Here's our summary of key economic events overnight that affect New Zealand, with news the US labour market expansion is slowing, albeit in an orderly way.
First up today, the rise of US non-farm payrolls came in less than the +200,000 expected, up only +189,000 in July from June in seasonally-adjusted terms. This was very similar to the June rise of +185,000. But is was far less than the +568,000 surge they had in July 2022. There are now 156.1 mln people employed by 'establishments', up +3.25 mln from a year ago.
Regular readers will know that we also look at the household survey because this broader view bring in the self-employed and unincorporated workforce. That shows (on the same basis) the number of people in jobs was up +268,000 in July from June, and that is +3.0 mln more than a year ago at 161.3 mln.
It is mid-sized and smaller firms still hiring strongly; large firms actually shrank their payrolls even if it was only minor.
Overall, their headline jobless rate held at 3.5%. Their participation rate held at 62.6%. Average hourly earnings rose +4.4% in July from a year ago, exceeding their CPI rate of 3.0% in the same period..
This overall outcome in July from June was significantly lower than the precursor ADP Employment Report of private payrolls indicated, and for a second consecutive month. But it is still an expansion, and the year-on-year increase of people in paid jobs remains impressive. And the ADP report also shows these private payrolls +3.1 mln more than a year ago, so very similar overall.
Two Fed officials said the slower job gains suggest the US labour market is now better balanced, arguing they may soon need to focus on how long to hold interest rates at elevated levels. (There are however twelve voting members making these decisions.)
North of the border, Canadian employment actually slipped very slightly, down -6,400 when a +21,000 rise was expected and the June rise was an impressive +59,900. But it was a fall-off in part-time jobs that skewed this result. Full-time jobs held little-changed.
In China, they announced that they will drop its tariffs on Australian barley imports that have been in place for three years. In response Australia said it will suspend its case at the WTO. It was widely expected that China would lose the case. China had already lifted its block on importing Australian coal. But don't forget China still has a blockade on Australian wine imports. Until that is lifted, the Australian prime minister won't visit Beijing, a stance that is said to annoy the Chinese leadership.
Singapore retail sales are struggling, down -0.8% in June from May and only up +1.1% from a year ago. The key drag was from car sales, but the non-car sales activity isn't that flash either.
German factory orders came through with encouraging results for June however. They were expected to fall -2% from May but in fact they rose an impressive +7.0%, building on the very good +6.2% rise in the prior month. If they keep this up, it can really move the German economy's dial. They were up +3.0% in June from a year ago, and remember this is 'real', inflation-adjusted data.
The Australian competition regulator has knocked back ANZ's AU$4.9 bln takeover of Suncorp Bank. It is not a complete surprise, with others working to merge Suncorp Bank with Bendigo Bank. The ACCC is promoting that 'solution'. But the problem with the alternative is that would be two weak institutions combining, and it wouldn't necessarily result in any strength improvement. The ACC said “We are not satisfied that the acquisition [by ANZ] is not likely to substantially lessen competition in the supply of home loans nationally, small to medium enterprise banking in Queensland, and agribusiness banking in Queensland. ... Second-tier banks such as Suncorp Bank are important competitors against the major banks, especially because barriers to new entry at scale into banking are very high”. ANZ said it isn't giving up and will appeal the ACCC ruling.
Separately, the RBA released its Monetary Policy Review and trimmed its 2023 growth expectation from +1.2% at its last MPR to +0.9% now, as higher interest rates and inflation bite. A year ago, the RBA expected the Australian economy to grow +2% so the change since then has all been quite negative. It sees widespread "trading down" by households (p 33) as a key driver of the waning growth. In fact it might be slowing fast enough that even +0.9% is optimistic. Higher nominal wages are also driving a very much higher tax take. And that is probably why the newish Labor Government is going to leave the Morrison Government "stage three" tax cuts in place (despite railing against them when they were in Opposition). If those tax cuts keep inflation higher than the RBA wants to see, we could see another rate hike from them (although those tax cuts don't actually come into effect for a year yet).
