Here's our summary of key economic events overnight that affect New Zealand, with news the global economy has one month to go to bolster its 2025 economic performance, all down to retail sales now.
First, of course, the US is now in its Thanksgiving holiday weekend, the start of their big retail period until Christmas. A lot rides on the consumer spending activity in this period. It is an impulse with global impact. But the lead-in has not been helpful about giving clues on how it will turn out.
Meanwhile, Canadian average weekly earnings came in stronger than expected, up +3.1% in September from a year ago and a touch higher than the August +2.7% rise on the same basis. It was a broad-based rise. It is not a bad result for them given their CPI rise was +2.4% in September, and fell to +2.2% in October, so their earnings are recording real gains.
The 'Buy Canadian' movement will be getting the ultimate test this weekend during the 'Black Friday' sales period.
In China, industrial profits dropped -5.5% in October from a year ago, taking the top off the +22% jump in September. and the +13% rise in August, and being the first slowdown in growth in three months. A quarter of all companies are now posting losses, a record high. The cost of debt is also a reason some are noting that profits are under pressure. And that may loom larger, because Beijing as told their SOE banks to lend more to other SOEs to prop up consumption demand.
We can also see office rents in major cities falling, vacancy rates rising, as pain spreads in the commercial property sector. Vanke is wobbling more now. And separately, despite high sales and rapid growth, Chinese car manufacturers are suffering record low margins. Their industry is very vulnerable to a demand slowdown.
In Taiwan, consumer sentiment edged up in October from September, but it is still quite low and far lower than year-ago levels. They haven't got back anywhere near the level they started the year with. Relentless mainland pressure to 'unify' and kill their independence isn't helping.
The Bank of Korea held its base policy rate at 2.5% at yesterday's meeting, the final policy session of the year. It did this despite concerns over the broader Korean economic outlook, including a persistent property market slump and a volatile currency.
In Malaysia, producer prices were little-changed in October, essentially ending the deflation they had in the prior seven months.
In the EU, overall economic sentiment held as did consumer inflation expectations. They are modest and back to pre-pandemic levels in a stable mode and putting behind them the rather strong deflationary expectations over the past two years. That sanguine view was reinforced by the release overnight of the ECB meeting minutes. They seem happy with where they are at and no rate changes seem imminent.
In Australia, prudential regulator APRA has said it will limit high debt-to-income home loans to constrain riskier lending that is starting to show up in that market. Some of it has been induced by the Canberra government's taxpayer-subsidised 5% deposit guarantee scheme.
And staying in Australia, new private capital spending is rising and more quickly than expected. The rise was largely driven by non-mining industries, which recorded a +13.0% jump, while spending on mining equipment and machinery grew just +4.5%.
Global container freight rates dipped -2% last week to be -47% lower than year-ago levels. Outbound China rates are a touch weaker while trans-Atlantic rates a touch stronger. However, bulk freight rates have risen +6.0% over the past week and are now sitting a touch over +50% higher than year ago levels and are back to levels we last saw briefly in November 2023, and prior to that during the pandemic.
The UST 10yr yield is still just on 4.00% with US markets closed. The key 2-10 yield curve is still at +52 bps. Their 1-5 curve is now inverted by -3 bps and the 3 mth-10yr curve is now inverted by -1 bp. The China 10 year bond rate is up +2 bps at 1.85%. The Australian 10 year bond yield starts today at 4.49%, unchanged from yesterday at this time. The NZ Government 10 year bond rate starts today at 4.37%, up +1 bp from yesterday.
Wall Street is of course closed today for its holiday. European markets were all little-changed overnight. Tokyo ended up +1.2% yesterday. Hong Kong was little-changed, up +0.1% in Thursday trade and Shanghai ended up +0.3%. Singapore firmed +0.2%. The ASX200 ended its Thursday trade up just +0.1% while the NZX50 fell a full -1.0%.
The price of gold will start today at US$4156/oz, and down -US$10 from yesterday.
American oil prices have risen almost +US$1 from yesterday to be just under US$59/bbl, while the international Brent price is also up, but less, now just over US$63/bbl.
