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90 seconds at 9 am: Tough budget predicted; property a sellers market; EU manufacturing falls; US and China manufacturing rises
Here's our summary of the key news overnight in 90 seconds at 9 am, including news that yesterday's Crown Accounts to February and the related monthly update on Treasury's outlook now mean the Government will need to deliver a very tight budget indeed if it still wants its revenue to exceed its spending in the 2014/2015 year. The tax take is falling below previous estimates and the Prime Minister has signalled that a 'zero budget' is what they are targeting in May for the 2012-2013 year to try and keep a lid on the current run of deficit spending. We have more on this story online.
The March update of the Property Report is out and that shows the New Zealand property market is very much a sellers market. Inventory levels have fallen again, and in thirteen of nineteen regions "sellers have the power" says Alistair Helm of realestate.co.nz. There is much more detail on the website and we will have an interview with Alistair Helm going up soon with more analysis.
Meanwhile overseas, unemployment in the Euro-region rose to the highest in more than 14 years and manufacturing contracted for an eighth month, adding to signs the European economy probably slipped into a recession in the first quarter.
In contrast, across the Atlantic manufacturing in the US expanded at a faster pace in March, driven by gains in employment and production that signal the world’s biggest economy is underpinning global growth.
The US news, combined with positive Chinese manufacturing data, has seen 'risk' settings return to markets. The oil price has recovered as quickly as it fell last week along with gold and the Dow, and the Kiwi dollar is back up to US$0.825. The thirteen week gains the Kiwi dollar had racked up vs the Aussie dollar looked like they were ending yesterday, but in overnight trade our currency resumed its climb back towards the AU$0.80 mark.
We will be watching today's RBA rate review announcement closely and will have an update at about 4:30 this afternoon.