The UST 10yr yield will start today at 4.04% and down -16 bps from this time yesterday with a pullback triggered by the US jobs report. But that is up from the week-ago level of 3.96%. Their key 2-10 yield curve inversion is slightly deeper at -74 bps. Their 1-5 curve is deeper at -119 bps. And their 3 mth-10yr curve is sharply deeper at -133 bps. The Australian 10 year bond yield is now at 4.06% and down -7 bps from yesterday. The China 10 year bond rate up +1 bp at 2.69%. The NZ Government 10 year bond rate is up +6 bps from yesterday to 4.89%. A week ago it was at 4.79%.
Wall Street has ended its Friday session down -0.5% on the S&P500 from Thursday but down -2.3% for the week. Overnight European markets closed at +0.5% across the board. Yesterday Tokyo ended its Friday session up an insignificant +0.1% but was down -2.8% for the week. Hong Kong rose +0.6% yesterday but ended the week down a shrp -3.5%. Shanghai rose +0.2% yesterday to end the week essentially unchanged. The ASX200 ended its Friday session up +0.2% to end the week down -1.1%. The NZX50 ended Friday little-changed and it was also little-changed for the week, a creditable result given how markets moved elsewhere.
The Fear & Greed Index as moved back from "extreme greed" to just normal "greed" (!)
The price of gold will start today at US$1941/oz and up +US$7 from yesterday. But it is down -US$19/oz from a week ago.
And oil prices are up +US$1.50 at just under US$82.50/bbl in the US. The international Brent price is up less at just over US$86/bbl. A week ago these two prices were US$80/bbl and US$84/bbl.
The Kiwi dollar starts today slightly firmer at just on 61.1 USc and up +¼c from yesterday. A week ago it was at 61.5 USc so almost -½c down from then. Against the Aussie we are unchanged at 92.8 AUc. Against the euro we are marginally softer at 55.4 euro cents. That all means the TWI-5 has basically held at 69.4 which is -30 bps lower than a week ago.
The bitcoin price is little-changed again today since this time yesterday and is now at US$29,067 and down -0.6%. A week ago it was US$29,318 so down -0.9% since then. Volatility over the past 24 hours has been low again at just under +/- 0.7%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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50 Comments
Job losses starting to rise and rates still high, housing market will start to feel the crunch..
I think you read the wrong thing into everything. What you are likely to see now is all sorts of reasons, or in your case excuses on why rates stop rising. The FED and others are look for reasons to not raise now, they don't want a crash. Yes some people got in to deep on property and there will be some short term pain, maybe even a few relative bargains but unless you are in a position to buy it changes nothing.
For a change, a realistic article .
https://www.oneroof.co.nz/news/more-pain-store-why-mortgage-interest-ra…
I’m getting very dismayed about the upcoming election. We have some big issues that need to be fixed yet we have to choose between one party that wants to give money away and another that wants tax cuts particularly for property investors. The minor parties are even worse. Where is the party that actually wants to invest in NZ, build hospitals and transport and houses and water pipes and just make the place better? In MMP why isn’t there another centre party to choose from (that isn’t superannuation Winny)
Hard to disagree with your sentiment and as well, local government demonstrates similar issues. How NZ got to this might well be found in part by the calibre and persona of today’s politicians. Appreciate to enter politics there must be quite some degree of ambition but if that is centred more for the good of the individual rather than the good of the nation, then there is immediately a divergence from what parliament is set up to achieve. Asked this question the other day. What percentage of our mps have had a meaningful productive career in business and/or services such as education/ healthcare, before they entered parliament. Would wager if you add the academics to that, you will find a significant majority and that in turn suggests a good number of mps are entering parliament as a career rather than being able to offer parliament the expertise and benefit of a prior career.
Tall poppy syndrome at its best, eh? We don't even give entry-level jobs to bright candidates who can't hold a fun conversation in an interview.
FYI TOP has a bunch of scientists, medical practitioners, researchers, etc. in their ranks. Not your usual party list full of career lobbyist or trade union negotiator.
