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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