The Kiwi dollar is up another +30 bps from yesterday, now at just over 57.2 USc. Against the Aussie we are up +20 bps at just over 87.6 AUc. Against the euro we have risen +30 bps to 49.4 euro cents. That all means our TWI-5 starts today at just under 61.9, and up +30 bps.
The bitcoin price starts today at US$91,468 and up +4.5% from yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.3%.
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25 Comments
“Chinese car manufacturers are suffering record low margins” - some people would argue that’s a win for the consumer. I doubt that’s ever the case, low margins result in stupid cost cutting. Next thing you know your airbag is shooting bullets at you.
Same with supermarkets here IMO. I’d rather pay an extra few bucks than have them try and save those bucks through lower food quality.
They don't save those bucks by buying cheaper food Jimbo, although they try. They save them by paying their staff less.
Can’t pay less than minimum wage.
Try eating supermarket food in the UK or US if you want to know where we’re heading.
Wages are a pretty low overall cost to a supermarket. Even if they paid half the minimum wage, you'd only see food a few percent cheaper.
Or just paying everything late, or not at all. It sounds like suppliers of parts for EVs can go unpaid for months and months.
Or have less staff do more
Lower dollar, and high inflation back in '21, '22 resulted in a slow erosion of options at supermearkets as they got less imports in and fewer choices to save margin.
And separately, despite high sales and rapid growth, Chinese car manufacturers are suffering record low margins
They have spent half a trillion dollars subsidizing an industry where a small percentage of the businesses make any profit, and the only prospect of increasing sales is by further slashing prices.
That said I'm actually looking at one now, because some models are being cleared out under half their original price and 10 grand cheaper than the entry level ICE equivalent. Huzzah for radically over estimated demand!
Huzzah - they oversupplied dehumidifiers to B Deck.
Meaning they gave the right answer to the wrong question.
DC - 'But the lead-in has not been helpful about giving clues on how it will turn out'
Um, if you were watching, yes it did. And has been for some years. If not decades.
You clearly don't understand the Chinese Pa1nter. They don't care about this year's profit, or next, they are in it for the long-term. They will drive incumbents out and then restore margins.
Standard Western hubris. China have dragged 500 million people out of subsistence living and into middle-class manufacturing and technology in 40 years, what have we done?
But they did that by copy pasting an industrialization model others spent centuries developing. The same thing occured many places after WW2, the Chinese just spent another few decades working out that Communism doesn't make your people better off.
What no one's managed to do, is work out what comes after you've developed. Well, aside from funnel populations into cities and make procreation obsolete.
Nor ever will.
Cities are massive demanders of energy and resource inputs; massive outputters of the wastes of both. Compression manifests as 'up'; the moment it starts alarm bels should ring. So they suck from 'elsewhere', while running blind as to that depletion.
Multiply that by several hundred over 1 million, and you've got Limits to Growth in no time, accompanied by blindness to same. As we see.
There isn't enough planet eft for China to get to the US level of consumption. Came to the party too late. India is worse. China may well be the relative biggest in the future, but not the all-time biggest. And all under a sinking lid.
Same sinking lid says our own Government is not going to succeed - even dropping all regulation, growth is essentially in the rear-view mirror.
Nor ever will
It'll morph into something, it's fairly guaranteed.
What that might be, is the topic of much navel gazing and movies.
Yes and no. The Chinese have a cultural mindset and work ethic completely foreign to us. What other industrialisation model is there? The reform required to transition from state run subsistence farming to modern industrialised powerhouse is extraordinary. I find it fascinating that what we see as one of the great traditional communist states is now far more "free market" than us bloated welfare states. Fully 50% of UK residents receive some form of benefit. In China, you work to eat.
The Chinese have a cultural mindset and work ethic completely foreign to us
The cultural mindset is fairly different, for sure. The work ethic comes from being hungry. Our forebears could flog themselves to death. Once you're several generations from starvation and into comfort, everyone gets soft. "Quiet quitting" isn't a Western only phenomenon.
I'm not blind to the negative externalities in this transition, but it's probably the most significant revolution to take place in our lifetime, if not ever.
The West has become bloated, bureaucratic, entitled. The Chinese will own us all one way or another within 50 years.
Only really by scale.
I think they were saying the same thing about the Japanese in the 80s.
