US non-farm payrolls rise but leave 11.5 mln stranded; US coal industry on the ropes; China's home sales surge; China the world's dominant steel producer; UST 10yr yield at 0.72%; oil drops and gold unchanged; NZ$1 = 67.3 USc; TWI-5 = 70.2

US non-farm payrolls rise but leave 11.5 mln stranded; US coal industry on the ropes; China's home sales surge; China the world's dominant steel producer; UST 10yr yield at 0.72%; oil drops and gold unchanged; NZ$1 = 67.3 USc; TWI-5 = 70.2
Lake Hauroko, Fiordland, the deepest lake in New Zealand. Photo by Roger Harris

Here's our summary of key economic events overnight that affect New Zealand, with news the partial recovery of the pandemic job losses seems to be losing steam.

In the US, employers added a bit less than +1.4 mln new jobs in August which was almost as expected. (In July they rose +1.7 mln.) But that now leaves a net loss since February of -11.5 mln jobs so far. Their participation rate hardly changed and payroll growth in private sector firms was the weakest contributor, a full -30% less than in July. And even though total jobs have collapsed, the number of part-time jobs is now +3.3 mln more than in February.

Canadian payrolls grew less than expected in August and far less than in July. But almost all of their increase was for full-time jobs. Still, they would have been disappointed by this 'bounce-back'.

Back in the US, we should note that US coal production is down -22% over the past year to the end of August. That is the steepest annual decline ever and that industry is on tract to be wiped out within a few years. Production levels are at 50 year lows and production in recent months has fallen at ever faster rates.

In China, new home sales grew at a startlingly fast pace, up +31% year-on-year in August as their housing market continued to rebound. That was up from a +25% rise in July. Analysts expect the market to see more growth in the coming months as their economy improves further.

And China is now producing more than 60% of the world's steel. With mills in other parts of the world handicapped by the pandemic, China is the only country where output is rising. Elsewhere it is estimated that steel production is down more than -40%. It does seem very odd that with now only one main active buyer and many sellers, the iron ore price just keeps on rising.

In Singapore, their July retail sales declined less than in the prior month on a year-ago basis but this was considered a weak improvement.

In Germany, new factory orders declined less in July compared with the same month in 2019, than they did in June. But this was a much tamer outcome than analysts were hoping for.

In Australia, retail sales in rose in July 2020 to be +12% above year-ago levels, with sales in household goods particularly strong, up almost +30% above the same month last year. Melbourne's August lockdown probably undermines the next few months however.

And we should note that New Zealand ranked 26th in the 2020 Global Innovation Index released yesterday. That is a slip from 25th last year. Australia was 23rd in the 2020 league table (also down -1 place) where Switzerland was on top with daylight to #2 Sweden.

In New York, the S&P500 was down another -3% in morning trade but has made a recovery from there and is now just -0.8% lower on the day. It is ending the week and going into their holiday weekend down -2.0% lower for the week. That is a weekly loss of market capitalisation of more than -US$½ tln. Overnight European markets fell about -1.0% on average. Yesterday, Shanghai closed down -0.9% and booked a -1.2% loss for the week. Hong Kong was down -1.3% on the day and down -2.9% for the week. And Tokyo was down -1.1% yesterday but that capped a weekly +1.4% gain. The ASX200 ended down an eye-watering -3.1% yesterday for a weekly loss of -2.4%, and the NZX50 Capital Index was down -1.9% yesterday and a weekly loss of -2.3%.

The latest global compilation of COVID-19 data is here. The global tally is 26,419,000, up +307,000 since yesterday. Global deaths reported now exceed 871,000 (+7,000 in one day).

Just under a quarter of all reported cases globally are in the US, which is up +50,000 in a day to 6,360,000 and a relentless rise. US deaths are now just over 191,500 and a death rate of 578/mln (+4/mln) and the same level as Sweden. (The UK is up at 611/mln, about the same as Spain now.) The net number of people actively infected in the US rose overnight to 2,584,000 (+20,000).

In Australia, there have now been 26,136 COVID-19 cases reported, and that is +87 and clearly the Victorian emergency isn't getting worse. Australia's death count is up sharply however to 737 (+59). Their recovery rate is now almost 85%. There are 3234 active cases in Australia (-230) and a turned tide and more recoveries than new infections.

