Here's our summary of key economic events overnight that affect New Zealand, with news the American employed labour force has risen to a new record high.
In the US, the headline non-farm payrolls data reported a +315,000 rise, pretty much as analysts had anticipated. But is was less than the outsized July gain. The jobless rate ticked up to 3.7% on a higher participation rate. This is the seasonally adjusted data, but the 'actual' data is very similar this month (+309,000) taking their employed labour force to just under 153 mln and its highest ever.
Average hourly wages rose +5.2% from a year ago.
It is hard to image a recession when employment and wage growth is strong. The Fed will be emboldened to push ahead against inflation knowing their labour market remains tight despite all the inflationary hurdles. Equity markets retreated on this thought.
But July factory orders slipped when they weren't expected to. They fell -1% in July from June, but remain +11.6% higher than year-ago levels
But there is evidence supply-chain pressures are easing, including for carmakers. Ford has been posting strong year-over-year gains on climbing electric-vehicle sales and improved deliveries of trucks and SUVs. The company’s EV sales increased fourfold from a low base a year earlier, while sales of petrol-engine vehicles rose by a quarter.
In Canada, Vancouver is reporting that sales of houses are down -45% from year-ago levels in August, and prices are now dropping month-on-month.
In Korea, inflation seems past its peak. It rose 5.7% year-on-year in August, slowing from a 24-year high of 6.3% in July and below the consensus forecast. Energy and food prices have started declining from elevated levels. The country’s annual inflation rate also slowed for the first time since January and marked the slowest pace in three months.
According to GDP figures from the IMF, India has now grown to be the world's fifth largest economy, displacing the UK.
The most dramatic overnight data has been from the EU. Their producer price index surged +3.7% in July alone, to be up +38% in a year. That means it is accelerating at a truly stunning pace. But even among that, one country stood out - Ireland, who reported that their producer prices rose +26% in one month! to be +48% higher than a year ago. "Interesting" statistical data collection there. Ignoring the crazy Irish data, Italy (+6.5%) and Germany (+5.6%) led the month-on-month rises by their large economies, whereas Spain (+0.0%) and France (+1.6%) were the most restrained of the remaining large economies.
Meanwhile, Gazprom said it "found a new fault" in its pipelines to Europe and is shutting down supply semi-permanently. That will no doubt save their senior executives from accidentally falling out a high-rise window. (Usually, windows that don't open in the first place.) The EU has adopted price caps on buying Russian energy; and Russia has said it will stop selling to any country that adopts price caps. This is motivating a very fast shift away from fossil fuels in the region, so may have a long-term positive effect. But the short-term pain will be acute, even is Europe seems willing to accept those consequences.
Global food prices retreated again in August to their lowest level in seven months, due to a broad-based fall, Cereal prices went down -1.4%, led by a -5.1% drop in international wheat prices on improved production prospects, especially in Canada, the US and Russia. Dairy prices fell -2% and meat prices fell -1.5% from the prior month.
In Australia, all eyes are on their 'jobs summit', the incoming Governments initiative and a nod to their supporters. It seems likely that many low-paid jobs will get big increases. There is a back-to-the-future muscular move underway with more aggressive strike action. The uncertainties might see more production moved offshore including to New Zealand, similar to what we saw in previous periods of Australian labour strife. But public sector unions seem especially aggressive, including those for public transport. That will trap them in higher public deficits. The upshot from all of this may well mean a move higher for the NZD vs the AUD over the next few years and reversing its recent fall.
The UST 10yr yield starts today at 3.19% and up +5 bps from this time yesterday but falling from the 3.30% level it hit before the US data was released. The UST 2-10 rate curve is much less inverted at -21 bps. Their 1-5 curve is less inverted too at -17 bps. And their 30 day-10yr curve is slightly flatter at +73 bps. The Australian ten year bond is +2 bps higher at 3.64%. The China Govt ten year bond is little-changed at 2.65%. And the New Zealand Govt ten year will start today at 4.01%, and up +4 bps to near a two month high.
Wall Street ended down -1.1% in late Friday trade as they realise today's jobs data will steel the Fed. That caps a -2.7% weekly loss. Overnight, European markets were all sharply higher by about +2% but Frankfurt surged +3.3%. Yesterday Tokyo and Shanghai ended their week flat in Friday trade, but Hong Kong fell -0.7% to end a weak week. The ASX200 fell -0.3% on Friday for a weekly loss of -3.9%. The NZX50 however rose +0.2% yesterday and ended the week up the same +0.2%.
The price of gold will open today at US$1714/oz and unchanged from this time yesterday, but down -US$24 in a week.
And oil prices start today down -US$3.50/bbl at just over US$86.50/bbl in the US while the international Brent price is now just under US$93/bbl. A week ago these prices were US$93/bbl and US$99/bbl respectively so a sharpish -7% fall in a week. There was also a fall in the North American rig count last week, and there has been no net rise since late June.
The Kiwi dollar will open today at 61.2 USc and unchanged from this time yesterday. From a week ago it is virtually unchanged as well. From a month ago it is down -3.3%. Against the Australian dollar we still up +½c at 89.8 AUc and up +0.8% in a week. Against the euro we are up to 61.4 euro cents and little-changed in a week. That all means our TWI-5 starts today up +20 bps at 70.7 and up +20 bps for the week.
The bitcoin price is now at US$19,967 and virtually unchanged from this time yesterday. But it is -3.5% lower than this time last week. Volatility over the past 24 hours has been modest at just on +/- 1.7%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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