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A review of things you need to know before you sign off on Wednesday; jobless rate up from record low, car sales weak, dairy prices fall, commodity prices stable, swaps on hold, NZD little-changed, & more

Business / news
A review of things you need to know before you sign off on Wednesday; jobless rate up from record low, car sales weak, dairy prices fall, commodity prices stable, swaps on hold, NZD little-changed, & more

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 RATE CHANGES
Unity Money raised its home loan rates for fixed terms 6 months to 2 years. But TSB has followed the majors with cuts to their 12 month, 18 month and 3 year fixed rates to quite competitive levels.

TERM DEPOSIT RATE CHANGES
To changes to report so far.

UP FROM A RECORD LOW
The June jobs data didn't bring the fall in our jobless rate that many were expecting. But it did bring an unexpectedly large rise in compensation. Statistics New Zealand says the unemployment rate has risen to 3.3% from 3.2%, while private sector hourly wages have risen +7.1%. Of note is that the employed workforce has been essentially unchanged for the past four quarters - and the number of people without jobs has been unchanged too. Closed borders have closed the labour markets. And despite the rhetoric, there is no evidence significant numbers of people are leaving.

DEMAND CONSTRAINTS
CoreLogic says we have had the biggest fall in residential property values since the GFC. They say average housing values in Auckland are down by more than -$85,000 since March.

SUPPLY CONSTRAINTS
More than a quarter of all new car sales are NEVs (new energy vehicles). In July, there were 8049 new cars sold with more than 2000 of them NEVs. Sales are now quite dependent on supply rather than demand and with supply chains gummed up, overall sales are actually quite low. New car sales were down almost -20% in July from a year ago. Commercial vehicle sales down more than -40% on the same basis. Against the trend, non-SUV sales rose slightly in July from June although the change was small.

A DECADE LOW
Imported used car registrations dropped more than new cars, down a massive -37% from July 2021 and taking these back to 2012 levels.

SOBERING MILK SOLIDS
Today's dairy auction brought prices lower by -5% from the last auction two weeks ago, and since the March peak, prices are now down -27%. Thoughts of a payout level above $10/kgMS are evaporating now.

SOFT NZD SUPPORTS RETURNS
Although overall commodity prices are still up +4.4% from year ago levels, they did fall -2.2% in July from June. But a retreating NZD cushioned some of this, so in NZD the fall was only -0.5%, and in local currency overall commodity prices are up more than +14% in a year, and basically maintaining a strong upward trend.

A TOUGH JULY
Consumer spending figures released by Worldline/Paymark today show July was another tough month for merchants across New Zealand, but several retail sectors are showing encouraging signs of growth - including a recovery in hospo. They point out that July had five full weekends. It also had to deal with rising interest rates, higher food and fuel prices, and wet weather. So on that basis, a rise in hospo trading was notable.

PHISH NOW, PAY SOON
Afterpay is warning of increases in fraudulent phishing text and email activity. They don't have this risk alone of course, but for them to be warning their users, the threats are clearly rising.

TAIWAN TENSIONS UPDATE
US House Speaker Nancy Pelosi met Taiwanese President Tsai Ing-wen in Taipei today, as part of a visit that has prompted China to undertake military drills around the democratic island. Beijing has responded angrily to the trip, the highest-level visit by an American official in 25 years. The Chinese government announced this morning it would ban imports of Taiwanese citrus fruit and two types of fish, and stop exporting natural sand to Taiwan. These moves follow the prohibition of thousands of food imports.

SWAP RATES HOLD
Wholesale swap rates are probably little-changed with local and global forces cancelling each other out. The 90 day bank bill rate is unchanged at 3.19%. The Australian 10 year bond yield is now at 3.07% and up +4 bps from this time yesterday. The China 10 year bond rate is now at 2.75% and little-changed. The NZ Government 10 year bond rate is now at 3.33%, up +1 bp, and still well below the earlier RBNZ fix for this bond which was unchanged at 3.37%. The UST 10 year is now at 2.72% and recovering +18 bps from this time yesterday.

EQUITY NERVES SETTLE
On Wall Street, the S&P500 ended the day (Tuesday) down -0.7% with late weakness. Tokyo has opened its Wednesday session up +0.5%. Hong Kong is up +0.2% after starting much higher. Shanghai is following the same pattern, but is back to flat now. The ASX200 is down -0.4% in afternoon trade. The NZX50 is the star of the show, up +0.9% in late trade. Summerset (SUM, #14), Goodman Properties (GMT, #15), Mainfreight (MFT, #4) and Fletcher Building (FBU, #9) are all having a very good day (each up more than +2%).

GOLD SLIPS
In early Asian trade, gold is down -US$10 from this this time yesterday, now at US$1,764/oz.