Edit: a TOP candidate with a PhD in physics currently working for Callaghan is likely to finish behind the ex-tobacco lobbyist and the former Treaty settlement negotiator in Hutt Central. Sigh!
a TOP candidate with a PhD in physics currently working for Callaghan
Don't assume academic pedigree in the hard sciences makes one a great leader. It also might sound sacrilegious to suggest Callaghan also has a grift component.
Some of the less high-powered stuff is like training from The Office. For ex, they use ex-PwC to lead these trainings.
Don't assume academic pedigree in the hard sciences makes one a great leader
Thanks for helping me make my point. Lets reserve all our scepticism for academics and meritocrats.
This attitude of playing safe with known devils is how we have ended up with a revolving door of career politicians, lobbyists and public sector workers taking turns to run the show.
Thanks for helping me make my point. Lets reserve all our scepticism for academics and meritocrats.
OK. Angela Merkel has a degree in physics; post-graduate work in physical chemistry; and a doctorate in quantum chemistry. And speaks Russian.
Perhaps the TOP guy will shine like Angela.
This attitude of playing safe with known devils is how we have ended up with a revolving door of career politicians, lobbyists and public sector workers taking turns to run the show.
The politicians are the frontmen though, there's actual scientists and nerdy types behind the scenes devising approaches and methods. It's how we have a semi-functional society.
It's not so much the background of our politicians that matter, it's that as society becomes more transparent, and fickle, the sorts of people with an inclination for the reins of power are going to veer towards the sociopathic end of the spectrum; i.e. the absolute worst sorts of leaders.
Questioning things is the first step, the core tenet of your view when stripped down is "the country simply doesn't earn enough to afford it's aspirations". So the question then moves to, where should those aspirations sit?
Can we be balls-deep active participants in the global rules based order (or whatever they're calling the US led global pole) and satisfy those aspirations?
Do we split away a bit, and be adjacent to the global order, but not 100% on board? What would we split towards?
Do we reverse thinking about domestic resource extraction, wear the increased cost in return for security and better sourced resources?
Interesting comment. Makes me want to see a reply from pdk based on the second law of thermodynamics.
I suspect we should accept a lower standard of material wealth in exchange for lifestyle, but our sociopathic tending leaders seem happier to let us drift towards max carrying capacity as long as the oil keeps flowing, and to let us fight it out for space. Human societies don't scale well above 100.
Part of me feels the next generation or two coming through might work it out.
Won't be able to trust anything online.
Revert to more analogue living.
Could be right on the resources side. Over time generations are getting a better idea that unlimited growth wont work, through bitter experience.
I can see new delusions emerging too though, such as people thinking machines have feelings because they are such good fakes. I would not be surprised if a decent chunk of society drifts off into secluded lives with no kids/families, living with nice looking robots without the pain in the arse aspects of real people.
Sounds appealing to be honest.
Not if you can differentiate bumping uglies with a willing, emotionally connected partner, vs some sort of on-demand receptacle.
Humaning is very hard though.
A great leader would be one that could face to face Putin and get a ceasefire.
There are no great leaders anymore.
If, Jacinda, chippy, Luxon wanted to make a name for them selves then go and front Putin.
Putt your mouth where's your money is.
Dean Martin advised if you’ve been drinking don’t drive, don’t even putt. Welcome to the forum, but pay heed, as a newcomer here best a little spell check before pressing save. Mind you can’t say I am not at fault either.
You do realise the TOP candidates have no say on policy, right? Their credentials have no bearing on what or how they will represent, nor will they be able to represent their electorates. TOP candidates sole role is to to look good to the electorate in order to gain votes so they may game MMP for the influence of the 'research group' behind them.
As a member and potential candidate, I met several other candidates, leadership, etc., but not once did I meet or was involved in any policy discussions - other than 'are you okay with representing what you're told?'. This did not sit well with me - I believe in elected representation, not party stooges - and we came to the mutual conclusion that I was not the type of candidate they were looking for.
So vote for your local candidate as you wish - but realise they are going to be effectively list members.
Good info - tks
I met several other candidates
Well done, you got further than I did by the sound of it.
I didn't understand how people can agree to be candidates prior to knowing what they'd be standing for.
