US labour market growth slows in an orderly way; Canada jobs shrink; China drops barley tariffs on Australia; German factory orders rise sharply; RBA cuts growth view; UST 10yr 4.04%; gold and oil up; NZ$1 = 61.1 USc; TWI-5 = 69.4

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 ».