Here's our summary of key economic events overnight that affect New Zealand, with news the long-anticipated weaknesses in the American labour market may now be starting to show. But the signals are still faint.
US jobless claims rose last week by +235,000 which a notably higher than we have seen in a while. There are now 1.8 mln people on these benefits, and while that is little-changed, it is the 'shift on' that we should track because these benefits only last a limited amount of time and there are always claimants who max out and are no longer qualified.
American producer prices rose +2.7% in the year to March, a sharpish drop from the February +4.9% on the same basis. It was also lower than the +3% expected. More interestingly, the annualised rate of change between February and March was a deflationary -6.0%, a twist no-one saw coming. Core PPI didn't shift as sharply, but it did still record a small deflation of about -1%. These were the biggest month-on-month falls since the pandemic. Maybe somewhat surprisingly, it was services that recorded the biggest shift lower, not goods.
In China, overwhelming debt problems have caught up with one southern province. Things are so tight they have had to appeal to Beijing for help - in now-deleted online post. Researchers in landlocked Guizhou province (population 40 mln, so much larger than Australia) surveyed some of the province’s most indebted cities and found it ‘impossible’ to solve their debt problems at local levels. The relief valve of land sales have dried up completely leaving no revenue to service the legacy debt load. Things are unlikely to work out well for the Party boss and governor of the province.
But that might be an extreme isolated issue. China's exports unexpectedly surged in March, driven by solar products, new-energy vehicles and lithium batteries and as supply chain conditions continued to improve from their pandemic paralysis. Exports rose almost +15% year-on-year when a -7% fall was anticipated like in February. It isn't clear why analysts got this so wrong.
China's imports however did fall. And with New Zealand they are down -18.7%. Our imports from them (and that includes Teslas from the Shanghai factory and other EVs) are also down in March, but by less. The same data shows that Australian exports to China, and its imports from there, are each up more than +10% in March from a year ago. So perhaps 'being friends' with China isn't a great benefit because being in their bad books, like Australia, isn't hurting them in overall trade.
In Australia, the Melbourne Institute's inflation expectations survey shows it dipping from 5.0% in March to 4.6% in their April survey.
And Australia added +53,000 new jobs in March, with full-time roles rising +72,000 and the number of part-time roles falling -19,000 in the month. Their jobless rate stayed unchanged at 3.5%. Their participation rate was also unchanged at 66.7%. The continuing strength of their labour market puts more RBA rate rises back on the table as they may have turned dovish too soon.
International container freight rates were virtually unchanged this week, maintaining their below-average levels as world trade remains weak, especially out of China. Bulk cargo rates were little-changed as well.
The UST 10yr yield starts today at 3.45%, and up +4 bps. The UST 2-10 rate curve is marginally less inverted at -53 bps. Their 1-5 curve inversion is now at -119 bps and marginally less inverted too. And their 30 day-10yr curve is very much less inverted at -55 bps. The Australian ten year bond is up +5 bps at 3.33%. The China Govt ten year bond is up +2 bps at 2.85%. And the New Zealand Govt ten year is up another +4 bps at 4.10%.
On Wall Street, the S&P500 is up a strong +1.3% near the end of its Thursday trading session. European markets were all up between London's +0.2% and Paris's +1.2% in their overnight trading sessions. Tokyo ended its Thursday up +0.3%. Hong Kong was up +0.2%. But Shanghai fell -0.3% yesterday. The ASX200 ended its session down -0.3% and the NZX50 ended up a minor +0.1%.
The price of gold is at US$2044/oz and up +US$31 from this time yesterday. That puts it at its highest since August 2020.
And oil prices are down -US$1 at just on US$82/bbl in the US. The international Brent price is down to just on US$86/bbl. And perhaps we should also note that natural gas prices are back to very low levels, levels we had prior in the 1990s. Suppression of Russian energy prices may have a lot to do with this.
The Kiwi dollar is almost +1c firmer against the USD and now at 63.1 USc. Against the Aussie we are have firmed slightly to 92.9 AUc. Against the euro we have risen more than +½c, now at 57.1 euro cents. That means the TWI-5 is at 70.5 and up +60 bps from this time yesterday.
The bitcoin price is again little-changed, still at US$30,452 and up a mere +0.7% from this time yesterday. Volatility over the past 24 hours has remained low at +/- 1.4%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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59 Comments
The strength of the Aussie jobs markets has got to be a worry for our rbnz if our staff are heading off.