NZD LITTLE-CHANGED
The Kiwi dollar has firmed slightly again today to 63.4 USc. Against the AUD we are little-changed at 90.1 AUc. Against the euro we are soft at 61.3 euro cents. That means our TWI-5 is now at just on 70.8.

BITCOIN UNCHANGED
Bitcoin is now at US$22,804 and down a mere -0.3% from where we were this time yesterday. Volatility over the past 24 hours has been modest at just under +/-1.7%.

Daily exchange rates

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Source: CoinDesk

Daily swap rates

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This soil moisture chart is animated here.

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45 Comments

"New car sales down 20% from a year ago and imported used car registrations down a massive -37% from July 2021".  A first sign of wallet tightening due to the higher interest rates?

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I would have thought that a housing market that is well on the way to annualized falls of 20% or more was an earlier sign of that.......

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According to one housing expert on the radio, he considered a 20% fall as a crash.

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Nah 20% is only a hair cut

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NZD depreciation probably not helping either. Although I suppose in bidding for Japanese second hand cars it's not clear that we're bidding against anyone with a currency that hasn't also depreciated. 

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NZD / JPY is way stronger now than the average over the past couple of years.  

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Another part of the covid shadow. There's been massive undersupply so sales volumes are all over the show globally, including used vehicles.

If you want a new LandCruiser you might get it in 2026.

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This could be due to low stock level. A friend of mine was looking for a new car for his wife but got told that he has to wait for at least 6 months and prepare for higher price once it gets here. If you just got a new car, you could easily sell 5k more on trade me. There is a lot of demand out there.

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Contrarily, I see the supply chain catching up.

 

We bought a new car for my partner 8 months ago (arranged to take delivery just after the subsidy kicked in), at the time, dealer told us we're lucky to be able to order, and lucky to get it in that timeframe. I asked about a car for myself and he wasn't interested.

It was delivered early April, and at the time, he told me things are catching up, and I should think about whether I want that new car.

These days, he wouldn't stop calling me to tell me about how I should get that new car for myself, and I won't have to wait too long, when I stopped answering his calls, he added me on facebook.

 

Are cars fundamentally that different from houses when it comes to consumer behaviour?

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It was like that over 12 months ago.  We purchased a new Toyota RAV late 2020, had to wait 6 months for it to arrive.  

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I think that the huge demand for second hand cars is fictitious.

I tried to sell my absolutely mint WRX at a realistic price since Jan. No takers at all.  So its off the market. I'm keeping it.

I saw lots of high mileage ones not selling either.

Sure a WRX being a boy racer car. And most boy racers would not have big dollars. So mine was a niche product. But still, no interest across the board says something. It must be getting tough out there. 

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It was looking good for the WRX and older now over priced STi that people were trying to sell used for more than they sold new for but then Toyota launched the new GR Corolla in a number of varients and spanked it.

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A new tesla wont arrive until may next year if you order now. Mine got tboned April 2 this year and is still waiting on the last of the parts to arrive from the factory in China.

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China eeeek!

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Ordered a new Y in June. Picking it up on the 12th. 

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Looking at the Teslas parked at the delivery centre and being told that's only half of them, plus the ones that stayed on the boat to chch, I would expect 2000 Teslas registered in August, and there is probably another shipment still to come this quarter.  Thanks for the subsidy ute buyers! 

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Teslas are expensive Prius’s

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So begins the tourching of the economy in order to protect speculate leveraged bank profits. Is a slow motion reset better than one that clears the leveraged debris in a rush...?

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The thing is that for many, their interest rates haven't yet risen, as many are on fixed rates for sometime yet. 

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"New car sales down 20% from a year ago and imported used car registrations down a massive -37% from July 2021".  A first sign of wallet tightening due to the higher interest rates?

Oldie but a goodie. Relationship between luxury car sales and house price growth in Aussie. You're not going to see a better correlation than this. 

https://www.macrobusiness.com.au/2019/09/luxury-car-sales-lift-with-hou…

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How many new cars can you actually go to a dealer and buy at the moment?

Most EVs and several popular ICEs are still back ordered for months. 

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Hard to know whether this is the beginning/continuation of a trade sanction strategy by the CCP with regard to Taiwan. In lieu of a costly invasion and possible destruction of the Taiwanese economic infrastructure as per Russia and Ukraine. I wonder whether trying to starve out the population and strangle international trade would be enough for the Taiwanese to capitulate?

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Manipulating and/or depriving trade a viable weapon certainly. An actual blockade though would be something else again. Yes the CCP could declare the Straits of Formosa, all the coastal waters of Taiwan in fact, as their territorial water but if the international community declared that null and void and commenced shipping with say escorted convoys, then that arrives at the exact prospect  of the conflict that has been worrying all parties now for a very long time.