Taxation reform (LVT and tax free threshold) is still the single best policy across the political spectrum, so my vote isn't going anywhere, but I share your sentiment.
W C Fields “I never vote for anyone, I always vote against.” That’ll be me. Priority is to remove this penny dreadful government before they can do further damage. Rather negative admittedly, but necessity beats positivity in these circumstances.
Fair enough.
I guess I'm doing the same but including past governments too (since they haven't changed policy since they were in and I wanted them voted out).
And replace this "penny dreadful government" with what? A bunch of religious cranks unable to recognise the concept of finite planet and the only answer to any meaningful question is "build more roads". If the electorate are stupid enough to believe these people are intelligent enough to march us into the future, we deserve what we get. Long live Gilead. Blessed be the fruit.
Regrettably it is a bit of a Hobson’s choice because to me at least, and again I admit I am driven here by the negative, but a government that consciously embarks on legislation that is based on racial selectivity does not represent the good people of New Zealand any more than democracy itself.
20 APRIL 2010
National Govt to support UN rights declaration
The statement in support of the declaration:
- acknowledges that Maori hold a special status as tangata whenua, the indigenous people of New Zealand and have an interest in all policy and legislative matters;
https://www.beehive.govt.nz/release/national-govt-support-un-rights-dec…
Where are the McGillicuddy Serious Party, when you need ‘em!
Better to build more roads than constantly paying consultants millions to tell us what we already know. We need better roading infrastructure, end of story. There is nothing else realistically possible as a transport route, even with a 100% EV fleet we are still going to need roads, maybe the lane width can come down eventually with smaller cars so your 3 lane can become 4 but that's about it.
To make matters worse, one side of the spectrum is promising to invite foreigners to invest and operate in NZ's public infrastructure. That's a roundabout way of saying they're planning to pawn off state-owned assets and cut back on core spending as their predecessors did.
We've had so much success with neoliberalism in NZ: let's now extend our market oligopoly structures to roads, bridges and hospitals.
Quite right.
Can't we see how it worked out for, say, Sri Lanka?
At some stage, a tiny, independent economy must realise that it can't remain so on the back of borrowing and capital gains. That can only take you so far for so long, and then something has to give, and retake the productivity reigns. That's where we find ourselves. And the answer is not to 'privatise' new necessities, it's to recognise that we have to live according to our means - and that...is going to be a sobering exercise for many.
The alternative is to do the disastrous "Public/Private Partnership" deals to finance necessary works (ask any NSW driver how delighted they are about their mass of toll roads!) and allow offshore interests to do that - and in effect we are selling souls before we've even made the goods.
I agree, isn't it time the adults returned to the house? As far as I can see TOP are the only party remotely adult.
We are screwed as a nation. Politicians are using our greed to win and we are falling for the trap. Remember no one can take money to the grave but we can leave this country as a better place for next generation if we work collectively to make it a better place and lot divided by getting sucked into politicians narratives.
Let's ask the leaders to tell us what they are doing for the country as a whole and not just a few. Don't give me fish, tell me how to catch my own fish.
God save NZ
The rot in the NZ trunk started when the "MMP fungal growth" leached into the roots from the parasitic soil.
Now the branches are slowly losing their leafs and the spring bloom no longer exists..
The owner tries in vain to water it but the water costs to much and The winter rains do not come.
However the local farmer still tries to fertilize the tree but in the end the council's cuts it down because it's not a " native indigenous" variety.
Thats NZ for you
In Cambodia, in the 70s, they had so little money for the genocide they had to use a hammer.
More parties is usually preferable.
If you think NZ isn't good enough then go make it better ow.
Parties do not base their lists on who is best suited. They base it on who we the electorate will vote. The poor choices we get are the poor choices we vote for. We want change and yet the majority vote for the the same thing, hence we get what we've always got.
I can only conclude that our voting means we deserve this bullshit.
Yes, the vast majority of voters have selected status quo time and time again. Will this year be any different?
Who knows, the fear of wasting a vote has trumped the fear of a wasted future in NZ thus far.
