Here's our summary of key economic events overnight that affect New Zealand, with news American populism is driving the world's economy into a blind alley. Other countries are trying to figure out how to separate themselves from that.
In the week ahead, financial markets will be assessing the risks of stagflation after the weaker labour market report in the US, and the growing expectation that inflation's new rise will pick up steam. In the US we will get August CPI and PPI data at the end of the week and their core CPI rate could well rise from its July 3.1% rate. That data will be put in context with the next University of Michigan consumer sentiment survey update.
Inflation data from both China and India is also due, but little upward pressure is expected to be seen from either of them. In China, new initiatives on support measures to keep their economy from stuttering are expected this week largely to fend of deflationary pressures.
The ECB will be reviewing its policy rates this week, but no change is expected. Inflation is no threat there, giving them options.
Over the weekend we got a keenly anticipated American update on their labour market. It turned out that analysts were right to think the low forecast of a +75,000 rise in US non-farm jobs was optimistic. In fact they came in at +22,000 for August. June data was revised down by -27,000 and the change for July was revised up by +6,000. With these revisions, employment in June and July combined is 21K lower than previously reported. Trump's firing of the agency that reports this data isn't changing the sharp trend lower. Trump now has to own this trend.
In fact, the total jobs added in May, June, July and August in 2025 is about the same as was added in August 2024 alone. For them its a concerning trajectory but it can all be traced to junk public policy.
Worse, the data shows that manufacturing jobs fell -12,000 in August with clearly no sign of factory jobs reshoring.
If we look at the unadjusted data for civilian employment - which accounts for more than just those on employer payrolls, the July to August change was a -511,000 reduction. It's a time when the self employed are really struggling.
All this downbeat data is reflected in the financial markets on Friday. Wall Street was down -0.3%, bond yields fell sharply again, and the USD weakened. The pall spread to Europe too where they are digesting the latest US strategic insult.
The chance of a rate cut by the Fed has now become a certainty in financial market pricing as the central bank is scrambling to contain the growing fiscal mess which looks like it is going to be much larger than feared, and much sooner. A full -25 bps rate cut is priced in for the mid-September meeting, and another before the end of the year. Trump will get his rate cuts because of his actions to tank the US economy. But there are voting members who still insist that inflation should be contained before they cut. The next US CPI data is due in a week and the current +2.7% inflation rate is widely expected to rise to 2.9% and a core rate back over 3.0% which emphasises the risks stagflationary effects are hurting the world's largest economy.
It was no better in Canada where payroll employment fell -65,500 in August from July largely due to a sharp fall in part-time employment (-59,700). The trade shock with the US is getting the blame here too.
In Canada they watch the Ivey PMI closely and that shifted from a modest expansion in July to none in August. But at least it wasn't contracting. Consistent with their official jobs data, the employment sub-component of this PMI was contracting.
A -25 bps rate cut there is also priced in before the end of 2025. Canadian August inflation is expected to come in little-changed at 1.7% on September 16, 2025.
The Canadian government is taking an activist approach to protecting their economy with a major support announcement on Friday.
Data out across the Pacific was far more encouraging. Singapore said its retail activity expanded far more than expected in July, and is now up +4.1% from June, up +4.8% from a year ago. It has been on a rising trend for almost all of 2025.
And China said its fx reserves rose to US$3.32 tln in August, its highest since late 2015. And it purchased a bit more gold in the month, helped by the rise in the gold price of course, which adds another US$2.5 bln to to reserves which now total US$3.64 tln.
In Australia, extended June quarter labour market data showed that the number of total jobs there increased +0.3% to 16.3 million. Filled jobs rose +0.2% to 16.0 million where secondary jobs decreased -1.2% to 1.0 million and multiple job-holders decreased -1.3% to 948,900. Hours worked increased +0.3% to 6.0 billion hours in the quarter
The FAO global food price monitoring shows that in August overall prices were stable and just marginally higher than where they ended 2024. Dairy prices look like they have peaked but meat prices are still rising driven by beef and sheep meats.
The UST 10yr yield is now at 4.09%, unchanged from Saturday at this time. That makes the weekly backslide -14 bps and to a five month low. The key 2-10 yield curve is still at +58 bps. Their 1-5 curve is now inverted by -9 bps. And their 3 mth-10yr curve is now inverted -12 bps. The China 10 year bond rate is holding at 1.77%. The Australian 10 year bond yield starts today at 4.35% and up +4 bps from Saturday. The NZ Government 10 year bond rate starts today at just under 4.43%, and unchanged from Saturday.
