Breakfast briefing: Entering a stagnation phase

Business / news

US jobs data weakens; Japan GDP growth up; China prepares for a rate cut; EU GDP in recession; Aussie exports fall; UST 10yr 3.72%; gold up and oil down; NZ$1 = 61 USc; TWI-5 = 69.1

9th Jun 23, 7:18am by David Chaston

Here's our summary of key economic events overnight that affect New Zealand, with news the global economic impulse seems to be weakening further.

US jobless claims rose last week to +219,000. When seasonal factors are added, this rise was significant. Seasonally, there should have been a decrease. Perhaps we are now getting the American labour market reaction to the slowing economy other data has been pointing to. The bond market is wondering and benchmark rates fell on the data. But there are still only 1.6 mln people on these benefits which is little-changed in a week.

One place the effects of an economic slowdown might show up is in inventory holdings. And while they have been rising on an inventory:sales ratio basis for more than a year, it has been off an unusually low base - and inventories actually fell in the April data released earlier today from March. So no confirmation of a slowdown there.

Japan reported a strongish +0.7% GDP advance in Q1-2023 over Q4-2022. But that only leaves them +1.3% ahead of year-ago levels. However the more recent burst higher is a good sign for them. And their current account surplus in Q1-2023 has been impressively high as well.

The recent round of deposit interest rate cuts by state-owned Chinese banks is being seen as a harbinger for an official rate cut by the Chinese central bank later this month. They need to do more to try and get some economic momentum back into their economy, especially their factory sector.

The EU economy unexpectedly shrank -0.1% in Q1-2023 from the prior quarter. The expectation was that it would rise +0.1%. Data for the final quarter of 2022 were also revised to show a -0.1% fall, instead of a flat reading, which means the eurozone has now entered a small technical recession. A decrease in household expenditures led the retreat.

When New Zealand trade negotiators deal with the EU, we end up having to take what they will give, which hasn't been much. That is because we don't have anything they really need. It is not the case with Australia however. The Aussies are warning Europe that it risks losing access to critical minerals unless it sweetens a free trade deal for Australian farmers. Hopefully our MFN clauses will allow us to benefit if the Australians win that one.

In April, the Australian trade surplus was huge again, but less than expected. Goods exports shrank -7.0% from March but were down a lesser -3.2% from the same month a year ago. Rural exports were the hardest hit in April. Services exports (largely travel and education) are however recovering very rapidly. And imports rose +1.2%.

We should note that coal prices have fallen dramatically in 2023. From the start of the year, they are down by two thirds but that is only back to levels we last had in July 2021. Analysts see large falls ahead, still to come.

Global container shipping freight rates were stable last week, unusual because this is the first week in the past 82 that they haven't fallen.

The UST 10yr yield will start today at 3.72% and down -7 bps from yesterday. Their key 2-10 yield curve is little-changed at -80 bps. Their 1-5 curve is also little-changed at a -128 bps. But their 3 mth-10yr curve is at -139 bps and much more inverted. The Australian 10 year bond yield is now at 3.95%, unchanged and holding yesterday's sharp move higher. The China 10 year bond rate is unchanged at 2.72%. And the NZ Government 10 year bond rate is at 4.61% and up +11 bps from this time yesterday.

Wall Street is in its Thursday session and up +0.4% on the S&P500. Overnight, European markets were mixed with London down -0.3% and Paris up +0.3% and the others in between. Yesterday, Tokyo pulled back another -0.9% on the day. Hong Kong rose +0.3%. Shanghai was up +0.5%. The ASX200 ended its Thursday session down -0.3%, and the NZX50 ended down -0.4%.

The price of gold will start today at US$1963/oz and recovering +US$19 from yesterday.

And oil prices have fallen -US$1.50 today from yesterday at just on US$71.50/bbl in the US. The international Brent price is now just over US$76/bbl.

The Kiwi dollar starts today +½c higher at 61 USc. Against the Aussie we are unchanged at 90.8 AUc. Against the euro we are firmish at 56.6 euro cents. That means the TWI-5 is up to 69.1 with a +30 bps rise and off its six month low.

The bitcoin price is virtually unchanged since this time yesterday at US$26,487. Volatility over the past 24 hours has been modest at just on +/- 1.3%.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

Daily exchange rates

Select chart tabs

Source: RBNZ

Source: CoinDesk

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

57 Comments

by Pa1nter | 9th Jun 23, 7:41am 1686253263

Perhaps we are now getting the American labour market reaction to the slowing economy other data has been pointing to.