The S&P500 has had a good run, still 14 percent below Dec 2021 peak. Will the latest move, up 7.5 pct since mid march be easing
But like in NZ here, finding a good place to rent will be difficult...
The S&P 500 has only rode the inflation wave.
Oh my bad. There is always a reason why the doomie gloomie forecasts don't eventuate.
*** Recession, depression
*** high unemployment, high mortgagee sales
*** utter chaos, worthless assets, worthless and plunging markets.
The worst case outcomes peter out with some vague reasons given or likely just dont get mentioned anymore. The game is not going to plan and the chief cheerleader for the doomie team, HM has resigned and licking his wounds
NZ is an outlier and will crash worse because of the Idealistic policies of Labour and the money it has cost and will cost everybody.
Min wage
$$$ wasted on non essentials
Reforming everything to Socialize everything ...at big cost
Poor export v import control
New taxes
Overbearing influence in RB.
Cost added to private business
Dot dot dot ..
NZ is expensive and poorly serviced by infrastructure. We have lost our way in the world https://i.stuff.co.nz/travel/news/131756351/new-zealand-passport-plumme…
We have become " Ardern/ Shaw" world leaders in the dumb areas while our country is deprived of the basics ( health, education, policing, infrastructure...)
.yip .. signing into environment, gay, kindness, UN bullshite has come at the expensive of our health, violent crime, education, racial harmony etc and for what...the chief antagonist , Jacinda , to walk away!
What a croc of crap this country has become! In 7 years
The Government has and continues to have it's eye off the ball.
I don't understand why, if the fed is predicting it will cause a recession, the market is climbing?
Good news is bad. Bad news is good.
Because a recession usually leads to inflation easing and interest rates declining, so the cost of credit goes down and it is easier for companies to borrow money, and for their customers too. Credit makes the world go round. They are betting that that offsets the loss of business, which I think is overly simplistic.
The market is still climbing because inflation is still climbing. Stock markets, asset holders, indebted governments, banks crave inflation, but the poor doom and gloomers with hard earned money in the bank and wage earners that are totally screwed.
No, in 2022 stock prices fell hard for that reason, stocks are subject to interest rates too, like property is. The double whammy from higher rates mean higher outgoings leading to reduced earnings and investors demanding better returns. Both lead to falling stock prices.
What you are missing is the forward looking aspect of the stockmarket which effectively, through trillions of investment decisions gives a handle on market opinion of interest market movements and the economy in general
Reserve Bank of Australia officials have finally admitted they “did a terrible job”. Speaking at a panel in Melbourne on Wednesday, Ian Harper, who has been a board member for seven years, conceded that after Covid hit, the central bank struggled to balance the need to keep inflation within its 2 to 3 per cent target and maintain stability in the financial system.“Both of those things led us to be extremely cautious. With hindsight, excessively cautious in how we set interest rates during that time,” he said. He added that “with the benefit of hindsight … it looks like we did a terrible job”.
USA unemployment figures are a joke, 'there are always claimants who max out and no longer qualify'. Try getting unemployment (which you have paid into), when you get fired, nope. No previous job for at least 2 years, nope. Leave university, can't find a job, nope. Homeless on the streets, nope. Unemployment is only for the 'Corporates', who need time out from their stressful jobs before they get back into the revolving door.
Infometrics inflation report seems to be the key piece of news today says -> 18 months to get inflation even close to acceptable levels and a higher OCR (largely due to specific NZ issues) than anticipated and a very slow OCR drop after.
Tallies with the word on the street tbh. Pricing is still rising and people are still spending.
“Pricing is still rising and people are still spending.” Aye true, but the next serious questions are how much are they borrowing to enable that spending and what percentage of that is on basics, essentials, necessities etc.
Borrowing less than they used to I imagine. Min wage is so much higher than just a few years ago and job security is currently very good. Yes prices have gone up but not as much as wages in the last 5 years. You won’t read that here though, everything is doom and gloom apparently, despite the data saying otherwise (for now at least!).
From what I hear.. (and aside from Real Estate and construction) the spend seems to be holding up and very few people bejng let go.
Businesses are negative at the anticipation of a downturn.. but not yet feeling it.
Residential building jobs may have taken a tumble but hiring in industrial and infrastructure construction is still strong.
Not difficult for tradies to find work in the broader manufacturing sector with transferrable skills on the tools. Won't pay as much, a decent paycheck nevertheless.