The UST 10yr yield is rising sharply near the end of trade and now up +10 bps today at 0.72%. Their 2-10 curve is notably steeper now at +56 bps. Their 1-5 curve is up even more at +17 bps, and their 3m-10yr curve steeper too at +61 bps. The Aussie Govt 10yr yield is up +6 bps at 0.95%. The China Govt 10yr is unchanged at 3.14%. But the NZ Govt 10 yr yield is down -4 bps at 0.60%.

The price of gold is little-changed today from yesterday, up a marginal +US$2 to US$1,934/oz. Central banks, even those of autocrats, seemed to have stopped buying gold recently.

Oil prices are sharply lower today, down -US$2/bbl to under US$39.50/bbl in the US while the international price is down to just on US$42.50/bbl. US working rig numbers have stopped falling and stabilised at record low levels.

The Kiwi dollar is firmer today from yesterday and now at 67.3 USc but it is ending the week slightly lower. Against the Australian dollar we have also firmed to 92.3 AUc and that is +¾c higher in a week. Against the euro we are up to 56.8 euro cents but that is only marginally higher over the week. That means our TWI-5 has firmed to 70.2 and a small weekly rise.

The bitcoin price is lower again today from this time yesterday, now at US$10,418 which is another -3.0% reduction. In fact since Wednesday it has now dropped -13% or more than -US$1500. The bitcoin rate is charted in the exchange rate set below.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

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28 Comments

And we should note that New Zealand ranked 26th in the 2020 Global Innovation Index released yesterday. That is a slip from 25th last year. Australia was 23rd in the 2020 league table

Too bad speculative industries and the financial system constantly coming up with innovative ways to keep the asset bubble inflated doesn't count. In which case, the Anglosphere nations would've all taken top spots.

Good to see someone's aware of the English-speaking world's hegemony over economic thought and monetary system. Look, I'm not big fan of China or Russia, but they must tire of the gall of our leaders and the garbage we promote (that being said, the asset bubble that has engulfed China is downright terrifying and would take down the global economy if nature were allowed to take its course). As for promoting asset bubbles, I've noticed the Colliers, CBRE's, Savills, etc across South-East Asia have toned down their salesmanship and tempered their forecasts about property. The pressure will be on for them to entice the nouveau riche into some overpriced condo or even some foreign funded industrial park development.

Great we have a vaccine. Vaccinate the old and vulnerable and we can get back to normal

Sorry Rosenstein, what you think of as 'normal' was a very brief period where one species grew it's numbers exponentially, by exponentially increasing it's resource draw-down. Your 'normal' was therefore unsustainable. If you had the right likd of eyes, you could see the highwatermark - 2008. Even that was a tad repercussive; I log it as 2005.

Why are folk so shallow and short-term in their thinking? So assumptive.....

Sorry PD hit report on your post way to easy to do using a mobile while holding to scroll down. Needs a secondary button press confirmation of a yes or no on that.

Check my RNZ link below, the epidemiologist saying that the time span for a vaccine development is 4-10 years. But could also be never. Quite frankly anything sooner than fours years being launched on the public is an experiment.

12
up

'When wrong, shout louder, get angry, double-down, attack your critics in any way possible. Accuse them of being anti-vaxx, or something of the sort. Dig for the dirt. ‘How to succeed in politics 101, page one, paragraph one.’

However, just have a look, at the figures. Tell me where they are wrong – if you can. The truth is that this particular Emperor has no clothes on and is, currently, standing bollock naked, right in front of you. Hard to believe, but true.'

https://drmalcolmkendrick.org/2020/09/04/covid-why-terminology-really-ma...

That.. was a bloody good article. Considering we all know how hard it is to admit mistakes, it made very interesting reading... recommended! Thanks Andrewj

I'm curious what the author means by a "severe flu". The US is closing in on 200k deaths - when did that last happen in a flu season? If we take his number of 0.1% IFR and multiply by 60% of the population (herd immunity), that would be 198k - so I can see why he is declaring it over. But none of the immunity studies show anything remotely near 60% infection rates having been achieved. And if you look at the death numbers for NYC, I suspect he is cherry picking his numbers.