There is data that resignation levels peaked last year, and is back to 2019 levels.

RIP "Quiet Quitting", it was a short life.

by Golfer | 9th Jun 23, 7:46am 1686253576

You don’t resign to Quietly Quit you just do the bare minimum. Add in the culture war and good luck NZ.

by Averageman | 9th Jun 23, 7:55am 1686254113

Indeed. Would suggest most businesses know who the quiet quitters are. They will be the first offloaded when head count downgrades are required.

by Uninterested | 9th Jun 23, 9:58am 1686261506

What I have seen is that during restructurings its pretty random who is fired. One case sticks in my mind. There was a middle manager guy who would work huge hours. Possibly because of personal insecurity. Alas, he was laid off. Others who worked the standard hours stayed.

Me: When I worked, I always just did the required standard hours unless there was a genuine (strong) reason to stay a little longer. Or for example an equipment outage could only occur at night. But those instances were very rare and my pay rises/ security of employment were never at risk.

Never did working from home. I think that this is a scam. Productivity must be really low and hard to monitor.

by ChrisOfNoFame | 9th Jun 23, 10:05am 1686261947

re ... "Would suggest most businesses know who the quiet quitters are. They will be the first offloaded when head count downgrades are required."

Not in my experience in ICT. About half the bosses will keep the suck-ups and lose anyone they don't like.

by Pa1nter | 9th Jun 23, 7:56am 1686254181

You don’t resign to Quietly Quit you just do the bare minimum.

Sure, but in a tightening job market, doing the bare minimum isn't a good survival strategy.

Google is now demanding their workers back to the office, because despite everyone claiming "I get more done if I'm working in my PJs", most don't.

by Chaosinflesh | 9th Jun 23, 9:47am 1686260841

I always understood quiet quitting to be "doing your job according to your job description". For a long time, senior staff have expected more from their underlings than the underlings were fairly remunerated for. And going above and beyond was no guarantee of advancement - esp. in the US where they have "at will" employment agreements. Staff are not valued, at the horrific rise of HR over the last 25 years has created little fiefdoms within the work force (I know one company who ended up divesting themselves of their newly acquired HR person, because they wanted to hire 5 other HR people underneath themselves to do the work, whilst recommending other longer-serving staff members were cut...).

Otherwise, I agree wholeheartdely with you - we see it in our team - initial productivity was good, but standards slack over time as people get complacent.

by Pa1nter | 9th Jun 23, 12:14pm 1686269648

And going above and beyond was no guarantee of advancement

It's not, but as a general rule, the vast majority of successful people I've known do significantly more than the bare minimum.

So in a healthy job environment, quiet quitting will keep you employed, but the individual ultimately is cheating themselves. They have made poor value of their time.

by Plutocracy | 9th Jun 23, 1:37pm 1686274646

They have made poor value of their time.

As opposed to doing unpaid additional work? That sounds like a significantly poorer use of time to me.

by Pa1nter | 9th Jun 23, 2:11pm 1686276691

Sounds that way, but people able to be productive and invested in what they're doing generally see a higher level of demand for their time. Higher demand usually leads to improved income.

by stefanblaise | 9th Jun 23, 10:08am 1686262114

Its very easy to make quiet quitters redundant, since its easy to demonstrate that they have either added nothing to revenue, or have actually caused a drop in revenue. The chain draggers that thought Covid Govt sponsored Quiet Quitting had created a new normal in employment relationships are going to get a hard lesson in economics. We chucked a sizeable portion of our dead wood last year for swallowing the WFH/Zero Value employment meme, and we are a lot more profitable as a result. If you are paid to service customers, you can't expect your employer to answer your fone for you.

by The Person | 9th Jun 23, 11:41am 1686267663

Quiet Quitting means not going the extra mile, not pulling regular all nighters, not working weekends. What you are talking about is someone who has either deserted their post, and are incompetent in their role.

"Quiet Quitter" is a terrible term to describe someone who just diligently gets on with the job and goes home to their family at the end of the day. To me, the people that aren't "Quiet Quitters" at work, well they have actually quietly quit their life

by Zwifter | 9th Jun 23, 12:30pm 1686270649

People that have terrible home lives work weekends as well. People I know that actually have a life practically turn their phones off and spend time with the family in the weekends. The only time its worth you going the extra mile in New Zealand is when you are self employed, seen people work at a company going nuts for 10 years, get a gold watch for their efforts then get shafted so they can employ someone else for less.

by Pa1nter | 9th Jun 23, 12:34pm 1686270874

The only time its worth you going the extra mile in New Zealand is when you are self employed

Or if your remuneration is strongly tied to your productivity.