I am not surprised to be honest, New Zealand had been artificially boosting an unproductive industry. Unlike other countries, RBNZ will need to work harder to tame the inflation here. I hope more people will see how bs Labour government's "wealth effect" is, you don't sell houses to each other to create wealth, you work hard through actually producing something to create wealth.
It isn't Labour's "wealth effect" it is every government and reserve bank administration for the last few decades
Correct National are just as guilty however they owned it. Labour make out they are the champion of the poor / middle but actively destroy the very people they say they support. And to all the TOP voters - you are supporting labour and the greens by voting TOP.
You say that like its bad thing. :) If i wanted to support Labour, i'd vote Labour, and frankly, they are probably my 2nd choice behind TOP at this stage, NAtional needs to come up with some policy that is worthy of support, rather than just undoing everything Labour has done which seems to be their current platform.
Nationals education policy looks good. I think their problem is the media bias, making it very hard if not impossible to get their policies out. And no I’m not a national fan boy. I am probably more aligned with the traditional labour, what we have now are left wing nutters.
Their education policy is dogshit. It's aimed at old people who think schools are "woke" and we just need to "get back to basics". Dinosaur thinking that was useful in the industrial revolution but not the technological one we are currently living through
Disappointing news for those who think they are pillars of industry because they bought a few houses.
BS. That's an opinion piece. US PPI just plummeted to the lowest level since March 2020.
Renminbi’s share of trade finance doubles since start of Ukraine war
Rising cost of dollar financing has also made China’s currency more attractive
But that might be an extreme isolated issue.
Sure only one cockroach.....
Meanwhile Hooton suggests diversification, which IMHO is prudent now at our leisure rather than later in a hurry.
https://www.nzherald.co.nz/business/matthew-hooton-its-time-to-show-chi…
Yes there may be some diversification via the UK mother country. Sadly that still will not replace china as a big trading partner, NZ is wedded to China
In a sense we are protected from fallout, in that China now has significant business interests
I would not be relying on UK as a primary partner given the mess they are in.
China's imports however did fall. And with New Zealand they are down -18.7%.
Matthew Hooton: It’s time to show China the door
If your business depends on China, it’s time to roll out Plan B. The main mission of MBIE, NZTE and Tourism NZ should be helping you.
New Zealand wasn’t alone in becoming too dependent on the authoritarian and expansionist superpower, but was the most naive.
In retrospect, China’s interest in New Zealand was always to infiltrate, subvert and make dependent the weakest member of the Five Eyes alliance.
Tesla New Battery Plant Cements China’s Place in Energy Storage
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The US carmaker already has an automotive factory in Shanghai
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Musk deepens China investment amid growing trade tensions
My fave is PDKs assertions that Putin holds all the cards as he has all the precious, precious Dino juice....
When it's looking increasingly like Russia is going to become a vassal state of China, who have little energy independence.
Well Russia, in theory, does hold a huge resource base. It's just suffering a continuation of the appalling management that dominates Russian history. The ageing entitled unimaginative leadership, with it's pseudo mystical desire to recreate an empire of subjugated peoples, is like living a time warp.
One thing Putin does understand is depletion. The European energy crisis was Vlad's big opportunity to make a move. Of course he expected the limp wristed response of Germany and France, not the flood of weapons from eastern Europe and the UK. Vlads timing was as off as his intelligence, but he is aging. If not now, when? The energy vice just wasn't screwed quite tight enough.
Energy is why Vlad didn't jump while he had the tweeting orange buffoon and his chicken bucket inhabiting the Whitehouse.
The invasion is about energy as a weapon. Something Russia still has and something the west is struggling to secure. Vlad knows if he drags the war out long enough his card hand becomes stronger. Meanwhile Russian oil is still finding it's way to market, some of it as repackaged Saudi oil and the west tolerates it to prevent the global economy falling off the cliff.
The only country that's made use of abundant fuel reserves is Norway.
So pretty clearly, human capital and political structure are more valuable resources than fossil fuel.
Russia will more likely implode before coming to its senses and making any meaningful change, and Vlad won't be there when it happens.
Energy is work. Nothing gets done without it. Political structures emerge only where there's an energy surplus. Human capital doesn't exist without energy.
