Here's our summary of key economic events overnight that affect New Zealand, with news the giant US economy is putting most other major economies in its shadow, expanding while others stumble.
But first, the number of people claiming unemployment benefits in the US fell by -12,500 from the prior week to 222,000, firmly below market estimates. It was the lowest reading in nearly one month, adding to the latest jobs report that indicated historical tightness in the US labour market, and so maintaining the leeway for the Federal Reserve to remain hawkish.
But American retail sales fell -0.8% in January from December, reversing December's rise, and worse than market forecasts of a -0.1% fall. It is the biggest decrease in retail sales since March last year, primarily driven by the aftermath of the holiday shopping season and cold weather. Car sales were notably weaker.
Business inventories rose, but in relation to sales they remain stable and slightly below historical averages.
But they need to be cautious; industrial production edged slightly lower in January from December, missing market expectations of an expansion after recording no change in December. And that meant there was zero change from a year ago. Frigid weather got some of the blame for the January result.
But things may be on the improve. Both the Philly Fed's factory survey, and a similar one in New York both recorded sharp improvements in their February surveys.
Canadian housing starts came in lower than expected in January, and by quite a bit.
Official data in Japan suggests their economy was in recession in the second half of 2023. Japan's GDP unexpectedly shrank -0.1% in Q4 from Q3, missing market forecasts of a +0.3% growth and following a revised -0.8% fall in Q3, flash data showed. That is a big miss for the world's third largest economy. That is their first recession in five years, as private consumption, which accounts for more than half of the economy, declined for the third successive quarter. What is off about this is that the granular data that makes up the result was relatively positive in the period.
This Japan retreat was enough to sink it from the world's third largest economy, to #4 behind Germany. But while Japan's nominal economic activity slipped below Germany, the country's growth rate has surpassed that of China for the first time in almost half a century (on a nominal basis).
India reported very strong growth in car sales in January, driven in large part by sales in rural communities. In fact, they "smashed" the previous record, up almost +14% year-on-year.
The British economy contracted -0.3% in Q4 from Q3-2023, following a -0.1% decline the previous period. That was worse than market forecasts of a -0.1% fall. Their economy entered recession (if you use the two-quarter rule) amid a broad-based decline in output, including in services. This is election year in the UK.
The euro zone economy will grow slower than expected in 2024 according to updated forecasts from the European Commission. But they also expect to face reduced inflation pressure.
For the first time in two years, the Australian jobless rate has risen above 4%. The actual 4.5% rate means they now have 654,000 people without jobs, the highest level since October 2021. (The headline rate is the 4.1% seasonally adjusted rate.)
Australian inflation expectations held unchanged in February at 4.5% in this Melbourne Institute survey. Their central bank would have been disappointed in that.
Globally, container shipping freight rates slipped slightly last week but are still unusually high. The risks keeping them high are basically unchanged. Bulk cargo rates are again little-changed, and low.
The UST 10yr yield starts today at 4.24% and little-changed from yesterday. The key 2-10 yield curve inversion is a little deeper at -33 bps. Their 1-5 curve inversion is deeper at -75 bps. And their 3 mth-10yr curve inversion is out to -114 bps. The Australian 10 year bond yield is now at 4.19% and down another -4 bps from yesterday. The China 10 year bond rate is unchanged at 2.45% while they are on holiday. The NZ Government 10 year bond rate is sharply down -13 bps at 4.87%.
In Wall Street's Thursday trading session, the S&P500 is up +0.4%. Overnight European markets all rose about +0.6%. Yesterday Tokyo ended its Thursday session back up +1.2%, Hong Kong ended up +0.4% after another rocky start. In the past two days it looks like these recoveries are after home team intervention. Shanghai remains closed. Singapore surged up +1.2%. The ASX200 closed its Thursday trade up +0.8% but the NZX50 ended -0.2% lower.
The price of gold will start today up +US$10/oz from yesterday at US$2001/oz.
Oil prices are back up +US$1.50 at just over US$78/bbl in the US while the international Brent price is up a bit less to US$82.50/bbl.
The Kiwi dollar starts today at just on 61 USc and little-changed from this time yesterday. Against the Aussie we are still at 93.8 AUc. Against the euro we are still at 57.7 euro cents. That all means our TWI-5 starts today at just under 70.6 and little-changed.