The price of gold will start today at US$3,585/oz, down -US$7 from Saturday and just off its record high. That is up almost +US$150 from a week ago and a sharp +4.4% risk aversion rise for the week.
American oil prices are a bit softer at just under US$62/bbl on the struggling US domestic prospects with the international Brent price also softer just on US$65.50/bbl. A big new burst of crude production is on its way too.
The Kiwi dollar is at just over 58.9 USc and little-changed from Saturday. Against the Aussie we are also unchanged at 89.9 AUc. Against the euro we are holding at 50.3 euro cents. That all means our TWI-5 starts today at just under 66.4, up +10 bps from Saturday.
The bitcoin price starts today at US$111,046 and down a mere +0.1% from this time Saturday. Volatility over the past 24 hours has been low at just on +/- 0.6%.
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22 Comments
Stagflation. The hangover of to much printed debt deployed in speculation. Over price assets and curreny debasement.
Let the stagger continue.
I see Winston wants compulsory KiwiSaver at 10% all of a sudden. Wasn’t he one of the ones saying NZ super was affordable and should stay at 65? Why would we need 10% KiwiSaver and NZ super?
Except nearly twenty years ago WP initiated a referendum on compulsory superannuation. The prospect was soundly defeated by the electorate. Personally I suggest his thinking was correct just as was too, Norman Kirk’s government’s introduction of compulsory superannuation. To my dying shame I voted against that, and many of the other worthwhile initiatives of that government in 1975.
If you are going to get NZ super, do you really need 10% of your income saved over your lifetime too?
A family that is currently struggling has to also save 10% to their retirement. They must be rich when they retire at the expense of being extra poor when they have kids.
Well thats exactly the story that Muldoon sold the electorate in 1975 and it didn’t take long afterwards for the realisation that his universal scheme would eventually overwhelm the forthcoming younger generations’ ability to support it. So much so that not much after that Jim Bolger’s government ventured means testing. While you point is hardly inaccurate it is not the main point in that some including WP long ago recognised that compulsory super was the only solution to the acknowledged abysmal savings record of NZrs at large, and to date nothing has been offered up by anyone else, that is any better.
In 1975 compulsory super was going to be a replacement for NZ super wasn't it?
AFAIK Winston wants to retain NZ super, won't allow the age to change to make it more affordable, but also wants us to save loads of our own money too.
I'd be happy with some kind of phased in approach - the younger generation contribute enough to Kiwisaver to pay for their own retirement, and every year the NZ super age increases so it is eventually phased out. At least we would all know what is happening. But forcing us to save 10% while also providing NZ super which is meant to be enough for a person to live on, is probably forcing people to choose a lifetime of poverty in exchange for a lot of spending money when they are old and need it less.
Winston Peters has a long history of advocating compulsory superannuation contributions as well as supporting the universal pension we call NZ Super.
However, his latest plan for income-tax cuts to offset superannuation fund contributions would deprive the state of much of the revenue needed to keep NZ Super afloat.
Here is Peters in 2000:
https://archive.ph/htsFa
'Trump now has to own this trend.'
Ah, no he doesn't. He is - in my opinion - a narcissistic fool, but he is not responsible for the inexorable trend which is impacting the US.
He is a result of it.
When folk steadfastly choose to continue blindness...
Regardless of any longer term trends, I think Trump can entirely take the blame for the short term down cycle that started with his tariff and migration enforcement escapades.
The problem is wider than Trump when you consider how he is being enabled by those with the power to reign him in....the change taking place is deeper and more fundamental than the whims of a mentally challenged frontman.
The thing is i don't think they would have ever challenged him. While I'm surprised as to the degree to which they endorsed him. I expected them to at least go through the motions of complying with the Constitution, not just kick into the can. They had started to reach the limits their corruption could get to without becoming blatant, and clearly illegal. Too many were already noticing, and the gullible voters grabbed the biggest disrupter they could find to put the system on it's head, without understanding just what they were doing.
What fascinates me is that their oath of office talks about defending the Constitution from all enemies foreign and domestic, but none can see the domestic enemy......
Who pays for the migration escapades? Do the resident taxpayers get any say in the matter? Or just the people smuggler cartels and their political/MSM elite enablers? A borderless international welfare state does not come cheap. The resident welfare state is failing rapidly, let alone free for all welfare.
