Here's our summary of key economic events overnight that affect New Zealand, with news the American labour market is still expanding although not as fast as previously.
The US economy added +187,000 jobs in August, compared to the downwardly revised +157,000 in July and more than market expectations of +170,000. These are the headline, seasonally-adjusted changes. It was the third consecutive month with job gains falling below 200,000, indicating a gradual easing of American labour market conditions, largely attributed to the Federal Reserve's significant interest rate hikes aimed at cooling inflation. There is a downshift, but it is a smooth one - so far at least
However as regular readers know we also look at the original data and that rose +268,000 to 156.4 mln people on company payrolls, a new record high and up +3.0 mln from a year ago. Meanwhile there are 161.4 mln employed when you also account for the unincorporated self employed, up +2.7 mln in a year, so that indicates a shift into company jobs. It is this overall surge in employment that is making the American economy so resilient.
Over the past year, average weekly earnings rose +4.0% and while that is still rising faster than inflation, it is at a slightly slower pace than in previous months.
Meanwhile, the widely-watched ISM factory PMI 'improved' slightly, meaning it contracted less. In fact it has now contracted for a tenth consecutive month. Recall yesterday the internationally-benchmarked Markit PMI came in with a very similar result. Basically their factory sector is in a shallow trough and analysts are suggesting it will climb out of it from here.
On the US West Coast, dockworkers and their employers have reached a new six year labour agreement, ending a long set of negotiations that threatened a port shutdown from Los Angeles to Seattle. The union involved has over the years allowed productivity improvements at the expense of hiring levels, just so long as those who remain get an outsized share of the benefits. They were very well paid before the strike threat, and will be even better off after. But there will be less of them.
Also in a trough is the Canadian economy. Their Q2 GDP data was released overnight and it did not grow from Q1. It is however now +2.2% higher than year-ago levels.
In China, the Caixin factory PMI surprised with a small expansion when a small contraction was anticipated. Given the official factory PMI out earlier showed a contraction, this is a double surprise. The Caixin survey has been volatile about the 50 point mark for a number of months now. Their survey noted a rise in new orders overall and the downturn in new export orders easing. This wasn't what the official factory survey found however. But both surveys noted that selling prices are still falling .
In Singapore, they have a new President after a landslide victory for the candidate of the ruling party. This role has a six year term. Given all the recent scandals in that party, the result is rather dubious as 'free and fair'. But this election wasn't for the role of Prime Minister however.
EU factory PMIs don't look fash at all, with factory orders shrinking disarmingly fast. But this is essentially a German and French problem. Country-level data showed that positive sentiment was strongest in Ireland and Italy, followed by Greece, offsetting the pessimistic outlooks at firms in Germany, France and Austria. Meanwhile in the UK, their factory situation is absolutely terrible.
In Australia, new home loan lending fell -2.3% in July from June to be -14% lower than a year ago. This same metric fell -3% in June and was expected to bounce-back in July, but that didn't happen. Lending for commercial property dived -33% on the same basis as lenders took fright at how that sector could hurt bank exposures.
The UST 10yr yield will start today at 4.18%, up +9 bps from this time yesterday. A week ago it was 4.24%. Their key 2-10 yield curve is flatter at -69 bps. And their 1-5 curve inversion is very much flatter at -109 bps. Their 3 mth-10yr curve inversion is flatter too at -121 bps. The Australian 10 year bond yield is now at 4.05% and up +6 bps from yesterday. The China 10 year bond rate is up +2 bps at 2.62%. And the NZ Government 10 year bond rate is now at 4.89% and down another -4 bps. A week ago it was 5.09%.
Wall Street has gone into their Labor Day holiday up a minor +0.2% on the day which finishes the week with a +2.0% gain on the S&P500 today. Overnight, European markets were mixed with Frankfurt down -0.7% and London up +0.3% to bookend their daily results. Only London had a decent weekly gain, +1.8%. Yesterday, Tokyo ended up +0.3% on the day to be +2.5% ahead for the week. But both Hong Kong was closed yesterday for their typhoon, ending their week down -0.7% for the four days of trading. And Shanghai ended up +0.4% on Friday but down -2.7% for the week. The ASX200 ended its Friday session down -0.4 for a weekly gain of +2.3% while the NZX50 was down -0.2% yesterday but up +0.5% for the week.
The Fear & Greed index is still 'neutral' but tilted to the 'greed' side.
The price of gold will start today at US$1941/oz and up a mere +US$1 from yesterday. But it is up +US$28/oz from a week ago.
And oil prices are another +US$2.50 higher at just on US$85.50/bbl in the US. The international Brent price is now at US$88.50/bbl. A week ago these prices were US$80/bbl and US$84.50/bbl respectively. Improved global demand prospects seems to be behind the shift while suppliers maintain their recent output cuts.
The Kiwi dollar starts today softer than yesterday at just under 59.4 USc but up +20 bps from week-ago levels. Against the Aussie we are slightly firmer at 92.1 AUc. Against the euro we are also firmer at 55.1 euro cents. That all means the TWI-5 is at 68.7 and a minor daily gain. A week ago it was at 68.4.
The bitcoin price has fallen back further today, and is now at US$25,611 which is down another -2.7% from yesterday and down -1.6% from a week ago. Volatility over the past 24 hours has been modest at just under +/- 1.8%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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...oil prices are another +US$2.50 higher at just on US$85.50/bbl in the US. The international Brent price is now at US$88.50/bbl. A week ago these prices were US$80/bbl and US$84.50/bbl respectively.