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The Kiwi dollar has firmed slightly again today to 63.4 USc.

I didn't see the NZD/USD at 63.40 today, more around 62.40 USc.

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Inflation ~7%

Private sector wage raises ~7%

 

Does Luxon have a leg to stand on talking about the "Cost of living crisis"?

Should he be campaigning to increase bureaucrat salaries increase to ensure the "Squeezed middle" isn't left behind? 

Weird times.

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It seems if you are on a "jobseeker benefit' you are not counted as unemployed ??

Is that actually correct? 

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Good question, does anyone know? 

And if you are not counted, has that changed in the last few years, and is that making the unemployment rate look better than it really is?

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No. If you are on a jobseeker benefit and are actively seeking work, you would be classified as unemployed. The jobseeker benefit is administered by WINZ according to their criteria, and the unemployment rate is measured by a survey by StatsNZ according to their criteria.

You could be on jobseeker and working 10 hours and would be classed as employed.

You could be out of work, but ineligible for jobseeker, and not actively seeking work, and you would not be counted as unemployed, but rather non-participating.

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Good questions, I tried to find some info on this and the definitions of unemploment and it was just impossible on the various Departmental websites. If anyone knows put it up. I suspect the unemployment numbers are "massaged" lower.

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Amazing how the self proclaimed ‘most transparent government ever’ somehow makes it so hard to find things on their ministries’ websites.

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Not to mention naming all the ministries in a language that nobody uses.

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The Ministry for the Environment’s website takes the cake for woke nonsense. Can find that crap easily, but important policy documents not so easily

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One of our country’s three officials languages. Christ what’s your problem with it man. All the surveys and evidence shows Te Reo usage nationally on the rise. 
I for one am happy to see it. More the merrier. Damn sight more interesting than S.I. english. 

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Casual racism is Brock’s MO…it’s why he’s created all the other accounts hosting Roman numerals 

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Are you still flogging that dead horse? I wish I was as entertaining as the prophet.

Now tell us, what's it like being the idiot that bought in November. It's almost as if you paid $130,000 worth of rent for eight lousy months.

It would have made more sense to listen to those kindly trying to warn of such folly.

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Some people love ideology being shoved down their throats and other's don't.

The language we all use in this country is English.

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Why do you suspect that? If anything anecdotal evidence tells me the real unemployment rate is closer to 0, almost anyone seriously searching for a job should find one at the moment.

Those that aren’t searching aren’t included as the whole point of the statistic is to tell us how heated the labour market is, not how many lazy bums we have. 

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When my wife stopped working for 6-months because of cancer treatment she was given a choice - Jobseeker benefit with the actual seeking (CVs and interviews) suspended or to take Superannuation with me (she was in her fifties but her partner was over 65).  She chose the latter because of more benefit and less hassle.

There are many Kiwis working parttime who are looking for more work - about one in eight.

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That has changed somewhat:

Before 9 November 2020, you could include your partner in your NZ Super or Veteran’s Pension payments. You could do this if you qualified for NZ Super or Veteran’s Pension but your partner didn’t (eg, they were under 65). After 9 November 2020, if you excluded your partner from your payments, you can’t re-include them again.

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pretty much --- you re only a jobseeker for a short period of time then classified as long term and so not looking for work anymore--  there are over 100000 more people on these long term and sickness benefits since Labour took office -  that are no longer included in the unemployed stats 

You will note the costs of benefits has gone up way more than what could be accounted for with the increase in benefit levels -- and most of these people have been written off -- get no support or pressure to find work and no penalties for turning work down -- so just sit there disenfranchised 

 

 

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Surely this would be a great story to dig into for mainstream media?

Labour has apparently increased spending by 10%+ yoy. So how come the front page news isnt digging into where its gone, whether the spend is of value to kiwis? The wastage? its inflationary effect?

Or useful stories and opinions of how to help these forgotton workers back into productive work (must feel like hell getting up everyday with no purpose and no future?). Pushing labour/national into policies then measuing outcomes.

In covid times we had daily covidmeters and vaccinemeters showing us progress against targets. Maybe we need government meters on the papers front pages showing us key KPI's and progress (long term unemployed, mental health, water infrastructure maintenance, crime, inflation. all showing current numbers vs kpi's).

Media seems asleep at wheel. 

 

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A big increase in folk going on the pension benefit has also been part of it.

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Do you know what % was due to that?

All i can find quickly is this graph seems to show  increase in benefits dwarfed superannuation spend?

https://figure.nz/chart/5AzPWcvuSoBBcdyt

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