But yeah I guess for someone working a generic job on a pay scale, it probably just keeps you in your job better than your lesser performing peers.

by Pa1nter | 9th Jun 23, 12:31pm 1686270680

"Quiet Quitter" is a terrible term to describe someone who just diligently gets on with the job and goes home to their family at the end of the day

Idealogically, if someone can do this, and adequately provide for their family, that's a fine thing. I think though from a practical perspective, there's probably a really strong overlap between quiet quitters, and people that are dissatisfied with what life is providing them.

by Juzz | 9th Jun 23, 1:40pm 1686274843

I have seen instances where productive employees are passed over for promotion as they're needed in their current roles more so than the quiet quitter in the same role. Management recognizes the slacker would not cope in that role if the high performer was promoted.

by Pa1nter | 9th Jun 23, 2:09pm 1686276594

One of the worst mistakes businesses can make is to promote highly productive workers into management style positions. They're not necessarily transferable skillsets.

by Juzz | 9th Jun 23, 2:17pm 1686277064

Never get your productive employees to estimate labor costs for a job. They look at it as how quickly they'd like themselves to be able to do the job, not how much time it's going to take the slackers to get there.

by Pragmatist | 9th Jun 23, 7:43pm 1686296587

I resemble this comment. Managing people not my strong point, not helped by the fact they are all obstinate engineers that think they are irreplaceable because they have siloed information. I'm learning, and they are getting more replaceable by the day.

by stefanblaise | 9th Jun 23, 4:17pm 1686284255

Perhaps what is needed is not so much fewer quiet quitters as an eradication of the term itself, since its syntax is not universally agreed. I literally tell staff to go home and enjoy their private/home lives if its past their agreed hours and they can't seem to put their work down because they are too engrossed in it. I still love them though (no, not like that, lol).

by Flying high | 9th Jun 23, 7:48am 1686253686

Huge congrats to Dame Jacinda.

Such a very well deserved dame-hood that I almost forgot to mention it

by Foxglove. | 9th Jun 23, 8:41am 1686256872

It’s show time. Rogers & Hammerstein. South Pacific. “There is Nothin’ Like a Dame.” There it is.

by murray86 | 9th Jun 23, 8:03am 1686254606

I'd challenge that. I agree she put NZ on the map in a few different ways. But in very many more she failed the people of this country dismally. She was our Prime Minister to serve and govern the people of NZ, not to become an international star. she she had to weather some fairly serious crisis's, and did so pretty well, but other than that what did she achieve? Child Poverty, a portfolio as a young mother to be for a child who it will be extremely unlikely to ever experience a single day of hardship, she took for herself and achieved what? Nothing, nada, nil, zip, zero. Yet it could have been so easy if she just put some controls around the cost of housing.

Our politicians are increasingly just hot air for the people of this country. A global warming threat!

by Pa1nter | 9th Jun 23, 8:08am 1686254917

Perhaps politicians have always mostly been hot air, but underlying, non political conditions meant they got to pat themselves on the back for societies' prosperity.

Something like poverty is an issue with a decades long tail, it's causes many. Probably, any meaningful solution will likely take just as long.

by Foxglove. | 9th Jun 23, 9:01am 1686258073

The knighthood is part of a reinvention & repositioning on the international stage. Imagine Key saw it as that too. Adds tinsel, a ribbon & a star. Never found Helen Clark exactly agreeable, but agree she was dead right in binning these archaic bottom of the barrel pretensions. She & Jim Bolger & Mike Moore deserve respect for being above it, not so much their deputies though.

by Flying high | 9th Jun 23, 8:56am 1686257801

Have you noticed (of course you have) how chipkins talks up ardern, even though he publicly ditched all her policies. And was raising her profile with the 3 month stint at Harvard. They will write on her forehead "return to sender"

by Comyn | 9th Jun 23, 2:33pm 1686277984

Harvard university is Jacinda's environment, her safe space. Most of our leaders have only know institutions.

Dame hood is the first title, next will be a book and then a building or street named after her.