OOPS! Container rates – measured by Drewy's World Container Index – are now below pre-pandemic levels. Shipping group Maersk warned of a steeper drop this year in global demand for shipping containers. Global container trade will probably contract as much as 4% this year, down from Maersk’s previous prediction of as much as 2.5% Link
There’s only so many cheap plastic things that you can put in your house. It feels like people are starting to spend on having a good time rather than having lots of stuff, and about time too.
Depends what the "good time" involves? If it's sharing a meal with family and friends, great. If it's flying around the planet clogging up the summit of Mt Everest for selfies, not so different to filling your home with plastics impact wise.
Let's go for somewhere in between.
The reference to the Drewry World Container Index is plain wrong. As we noted in yesterday's Briefing, rates rose +11.8% last week, and as the Drewry report says, prices "remain 24% higher than average 2019 (pre-pandemic) rates". The reason for the rise is increased rates from China to Europe and the USWC. That is the opposite of the tweet you copied. It's lying when he claims something his link doesn't support. (This is not a comment about the Maersk aspect. I haven't checked that so I don't know.) If he is going to refer to the Drewry report, at least he could spell their name correctly.
Is it me? or do China and the USA look like they are on the edge of a major meltdown.
And then you have Germany and UK strugging, Argentina and south America currency issues, Europes issues with energy, and Russia ...
I get the feeling the bills are mounting, inflation is stalled, and a obese gender neutral " non male" person is ready to exercise her vocal cords
China is struggling but the US is doing quite well. The US is re-shoring and starting to support local manufacturing while putting barriers in place for overseas competitors.
Europe is trying for some kind of middle of the road part recalibration. Biden's Build Back Better bill is doing it's job of keeping US aggregate demand up while retooling US manufacturing.
NZ could learn something from the American example.
China's pursuit of self contained empire is a reachable goal, but unfortunately the empire is taking what looked to be a large free spending self generating middle class and boxing it in with rules to the point where it can't self generate anymore. Which means a poor empire not a rich one.
NZ could also learn something from the Chinese example, like what happens if you let the bureaucratic class run rampant.
First up today, the rise of US non-farm payrolls came in less than the +200,000 expected, up only +189,000 in July from June in seasonally-adjusted terms.
...
Overall, their headline jobless rate held at 3.5%. Their participation rate held at 62.6%. Average hourly earnings rose +4.4% in July from a year ago, exceeding their CPI rate of 3.0% in the same period.
David am I confused here?
- So payrolls where expected at 200k, came in at 187k (you said 189k) which is miss.
- Then unemployment was expected to remain at 3.6% but fell to 3.5% (you said held) which was a beat.
- Finally wages where expected at 0.3% and came in at 0.4% which was a beat.
By my count a miss and two beats. I'm not sure the Federal Reserve will be running a victory lap just yet.
And oil prices are up +US$1.50 at just under US$82.50/bbl in the US. The international Brent price is up less at just over US$86/bbl. A week ago these two prices were US$80/bbl and US$84/bbl.
OPEC are moving the market but slowly.
I wonder how long OPEC can manipulate oil. I’m picking peak oil price (not supply) must be around now, electric will seriously dent demand in the coming years. How long can you hold back supply if demand is decreasing?
The bad news for inflation (although not so for the environment I suppose!) is WTI crude up 20% in past six weeks, Brent up 17%. Especially in New Zealand where fuel taxes have jumped back up again and the NZD decline RBNZ will not get much breathing room next quarter.
The good news is UBS are forecasting oil will stay around this level. Without wanting to make this too dry (cups of coffee at the ready!) if you look at September and October futures they are trading one or two dollars above spot currently and from there onwards the market is in backwardation: https://www.barchart.com/futures/quotes/CL*0/futures-prices
Consumer loans and credit card debt just hit USD1 trillion in the U.S. Happy days.
A trillion is the new billion.
https://fred.stlouisfed.org/series/CCLACBW027SBOG?s=09
Amusing how readers seem to hold that politicians determine economic cycle. Inequality and debt of pop do that as Michael Pettis explains
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