The bitcoin price starts today at US$52,232 and another +1.0% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.5%.
Daily exchange rates
Select chart tabs
The easiest place to stay up with event risk is by following our Economic Calendar here ».
23 Comments
EU has cut its forecasts for EU & Eurozone growth for 2024, as higher interest rates weigh on econ activity. Eurozone 2024 GDP growth cut to 0.8% from 1.2% w/German 2024 growth cut to 0.3% from 0.8%. This puts Germany at bottom of Eurozone countries in terms of predicted growth, w/Sweden being seen even worse in EU. Link
Brexit continues to bring a surging economic re-vitalization to the UK economy with the UK maintaining it's stunning run of success since BloJo 'got Brexit done'.........
Oh wait........
Also pertinent: ''Highlighting a deep economic malaise as households come under pressure from soaraway prices and higher borrowing costs, official figures show economic growth per head of the population shrank for seven consecutive quarters, the worst performance since modern records began in 1955.''
Another right wing wet dream fails to survive contact with daylight.
Brexit is what happens when right wing populist demagogues try to use a wedge issue in pretense, so as to rile up the populace in order to gain or consolidate power, only to accidentally achieve the outcome of the wedge issue.
The American evangelicals' angst at being told they had to desegregate their colleges or lose their tax breaks, then turning to Roe v Wade as a wedge issue to gain power, and the present bizarre lawmaking occuring in some US states is another such case.
To all the commenters here; what was the consequences to the UK of joining the EU?
While I do understand some of your comments, the Brexit issue would not of gained traction if there was a net benefit to the UK surely?
The issue now is that it takes time to rebuild following the exit, and too many are too impatient for that to happen.
"the Brexit issue would not of gained traction if there was a net benefit to the UK surely?"
I suspect there was a large net benefit to being in the EU (e.g. trade), but people were either sold a pack of lies, or were happy to be poorer if it meant less immigration (if they currently have less immigration).
And it didn't help that many didn't vote assuming it would never go ahead, they really should have had another referendum just to make sure before making such a huge change.
Suspicion is not enough Jimbo. i know joining the EU led to a lot of UK jobs being exported. Leaving it did too, but most if not all of those were specialised finance and banking jobs.
My understanding of the UK joining the EU, the net effect was they went from being a net exporter to a net buyer of goods. And then there was the immigration issue. I was not surprised when Brexit gain traction.
While reading your response, which I agree with I had the thought that this is really a world wide problem.
What i think really happened when the UK joined the EU is the loss of a lot of jobs. Most of those jobs would have been low qualification and perceived to be low value and therefore unimportant. But here's the rub, between 60 and 90% of the population really need those jobs, everywhere in the world. More - they need them to be more than minimum wage jobs. Although many low, or no qualification jobs are looked down on, with time most are far from being unskilled and low value. And that word 'value' has big contextual meanings too. The value in a job is much more than just the economic return to the employer. It is also about the person's ability to spend funds and therefore support wider aspects of the economy. It is also about building discipline and social cohesion, developing communities and supporting mental health. It is about teaching individuals what they are really capable of achieving and perhaps giving the the confidence to try, pushing themselves. And this leads to things like invention and development. They are so much more than just 'low value jobs'.
Indeed! Leaders should never ask the population how they want their country run. Feeding the planet eating super organism and the drones that run it, is paramount. Voters thought they'd get their country back, instead, they just got more of the same at higher cost.
"Leaders should never ask the population how they want their country run" - correct, people are way too stupid or uninformed to make individual decisions. The people should elect representatives based on the general direction they want the country to take.
Imagine if we set the OCR / tax rates / laws by referendum.
True but then people also have a self centered view. Which traditionally has harmed minorities. The choice to remove access and cut disabled people out of society was a majority view and continues today in large part with eugenic policies pushed forward to further exclusion and systemic ostracism & discrimination (see most councils transport plans). Most the majority has very little understanding of others and they do not consider the essential needs of others to live when they vote. They primarily vote along the us vs them lines (even regardless of impact to their own family as the us vs them simplification cognitive bias can be even stronger) following that they vote for their own desires and ideological luxuries that do not impact living needs.
Very very few people look to the living needs of others & community as a whole and even fewer vote with game theory in mind. Instead they think that if a majority of people get what they vote then those who miss out on living needs must just not therefore deserve to live.
And immigration is running at about 750,000 a year...
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.