Thanks. It is a good article. My question, though, is what are the likely long term impacts of C-19? It seems there are lingering impacts in multiple parts of the body particularly organs. At this point, I'm uncomfortable concluding the whole matter is a storm in a teacup because a number of scientists screwed up their terminology.
https://www.mayoclinic.org/diseases-conditions/coronavirus/in-depth/coro....

Flu can be nasty, my wife got the flu 10 years ago, she lost her sense of smell and taste for the best part of 3 years

The evidence is inescapable that the people getting Covid-19 are already unhealthy. Everything else is just wishful thinking.

so we need to protect those people to the best of our ability.

The fantasy of elimination. From an Epidemiology at the University of Auckland.

https://www.newstalkzb.co.nz/on-air/kerre-mcivor-mornings/audio/gerhard-...

And the opposite from his more senior colleague:
https://www.auckland.ac.nz/en/news/2020/08/18/learning-to-live-with-covi...

COMMENTARY: Professor of Epidemiology Rod Jackson sets the record straight on calls to let Covid-19 into Aotearoa.

"As far as I am aware, every experienced New Zealand epidemiologist supports our current elimination strategy and we have provided this advice to government."

Interesting. So why the panic an d in particular why the economic panic? I'd go back to March and look for the comments a number of posters made, the whole thing is perhaps tied up more with our economic health/sickness than with bodily health. There's going to be a reset sooner or later one way or another.

I had a talk to a woman who's daughter works for WINZ, she told me her daughter admitted that they really splashed the money about when we first went into lockdown, she was talking a lot of extra money to beneficiaries.

One or two red flags about the 'author' of that blog......

https://rationalwiki.org/wiki/Malcolm_Kendrick

Rationalism was for the pre-social media era.

It is quite the opposite, this is about control of the narrative. You can generally expect the larger party that exerts control to use all the leverage they have to keep it in the suppression of dissenting views. It is also about consistency of thought, with this principle underpinning it. You can't say Reserve Banks are abusing their power, and their control of the narrative, but also expect main stream medicine or big pharma not to. It is not consistent, and the line of thinking that they are isn't rational. However, as I've noted before, the bias of professionalism blinds people.

I first learnt the principle in Architecture. When you see Mega Symmetry there is always a power play. Think Nuremburg, and Washington DC is full of it also. I haven't been to some of the other main centers, but I suspect you will find it there.

Isn't time proving him correct? Big Pharma hates the guy.

https://drmalcolmkendrick.org/statin-nation-the-documentary/

It’s interesting everyone seems to hold Taiwan in such high esteem regarding their COVID response. Dig a little deeper and you will find their testing rates are abysmal. NZ 159,000/1M population..... Taiwan 3,600/1M population. Have they taken a page out of Trumps philosophy that we would have less COVID if we did less testing?

While Taiwan has done remarkedly well, people tend to forget that the Confucian nature of the culture means that they're ready to sacrifice individual righs, wants and needs for the perceived health of the group and wider community. Simple stuff really. Like wearing masks and following rules.

So it's annoying to see people like David Seymour put Taiwan on a pedestal and use them as a role model for NZ to tackle Covid. This is entirely at odds with the fundamental philosophy of libertarianism and most Western democratic socieities. I noticed Seymour's hypocisy but his loyal followers didn't seem to want to challenge him in any way.

I'm somewhat surprised to read that my home country Switzerland is by far the most innovative country in the world

I’m not but I can’t obviously match your innate knowledge. From doing business there in the 1980’s would regard them as the epitome of the quiet achiever. Polite, scrupulous, efficient and centuries on centuries of educated history. Think their historical neutrality and mountainous seclusion has created a unique independence and resilience. What surprised me most though was the subtleness and quality of the sense of humour, once you got to be friends.

I think it tells you a bit about the morons and clowns that compile these lists. Totally out of touch with reality.

Notably more people leaving NZ than arriving over the last month. Are they all tourists who were trapped here for lack of flights earlier in the year?

https://www.customs.govt.nz/covid-19/more-information/passenger-statistics/
Edit - used pen and paper to calculate the difference between arrivals and departures. By my paper based calculation, 3144 more people left NZ than arrived in August. That excludes the first three days of September which saw a further 656 more departures than arrivals.