Hmmm interesting, they are willing to have their patented tech deconstructed and copied in the country that holds no copyright law. Bold move sherlock
Do some research
Both Tesla and Toyota took the decision to open-source their patents respectively, claiming the decision was made to remove barriers, spark greater innovation within the EV industry and ultimately open up the road to sustainability.16/06/2022
“but was the most naive.” Naive is a really handy euphemism isn’t it. In mealy mouthed vernacular, it suggests an earnest endeavour that ended up being a mistake made in good faith. Even Judith Collins resorted to its use within the context of her connection(s) with China.
Naive is probably an accurate assessment though
Soviet Union was going and China was opening up with the belief in many countries that economic prosperity would push political change over time -unfortunately it didnt happen and has actually gone backwards. The plus is that a few hundred million people have been lifted out of the poverty zone and lead better lives and we have been a small part of that
and president Xi wont live forever
There's always another Xi, or Putin waiting for their turn as the "big man".
But in context I'd suggest it is referring to allowing ideology drive the process without a pragmatic perspective of reality. Helen Clark was extremely naive to disband the strike wing of our Airforce, when even then China was making noises towards expansionism which have only got louder today. I'd suggest Hooton is trying to stimulate a debate on a much needed topic and on the basis of the geopolitical divides that are occurring. I fully agree with him. But history tells us that he is not the first to make this call, and all others have been largely ignored.
Yesterday on National Radio I heard a chap suggest we could become the Switzerland of the (south)Pacific. But he appeared ignorant. The Swiss have protected their neutrality through the natural geographic features of their nation, the Alps, and a very strong military trained to make use of the Alps as a defensive weapon. History also teaches us that any so called 'neutral' country that hasn't had a very strong military, has simply been steam rollered by invading forces. The od adage of "if you want peace, prepare for war" holds true even today. Our politicians have neutered us, and refuse to see the writing on the wall.
Hooton is very late to the party, probably too late. Hasn’t he been in bed with the Nats for many years, who have gone out of their way to further the financial interests of themselves and their cronies by sucking up to the CCP.
I have been a vocal cynic of the CCP and it’s intent for many many years, and for many years on this website.
Very few have engaged on this. Not sure why. Bought the narrative that China is a benign state driving for co- prosperity with the West…????
yeah right
Hooton’s article is right on the money, but it’s at least 5-6 years late.
Good to see that the labour Maori caucus is still in control of the labour leadership. Chippy can't do a thing.
No wonder the local Maori do not like the Maori elite in Wellington. Just as i dislike the pakeha elite in Wellington.
Ones an aimless alien culture disconnected from its roots.
The others been forced to adopt the same bollocks.
Hilarity ensues.
That interview the other day when he was running interference for Mahuta was quite telling. She is clearly still the "shot caller".
Yep she that gave the middle finger to PM Ardern, in utter defiance went ahead and entrenched three waters, wilfully undermined parliamentary protocols and democracy itself in the process, is now worthy of high praise and utmost sympathy. Go figure!
If Maori want what the Maori elite want then surely thier Maori party would get 25% support and not 2.5%...
I would love too see a gay party and the % vote's they would get.... Wait a minute .... The Greens...🌈🌈🌈
If Labour had been able to change 3 waters to the new setup without co governance they probably would have won the election.
wash your mouth out - co governance is gone -Chippy said so -and he is right as its actually iwi control 100%. No one else will get a look in despite maybe being at the table as te mana o wai proclamations that can be made by iwi will rule
Its a sham and they need to be crucified for it. As for Chippy saying the people (read masses) dont understand co governance -quite arrogant for a PM to call us all stupid
You should comment more often, I like your pithy comments.
Well hadn’t thought of that. Of course it can’t be co-governance if there is just the one racial entity in charge. This is just stage one. Stage two will obviously be when the Iwis throw out the Kiwis. Gad, these lefties are cunning if nothing else.
Stupid is what stupid does
Welcome - great comment
The real news is ethereum.
Post shanghai upgrade and even though a huge % of staked eth can be sold the price held fine. Now up over 5% today to $2,010.
Last ride in crypto I was mostly in BTC - now its mostly ETH
and gold
Well timed
Why is National not campaigning for funding to Stats NZ so we can have crucial data monthly?
It's such an obvious policy and they can point the finder at the RB.
There is so much not going on (which should be) at National Party right now, it's a worry. This govt are tearing the country apart & the Nats are letting opportunity after opportunity pass them by. Thank God for ACT. If ACT can find their way through our bias media, surely National can???
The only one that evidences any charisma and panache and can land a telling sound bite is Erica Stanford. Seems to be these days that in terms of personality our politicians are a bunch of non entities.
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