That doesn't sound very deflationary so don't tell RBNZ. Luckily we only report CPI quarterly so we can just cover our eyes and pretend for a few months.
Look at the poor Canadians! Higher inflation, higher unemployment, higher house prices, lower wages, lower per capit GDP growth. Absolute economic catastrophe since the end if the Covid pandemic.
Oil prices are set by the Saudis until demand drops below the level that gives them the ability to control the price. Once that happens, the Saudis will flood the market with cheap oil until they kill off some competitors (shale etc) - then they'll take control of the price again.
Well, down through World War I, the German banking system was highly industrialized. It was working efficiently with governments and heavy industry.
But that’s not the way the rest of the world went. It took the Anglo-Dutch-American system. And it’s declining because the system basically is like that of the late Roman Empire.
It created great wealth for the wealthiest 1% or the 10%, but it impoverished the 90%. And if you’re going to impoverish the market, then you’re going to have the kind of crisis that Marx described.
And yet Marx did not think, see that it would, nobody anticipated that it would be a financial crisis, because Marx hoped that industrial capitalism’s self-interest would lead it to prevent finance from operating the way it used to, by what he called usury capital, and actually become productive.
The Western economies since World War I have erased the whole distinction between productive and unproductive investment, productive and unproductive labor.
The GDP and national income accounts don’t draw any distinction between production and what is really a transfer payment to the rentier sector, to the finance, insurance, and real estate sector, or to monopolies.
So there’s not even a way that the seemingly empirical statistics can explain why imperialism and why finance capitalism is declining. Link
Enticing new promo video for jobs in Western Australia, book your tickets now:
https://youtu.be/mUdnIv4gqKo?si=N0VBo_J6DyqlbpX9
Caution; being Australian, contains profanity
We live in a funny country! One party makes us all poorer with uncontrolled spending pushing up interest rates and (account) deficits. The alternative plays the same old trick by promising progress by the means of selling our assets to overseas interests. Are they not aware that about 40% of our forestry and 28% of our dairy are already controlled by foreigners? It appears non of the parties have an idea about growing the pie for all New Zealanders without selling assets of or have credital plans to makes us live within our means using our own economical capabilities to grow.
But no matter how insane it may look, this is exactly what the majority voted for the last 30 or so years and will continue to vote for. All the while claiming that to vote a minor party is a wasted vote.
The only wasted votes are those given to any of the parties currently holding parliamentary seats.
this is exactly what the majority voted for the last 30 or so years and will continue to vote for.
I'm not sure that's true. It's very hard to decipher what people actually voted for. Parties are broad churches and a voter might only like a tiny number of their policies but still vote for them because they detest only one of another parties' policies. So we lurch from red to blue trying to figure out what people really want while politicians fiddle at the margins as they're constrained by global events and the "wisdom" of the masses.
Only problem is that people on this forum and elsewhere appear to strongly dislike him.
I like him and he's great entertainment to listen to. The problem is Winston doesn't do what he campaigns on, for example, highest ever immigration when he last left office. He can be, let's say, economical with the truth if your memory is long enough (Yes to Winston's no sign for $10,600 | Otago Daily Times Online News (odt.co.nz)).
Credit where credit is due though, he sure does know how to pick himself up and get elected: Winston Peters promises millions in compensation to vax-injured and people mandated out of work (msn.com)
Even National is voicing concerns, come on Labour - this is really poor and you created the whole thing as none of this was happening when the boarders were closed.
National Party immigration spokeswoman Erica Stanford slammed migrant exploitation situation as “so bad” she thinks “it’s the worst human suffering we have seen in this country, maybe ever”.
Agreed. As someone who used to ask Aucklanders why we were importing taxi drivers (often with Masters degrees back then) in the late 90's when I moved there (answered with blank stares or shrugged shoulders) it has been multiple decades.
Labour decided to open the doors again after covid in the way they did, the issues in the article are on them.
What NACT would/would not be doing is another matter and I was no less critical of them when they were in 'power' on the subject of immigration (paying for jobs and your own tax is nothing new).
Did the political party decide to fling open the doors? Does Labour or National even determine how many immigrants come into the country? I thought this was the job of the Immigration NZ.
Even then, we all know Labour campaigned on reducing migration. Were Immigration NZ oblivious to this election promise? Did Labour formally instruct INZ to not follow through with that reduction? Or do these unelected bureaucrats kinda just do their own thing?
INZ didn't reopen the boarders, the Government did. They don't determine the number, but they could and should in my view (this year we're issuing 10,000 work visas and that is it, try again next year, it's only hard if you want it to be). They indirectly do via the requirements such as wages have to be above median etc. Labour never asked for it, nor did they change the requirements so the numbers would reduce. While you're giving away residence (valued at hundreds of thousands of dollars, it's like winning lotto for most by doing a few years work).
INZ just does the implementation of the policy, Labour with a majority in this last term could have tightened the policy or loosened it as they chose to do. I liked Kris Faafoi early on, he seemed to have a handle on the links from immigration with housing affordability and wage suppression/employers not training but lost it towards the end and then Michael Woods couldn't loosen thing fast enough:
In 2017 Labour and NZF campaigned on it as you state, at the end of the term they had the highest ever immigration levels and it was only COVID that stopped it. INZ don't change direction based on election promises - they would need the law changed (Immigration law | Immigration New Zealand).
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