A lot of us will ask "why and what for?" And then get criticized for even asking the question....

by profile | 9th Jun 23, 8:45am 1686257157

"Amid a strong field of world leaders succumbing to copycat irrationality, Ardern was the High Priestess of Covid hysteria. The former NZ prime minister embraced tyranny like a long-lost lover, pursuing an “elimination strategy” which kept her country in cruel and futile lockdown for over two years. She caused immense suffering, particularly to citizens abroad who were banned from returning home – not even allowed back to see a parent on their deathbed.

Obergruppenführer Ardern also made the Covid vaccine mandatory for teachers, police officers, soldiers and healthcare workers long after it was known that the jab prevented neither infection nor transmission.

...Why would she want the title anyway? Ardern is a socialist and closet republican who would like to see the downfall of the institution whose glittering bauble she now shamelessly grasps with both hands. (Why on earth is the King ennobling one of the monarchy’s enemies?)

“I was in two minds about accepting this acknowledgement,” said Jacinda of the Dame Grand Companion of the New Zealand Order of Merit. An acknowledgment of what exactly? The fact that New Zealand saw its largest year-on-year increase in deaths in a century last year, a human tragedy almost certainly linked to Ardern’s delusional zero-Covid strategy?"

https://www.telegraph.co.uk/columnists/2023/06/07/jacinda-ardern-dameho…

by Foxglove. | 9th Jun 23, 9:08am 1686258529

Somewhere amongst all of that you came to sense that Ardern & entourage had developed quite some liking for the degree of control they had over the good people of New Zealand and were hard pressed to relinquish it. We know, we say, you do! For instance the equally farcical and impossible border encirclement containment that Hipkins proposed on Auckland pre Xmas, until the police finally told him to nuff off.

by rastus1 | 9th Jun 23, 9:07am 1686258449

Could Wayne Brown be an exception? Useless at media etc but it seems he is very focused on actually sorting out the dysfunction that is Auckland.

by agnostium | 9th Jun 23, 1:19pm 1686273559

How do you figure he is sorting out the dysfunction in council?

He literally said council dysfunction had nothing to do with him, it was the Chief Executives' problem to solve.

He then said his only role is to corral the councillors. How is he doing at that?

by gnx | 9th Jun 23, 6:51pm 1686293494

It’s pretty obvious it’s an organisation with no culture of doing things economically.

It’s outsourced every productive activity and kept the paperwork and admin.The productive suppliers seek a profit.The council doesn’t have the culture and skills to reduce cost.

Browns a clownWait a year and they will have to same budget issue.And only ten percent of the airport shares to hawk off.

I think we need a good recession to clean the country of the hopeless…..businesses, politicians & the real estate nouveau rich.

by Baywatch | 9th Jun 23, 8:23am 1686255806

Yes she smashed house prices, got us through covid (remember the summer of 2021)..and now following Luxons call will probably have more babies. NZ should be proud.

by Albert2020 | 9th Jun 23, 8:28am 1686256081

Special honors turned into a farce once Key got a knighthood.

by nktokyo | 9th Jun 23, 8:31am 1686256268

No it turned into a farce when Jenny Shipley got one.

by Albert2020 | 9th Jun 23, 9:20am 1686259255

Yes, I stand corrected. The joke started with her dame hood.

by kiwikidsnz | 9th Jun 23, 8:52am 1686257556

You forgot to add /sarc

by Flying high | 9th Jun 23, 9:10am 1686258614

You spotted the tongue in cheek inference

🍻🍻

by Te Kooti | 9th Jun 23, 9:37am 1686260228

I really liked her to start with but grew to loathe her. She locked Kiwi's out of their own country and then ran a lotto visa scheme, she delivered nothing of substance and her legacy is puddle deep. She is perfect for the WEF/WHO.

by Advisor | 9th Jun 23, 10:13am 1686262383

then ran a lotto visa scheme

I wonder why the Opposition wasn't up in arms on this issue. To me, that was Jacinda's successful attempt at buying a huge stock of new votes.

She practically gave away residence visas on super-low eligibility criteria. A hundred thousand-plus new voters who wouldn't have received residence on their own accord (probably engaged in low-wage work) believe they owe her party big time and will probably not vote for pro-business parties on the right.

by Te Kooti | 9th Jun 23, 10:43am 1686264220

By that I meant ran a lottery for a quarantine spot, there were Kiwi's abroad who missed parents funerals because a Kiwi here got allocated a q spot and went to Plantation Island for some winter sun.

