Here's our summary of key economic events overnight that affect New Zealand, with news of more of the same - continuing American economic strength, worries about China's prospects.
The number of American filing for new jobless claims fell to +190,000 last week which is their lowest since February. A rise to +234,000 was expected so this is a much better-than-anticipated result. There are now 1.75 mln people on these benefits, also much lower than expected. The US labour market is remaining much stronger than almost anyone thought by the end of Q3. With this sort of continuing run, it is hard to see their September non-farm payrolls showing the weakening that has long been foreshadowed - and hoped-for by the Fed.
American labour costs are rising (+2.2%) and with the extended labour market pressures this isn't really a surprise. But it is a surprise that pay rates are rising faster (+5.7%) than inflation (+3.0%), and they are getting good labour productivity at the same time (+3.5%). Rarely do you get a 'virtuous combination like this in tight labour markets. It is actually quite remarkable.
On the labour front, the GM workers union rejected the carmaker's +16% wage offer as far below their asking +46% demand. Such are levels in a hot labour market.
In Canada, they have their own positive surprises. Their widely-followed Ivey PMI came in in August with their strongest expansion since April, reversing a downtrend and a contracting July.
Also 'positive' in a back-handed sort of way, Canada's July building consents fell -1.5% which was a much smaller correction than anticipated after the strong +7.5% june rise, meaning most of the June momentum was maintained. In fact their residential consent level rose another +5.4%, so the housebuilding sector maintained it's push up.
China's August exports inched higher than in July, but were still -8.8% lower than year-ago levels and this was the fourth straight month of year-on-year declines - and comes despite a weakening yuan. They ran a +US$33 bln surplus with the US which accounted for about half their total trade surplus. They remain very dependent on their trade with the US. Versus Australia, they had an August deficit of -US$6.2 bln in the month, and with New Zealand a deficit if -US$220 mln.
China's FX reserves slipped -1.4% to US$3.16 tln, a fall of US$44 bln in the month and to their lowest level since February. But they are well up from just over US$3 tln in July 2022. The yuan weakened to a 16 year low today.
The EU's third estimate of its Q2 economic activity was revised lower to an expansion of just +0.1% in the period.
For most non-oil countries, an +$8 bln monthly trade surplus would be something to celebrate. But not for Australia. Their trade surplus declined to +AU$8.0 bln in July from a downwardly revised AU$10.3 bln in June, below market forecasts of a +AU$10 bln gain. It was the smallest trade surplus since February 2022, as exports shrank while imports rose.
Global container freight rates fell last week by -3.4%, continuing the recent retreat. The biggest falls were China to the EU; in fact China to the USWC rates actually inched up last week. Freight rates for bulk cargoes were little-changed.
The UST 10yr yield starts today down -3 bps at 4.27%. Their key 2-10 yield curve is less inverted at -69 bps. And their 1-5 curve is unchanged at -101 bps. Their 3 mth-10yr curve inversion is also little-changed at -109 bps. The Australian 10 year bond yield is now at 4.13% and down -2 bps from yesterday. The China 10 year bond rate is unchanged at 2.69%. And the NZ Government 10 year bond rate is now at 5.07% and just -1 bp lower.
Wall Street is lower in their Thursday session, by -0.4% on the S&P500 and mainly from fallout of China's decision to ban Apple iphone use by their public employees. Overnight European markets were mixed at +/-0.2%. Yesterday, Tokyo ended its Thursday session down -0.7%. Hong Kong ended down a sharper -1.3% and Shanghai fell -1.1%. Hong Kong may suspend trade today because of more typhoon weather. The ASX200 ended its Thursday session down -1.2% but the NZX50 was virtually unchanged in what was a better-than-most performance for the day on the global stage.
The price of gold will start today at just on US$1918/oz and essentially unchanged from yesterday.
And oil prices are down -US$1 at just over US$86.50/bbl in the US. The international Brent price is now at just over US$89.50/bbl.
The Kiwi dollar starts today little-changed from yesterday at 58.8 USc. Against the Aussie we are back up +¼c at 92.2 AUc. Against the euro we are also +¼c firmer at 55 euro cents. That all means the TWI-5 has edged up by +20 bps to 68.4.
The bitcoin price is virtually unchanged from this time yesterday, and is now at US$25,922, a net rise of just +US$6 in a day. Volatility over the past 24 hours has been low at just on +/-0.7%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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