"Overall, immigrant and descendants were associated with a net cost for the public finances of approximately DKK 16 billion in 2019. It covers a positive net contribution for Western immigrants and descendants of DKK 11 billion and a negative net contribution for non-Western immigrants and descendants of approximately DKK 27 billion."
https://fm.dk/udgivelser/2023/september/oekonomisk-analyse-indvandreres…
"Somalia. According to the results shown in Table 1, the average (expected value) of life cycle effects
for immigrants born in Somalia is -951,000 euros per person, while excluding the life cycle effects of
immigrants’ children. On the other hand, the average is -1,343,000 euros when children’s effects are
included. The standard deviations (SD) in Table 1 are those of life cycle effects predictive probability
distributions, and they are used to measure the magnitude of uncertainties pertaining to individual life
cycle effects predictions.
Iraq. The equivalent results for those born in Iraq, and who migrate to Finland between the ages of 20
and 24 are as follows: The life cycle effects expected value while excluding children’s effects is -690,000
euros, and -844,000 euros when children’s effects are included."
https://www.suomenperusta.fi/wp-content/uploads/2019/03/Summary_AsylumSeekers_lifecycle_effects.pdf
I'm not sure who you're arguing with here, I didn't offer an opinion on open borders or refugees. Simply stating that removing hundreds of thousands of residents and making a few million others too scared to participate in society is likely to cause a shock to your economy. Add the uncertainly from tariffs, months (years?) of not knowing your cost of doing business and the lack of investment decisions that will flow from that and you have an economic own-goal.
A few months ago we might have added the job cuts from assorted spending cuts, but actually it looks like the Fed is spending more than ever and DOGE was merely pissing into the wind.
I think you're only partially right. While he is in part, a result, he has also accelerated the trend too. Yes he's a narcissistic fool, but that trend is impacting the whole world and generations of politicians are responsible for it, not to mention all the academics who wrote papers and advised politicians to do what they did. Trump is going against the history but making the trend worse because he simply does not understand the dynamics of it all. I think very few do.
You can stem an inexorable process, only so long.
So really he didn't accelerate anything; more just removed the dam and the pent-up pressure flowed.
Someone yesterday unwittingly spotted the difference: the 'median income' in the US seems relatively high - but that doesn't factor-in unsupported costs (health being obvious) nor the gig-economy. Which is huge. And increasingly desperate. The biggest hegemony the planet has ever seen - or will ever see - has peaked. Don't blame the night-watch-man.
The bigger problem, for us, is the comments from those who steadfastly avoid depletion/degradation/overshoot in their comments. We can see why - it happens inside academia too. Thay all are trying to justify themselves; their 'now' selves. The problem is that 'now' was temporary.
"The problem is that 'now' was temporary." Wrong word - not "was" but rather "is".
But science in itself is a apart of the problem. Science tends to look at things through straws, or they'll take one aspect of a subject and examine it to death until it takes on a life bigger than itself and then the whole subject will seem to rotate around or depend on a single input. The reality is it never happens that way. But is is really very easy to lose sight of the big picture when you're focussed on just one pixel.
Meanwhile, signs our economic recovery is some way off...
https://www.rnz.co.nz/news/business/572373/new-zealand-income-growth-on…
https://www.rnz.co.nz/news/business/568286/new-zealanders-urged-to-brea…
Pretty obvious what the issue is, the economy is missing huge credit creation via property investment, sure red meet and diary prices are up, thats helping some but costing others.
Imagine how much money is being sucked out of disposible income by people topping up interest only loans on non performing investment properties.....
"the economy is missing huge credit creation via property investment" - couldn't it also be that the economy is missing the much higher interest repayments on previous credit creation?
interesting article in Breaking Defence about why Modi wasn't present at the parade of Beijing's military might; "Politically, Modi cannot be seen to be endorsing the glory of the PLA."
It seems neither Clark nor Key are sufficiently prescient to understand that!
They are both more than sufficiently prescient.
Modi has to play both ends - but think: Once he didn't; now he does; plot the trend.
I'd also say: consider the ketchup
Modi has the problem of a disputed border with China, and until and unless they can put that to bed (which I don't think they can), there will at best be only a tenuous peace with China.
But the celebration to mark the end of WW2 was made into a strutting of China's current military might, and the political statement that goes with that is significant. Clark and Key must be cognisant of that statement and all of it's implications for NZ.
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