"What no one's managed to do, is work out what comes after you've developed." That's because they're trapped by the 'growth' mantra which can't work because of the finite limits of the planet. External aggression sort of substitutes for it, but that is just a diversion. Nothing more. The long term position needs to be a stable, sustainable population. Wealth, the current goal, should not be the ultimate goal. Survival should be the final goal. Aggression, greed, growth and lust for power are all ultimately a threat to survival. It is only a matter of time.
Stable, sustainable populations are not an anathema to good living standards, but they require firm control and a common understanding. Most cultures today rose from religious origins. None of those religions recognise the limits of the planet, or in PDKs words; "the limits to growth". The religious base of all todays ideologies must change.
That's because they're trapped by the 'growth' mantra which can't work because of the finite limits of the planet
Not necessarily. The growth from industrialization, globalization and the confluence of all human knowledge has been fairly remarkable. But it's rarely a constant, it usually occurs in bursts.
There's obviously a lot of mental and physical attention going into trying to push continuous growth. Whether it'll be realized, hard to say.
The religious base of all todays ideologies must change.
We can see some of the older ones have it closer than the newer ones. They'll probably be the ones that stick around after much else disappears.
Not necessarily. The growth from industrialization, globalization and the confluence of all human knowledge has been fairly remarkable. But it's rarely a constant, it usually occurs in bursts
The growth from industrialisation however was borne from the use of coal mostly, then oil. The british empire harnessed coal for mass industrialisation of metallurgy, weaponry, and globalisation can be viewed simply as the increased usage of other countries resources to benefit one's own. It was once slavery as human resource, then physical resources e.g most of the lovely vintage English wooden furniture was made from the likes of teak, oak and mahogany pillaged from colonised countries.
"There's obviously a lot of mental and physical attention going into trying to push continuous growth. Whether it'll be realized, hard to say." Really? Don't you accept that premise the our planet is finite?
I do agree that the development of technology can improve efficiency, but in itself technology improvement is not 'growth'. It is rather away to achieve something more efficiently, or perhaps something that wasn't achievable with the prior standard. I suggest that to a limited extent technology is the way to achieve the ultimate goal.
I tend to agree with your comment about religion, but in the end religion is just politics in a different coat and is about power and control. It inevitably gets corrupted. This is evident even in the oldest of them.
Really? Don't you accept that premise the our planet is finite?
Sure. But our means and methods of utilizing it are always in flux.
That's where PDK's EROEI comes in.
Where this picture changes is when resources can be sourced off planet. But then would also require some level of migration off planet.
The only other possibility is some previously undiscovered and unrealised energy source that is readily available and affordable. At this stage I'd suggest the odds are against it.
Standard Western hubris. China have dragged 500 million people out of subsistence living and into middle-class manufacturing and technology in 40 years, what have we done?
We have enjoyed a parasitic relationship using the labour and resources of less fortunate countries to bolster our standard of living and attract talent, used credit expansion and outsourcing of manufacturing to China to pretend we could keep this going forever, and now the less fortunate countries have learned, grown and are utilising the knowledge they have from western civilisation to go their own way while we have seen a greater ad greater concentration of assets and wealth as per the capitalist model. We are no as smart as we tell ourselves we are, we have just stepped on others to push ourselves up until those others congregate and take collective action to build something better for all, not some. Humans are silly.
Reposting from last night:
Anyone care to read the government books yesterday? https://www.stats.govt.nz/information-releases/government-finance-stati…
net debt rose $25.1 billion to $115.2 billion in the year ended June 2025.
Didn't NACTF just shrink the economy in the same year by 1.1%? I suppose its Labours fault somehow still? Those landlord tax cuts are definitely helping.
National also claims that they are responsible somehow for the uplift in the primary sector too, however with their systematic dismantling of the policies designed to limit GHG emissions, they are now putting many of our trade agreements at risk: https://www.stuff.co.nz/politics/360899463/revealed-billion-dollar-trad…
Even worse is that they are completely oblivious to these facts:
And yet McClay’s office claimed this week it was not aware of those concerns.
Would like to see how people are defending NACTF's economic record, they look like the most incompetent bunch of idiots in charge of the economy that we have seen in recent times...
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