As for her legacy, look at the shambles of a Cabinet she left behind.

by Foxglove. | 9th Jun 23, 2:32pm 1686277947

Likewise, early on, I gave her the benefit of the doubt but soon came to doubt there was little benefit in that. Still a bit of a bitter pill to admit how easily I was duped.

by Averageman | 9th Jun 23, 7:53am 1686253998

Stagflation. Higher everything via inflation, while assets plummet. A truely terrible economic outcome. Labour should vote to put itself out of Govt.

by El Torso | 9th Jun 23, 7:59am 1686254365

Labour caused global stagflation? Their influence knows no bounds.

by Pa1nter | 9th Jun 23, 8:10am 1686255019

I know, right?

Some say this is the worst government in living memory. But the level of accomplishment some are attributing to them would be supernatural achievements.

by Flying high | 9th Jun 23, 8:21am 1686255688

Labour should vote to put itself out of Govt.

They are doing everything they can to get there. Marvellous Michael and Jive-ing Jan are stars in the show

by agnostium | 9th Jun 23, 1:22pm 1686273776

Channeling Trump there with the silly name calling. Interesting role model.

by nktokyo | 9th Jun 23, 8:31am 1686256316

3 years of deleveraging starts now.

by Flying high | 9th Jun 23, 9:05am 1686258324

I heard recently how Marvellous Michael Wood held a special place in his heart for the anti-mandate protesters. He referred to them as a "river of filth" as they laboured under the Be Kind treatment dished out by Mr Mallard.

The Liebour ministers arent so good at following their own love and kindness messaging. It comes back to bite them when we see how Michael doesn't give a toss about doing his job properly.

by Advisor | 9th Jun 23, 9:12am 1686258730

There appears to be growing bipartisan support in the US towards re-industrialisation.

The part this plan that will not work is getting large corporations to forgo short-term profits in favour of longer term "national prosperity", obviously without taxpayers funding those forgone profits through generous subsidies.

What is The New Economic Patriotism? Hint: It’s About the Production (forbes.com)

Meanwhile Arnott's is bringing its biscuit manufacturing operations back to NZ after 26 years and is also setting up a local R&D team.

Let's show the Yanks how it's done! [sarc]

by ChrisOfNoFame | 9th Jun 23, 10:12am 1686262351

While it seems an odd thing to say, the yanks are finally catching onto robotics. Sure, car assembly has been using robotics for ages but a trip around many 'Merican factories after seeing Chinese factories and you really see the difference. 'Merica has relied too long on harsh labour laws that kill unions and make increasing production a question of hiring more and decreasing production a case of sacking more. A management strategy that is seriously frowned upon China.

by murray86 | 9th Jun 23, 10:24am 1686263043

IMHO i think that is the most egregious flaw in the American capitalist system. the few who get rich usually do so on the sweat of workers who they under pay and make work in appalling conditions. The only saving grace, and it is a small one, is that if an employer is truly bad a workers get hurt they can be sued so much they will take several hundred years to get over the debt, thus the insurance industry generally acts as a protection, albeit not a good one.

by rastus1 | 9th Jun 23, 10:51am 1686264681

The US worker is way better of than the Chinese worker. The CCP allowed that, not the capitalist system. Ditto across the globe.

by Advisor | 9th Jun 23, 10:31am 1686263517

Yes, goes back to the short-term profit and financialisation issues in the Anglosphere particularly, which makes our economies less compatible with sizeable industrial activities. The ebb and flow of blue-collared job opportunities plus our societies' obsession with university degrees has put many workers off these sectors for good.

The oncoming ebb in our building construction sector will force many to leave the sector or NZ altogether, while discouraging future workers from going into trades.

Why risk busting your backside outdoors in a cyclical industry when you could party through university, graduate with a degree in policy/comms and get a well-paid, secure, low-effort desk job in the public sector?

by KH | 9th Jun 23, 9:11am 1686258691

It was only a matter of time before Michael Wood became the star of a Downfall video. There are some killer lines and the reference to Anna Lorck is spot on!

https://twitter.com/aniobrien/status/1666723294530392064

by Audaxes | 9th Jun 23, 9:12am 1686258729

Fed Emergency Bank Bailout Facility Usage Tops $100 Billion For First Time As Money-Market Inflows Soared Again

by Squishy | 9th Jun 23, 11:24am 1686266681

And oil prices have fallen -US$1.50 today from yesterday at just on US$71.50/bbl in the US. The international Brent price is now just over US$76/bbl.

Take that OPEC!