Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No rate changes were announced today. The banks that wanted to (Kiwibank, ANZ, Westpac) all did it in advance of the OCR no-change today.
DEPOSIT RATE CHANGES
No changes here either.
OVERLY CAUTIOUS ?
Reserve Bank has left the Official Cash Rate unchanged at 1.75% today in its MPS review. Surprisingly, their forecasts indicated no change to future interest rates, with first OCR hike not now signaled until late 2019. The NZ dollar dropped a little. The RBNZ did say they see house prices moderating substantially.
PARTY FOODS COST LESS, FRESH FOOD COSTS MORE
Food prices increased only +0.2% in the year to April 2017, led by restaurant meals and ready-to-eat food which were up +1.9%. This followed overall annual increases of +1.3% and +2.2% for March and February 2017 respectively. Fruit and vegetable prices increased 3.0% of which vegetable prices jumped +8.1%, driven by higher prices for lettuce, broccoli, and kumara. Fruit prices fell -3.5%, mainly because of lower avocado prices. Avocado prices were at historically high levels a year ago, due to a crop shortage. Overall grocery food prices fell -0.2% over the year.
OUR INDEBTED NEIGHBOUR
Data out in Australia shows they owe the rest of the world a lot. Australia’s net international investment liability position as at 31 December 2016 was just over AU$1 tln for the first time ever, an increase of AU$61 bln or +6% on the previous year. That is 79.2% of their GDP. Just in case you were wondering, New Zealand's equivalent number is NZ$157 bln, or just shy of 60% of GDP. Australia is currently rated AAA by all three main credit ratings agencies. New Zealand only has that rating from Moody's, while S&P and Fitch give us one tick lower at AA+.
MORE THAN 1 MLN
The number of households, business, schools and hospitals connected to UFB has increased +12% in the past three months to 367,788. That now means more than a third of New Zealanders with access to Ultra-Fast Broadband (UFB) are now connected. And UFB is now available to more than 1 mln New Zealand households.
PHOENIX
New Zealand has now joined Japan in ratifying the TPP. Many of the other signatories are expected to follow. Efforts to push ahead with the major agreement are gaining momentum, even without the USA. A meeting in Vietnam soon will add to the push. While access to the US market was the original prize, most other signatories are getting to understand the the comprehensive nature of the benefits and tradeoffs still make good sense to them, often more so without the USA's requirements.
WHERE THE JOBS WILL BE
MBIE has forecast employment growth over the next three years to 2020 and by then more than 2.6 mln people are expected to be in work. Overall employment is forecast to grow by +2.8% (or 68,600) in 2018, by +2.0% (or 50,000) in 2019 and by only +1.3% (or 33,400) in 2020; that is +152,000 (or +2.0% on average) more people employed over the next three years. Employment will grow at different levels across the sectors and regions. Construction and utility services (up 32,400) will make the largest contribution to overall employment growth, followed by the business services (up 23,700) and health and education (up 34,000) sectors. This reflects strong construction activity, an ongoing employment shift towards the service sector and net inward migration gains. At a regional level, the highest percentage employment growth will be in the Auckland and Waikato regions in the North Island, and Marlborough and Tasman regions in the South Island.
RETAIL BEHAVIOUR WARNING
The Commerce Commission today published an open letter to retailers, highlighting pricing practices which might breach the law, and offering guidance on how to avoid them.
ANOTHER PRE-BUDGET RELEASE
Paula Bennett has today announced a new $102 mln Tourism Infrastructure Fund which has been launched alongside $76 mln in new funding for our most important tourism asset, the DOC Estate.
GIGANTIC, BUT LESS
According to the BIS, the total world exposure to derivatives is falling. But it is still enormous. Their gross market value – that is, the cost of replacing all outstanding contracts at current market prices – fell from US$21 trillion to US$15 trillion between June and December 2016 (view data).
WHOLESALE RATES DROP SHARPLY
Local swap rates bear-flattened today. They down -8 bps for two years, down -8 bps for five years, and down -4 bps for ten years. The 90 day bank bill rate however fell -2 bps to 1.98%.
NZ DOLLAR SLIPS BACK
The NZD is slightly weaker at 68.3 USc giving up some of its recent gains. On the crosses we are at 93 AUc, and 62.8 euro cents. The TWI-5 is back to 73.5. These falls were undoubtedly motivated by the RBNZ MPS tone, but today's changes just revert us to the track we were on earlier in the week.
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3 Comments
China’s biggest-ever foreign acquisition frenzy is ending almost as dramatically as it began.
After stunning the world with a record $246 billion of announced outbound takeovers in 2016, Chinese dealmakers are now struggling to cope with tighter capital controls and increasingly wary counterparties. Cross-border purchases plunged 67 percent during the first four months of this year, the biggest drop for a comparable period since the depths of the global financial crisis in 2009, according to data compiled by Bloomberg. Read more
Chinese authorities are particularly scrutinising capital outflows for acquiring non-core businesses. Although the frenzy might settle to relatively lower figures, the numbers would remain high for business corporate deals from a single-buyer country.
The MBIE jobs report looks promising for the fact that tourism, dairy and hospitality are not the highest job creating sector leaving room for high-value sectors to grow.
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