the inequalities, providing overall net benefits.
I'm simply suggesting we have a very narrow minded concept of productivity and like much of our other limited economic measurements it's limited us as a collective. It's why we have what we have now with so many imbalances showing up, and why they keep repeating.
There's many studies suggesting that after 6 hours productivity diminishes so it would make more sense to have 2 people doing a six hour shift than one person doing a 12 hour shift. This also allows the employee to be more productive in their personal life towards health and personal pursuits, that most likely improves their productivity in the workplace.
I actually worked out a while back that 60hrs a week for 9 months is more productive than 40hrs a week for a year (it's more total hours). Multiple months off doing anything other than work is of more value than an extra couple hrs a day either before work, when you're subconsciously waiting to go to work, or after work when you're knackered and can't really summon the energy for much of any value.
Likewise taking one break a day and starting/leaving earlier or later is better than taking 3 breaks a day.
Then again everyone's different, so we have the aggregated standard working hours.
How many days/wk are people doing 6hr shifts going to work to make up their 40hrs pay ?
I used to run multishift 24/7 workplaces. A 5hr x 5d evening shift was very popular with women & students who could work it after their partner & kids were home or after classes.
We had the fulltime people on 12hr x 4d for many years (4d off, avg 42 hrs/wk over the roster period). Fixed shifts Day & Night only, no one wants to reset their body clock every week). Then we moved to a 6d operating week & 12.5hrs x 3d = 37.5hrs with 4d off - this was considered the perfect shift pattern by staff & company, could easily staff the 7th day with OT if required.
How many days/wk are people doing 6hr shifts going to work to make 40hrs pay ?
There's a rationale that reckons you can get the same amount of production by people working less hrs.
This would imply then that currently a lot of time is being expended not doing much.
If I switched to a 4 day work week, we'd just get 20% less output.
Best entertainment today
https://youtu.be/VM0unf3R4F4?t=83
Woolworths CEO Brad Banducci grilled in Senate inquiry into price gouging | ABC News
Reminds me of the royal banking commission, can i remind the witness they are under oath.....
It would be more then amusing if after all this the brand is so trashed that it needs to be.... rebranded.
My thoughts were more around the rebrand in NZ so they don't have to open the books from countdown to comcom if they ever actually come knocking. "Who us, noooo that was the last company called countdown, we're a separate business and would never do anything out of sorts, honest!"
None. Area has been a hotbed of ethnic and religious hatred for Millenia. And always will be.
Iran was simply firing warning shots. Limited firing into the desert v mass firings at tel aviv accompanied by Hezbollah attacking with same to overwhelm Iron Dome. Israel will be tempered by its current gaza assault and the US warning it won’t follow into war v iran
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