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A review of things you need to know before you go home on Wednesday; key GDP components deliver positive surprise, public service hiring jumps, farmers less satisfied with their bankers, swaps and NZD little-changed, & more

A review of things you need to know before you go home on Wednesday; key GDP components deliver positive surprise, public service hiring jumps, farmers less satisfied with their bankers, swaps and NZD little-changed, & more
ID 22702269 © Daniaphoto | Dreamstime.com

Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
There are no changes to report today.

TERM DEPOSIT RATE CHANGES
None to report today here either.

BOUNCING BACK STRONGLY
Manufacturing sales volumes and wholesale trade sales values rose this quarter to record levels for any September quarter, bouncing back from the impact of COVID-19, Stats NZ said today. And the construction sector is also posting outsized gains. But many services, especially tourism related, are really struggling, according the StatsNZ data for Q3-2020. The net of this data is positive enough for bank economists to be revising the Q3-2020 GDP forecasts higher. That GDP result will be published on Thursday, December 17, 2020.

BUILDING BACK, BUT BETTER?
The State Services Commission updated its public sector workforce data today for the year to June. In a year where the private sector managed to only grow jobs by +0.7%, the public sector employment levels rose +3.4%. The narrow Public Service jumped +8.6% in the year, the biggest increase since this data servies began in 1995, and larger than in the heart of the Clark-Cullen government (the previous high was up +7.6% in 2004). The average annual salary in the Public Service in 2020 was $84,500, up +3.9% from $81,300 last year. The education sector grew by +1.7%, the health sector by +3.7%, local authority staffing grew by +6.5%, and staffing at the SOEs rose also by +3.7% in the year. We chart these rises here. And in case you are wondering, the latest contractors and consultants’ data shows the operating expenditure on contractors and consultants as a percentage of spending on the public service workforce is 11.7%, dipping from 12.8% 2019. But in dollar terms they rose to almost $1 bln in the year (actual $975 mln.)

HIRING FRENZY
The same data set reveals that Auckland Council increased its workforce by +16.3% in the year to 14,300 employees, and that compounds to a +24% rise in five years. The 2020 increase was far and away the fastest annual growth in Auckland Council staffing levels, adding +2000 people in just one year.

SUBDUED COUNCIL REVENUE GROWTH
Nationally, new data shows that local authority rates and fines (ie "regulatory income") was up +2.8% in the September quarter from a year ago. Apart from the June 2020 quarter (+2.2%), that is the smallest rise since 2014.

LESS PRESSURE, BUT LESS SATISFACTION TOO
Fewer farmers are feeling undue pressure from their bank but satisfaction rates continue to slide, according to the Federated Farmers November Banking Survey. In late 2017, 79% of farmers thought their communication with their bank has been good or very good. That is now down to under 62% feeling the same way. 18% of them now feel under pressure from their bank, but that is down from 23% a year ago.

'BANZPAY' REPLACES CO-OP MONEY NZ
The New Zealand Association of Credit Unions, which trades as Co-op Money NZ, and FACTS Ltd, which traded as Co-op Services Ltd, have been rebranded under the 'Banzpay' name. The move is part of a takeover by Credit Union Baywide. This involves the restructure of Co-op Money NZ and its related entities from an association structure primarily governed by the Friendly Societies and Credit Unions Act, into a corporate structure under the Companies Act and other related legislation. Baywide expects the restructure to protect and improve the essential business, banking, transactional and other services currently provided by Co-op Money NZ to Baywide, its members, and other Co-op Money customers. The acquisition of the business, assets and subsidiaries of Co-op Money NZ is expected to be completed early in 2021. Banzpay is an amalgam of the words 'banking' and 'payments.'

SHORT & FAT
Some readers had noted a very sharp rise in the US M1 data. For those interested in what the New Zealand data shows for M1, see here. It partly reflects the fading of term deposits - bank customers just keep their money at the ready these days (ie: at call).

ANOTHER NEW GOVT AGENCY
The Government has started the process to establish Taumata Arowai, the new water services regulator, and the official response to the Havelock North water debacle.

SENTIMENT SURGES HIGHER
In Australia, a Westpac-Melbourne Institute consumer sentiment survey has come in very positive, especially for expected future conditions. It is now 48% above the low in April and has reached its highest level since October 2010, marking a ten year high. Sentiment has fully recovered from their COVID recession.

APRA ADOPTS RBNZ RULE FOR NZ'S AUSSIE OWNED BANKS
The Australian Prudential Regulation Authority (APRA) has ceded a little ground to the Reserve Bank of New Zealand (RBNZ). In the very last paragraph of a 32-page discussion document on bank capital, APRA is proposing that risk weighted assets for the NZ banking subsidiaries of Aussie banks be calculated under RBNZ rules to determine Level 2 group capital requirements, which includes overseas subsidiaries of Aussie authorised deposit-taking institutions. "This [RBNZ approach] is a simpler approach that removes the operational burden of duplicate reporting systems for ADIs with exposures subject to RBNZ capital requirements," APRA says.

INCHING WIDER
China seems to have extended its ban on Aussie log imports, claiming a biosecurity risk.

MESSING WITH NATURE? OR ADAPTING TO CLIMATE CHANGE?
We missed this last week, but China is "forging ahead" with its artificial weather modification technologies - basically trying to make it rain when things are dry or excessively hot. It says its trial programs have been successful and it is rolling them out on a large scale from now to 2025. It also claims "by 2035, China's weather modification should arrive at a worldwide advanced level in terms of operation, technologies, and services."

LARGE POSITIVE SURPRISE
Japan is reporting a rather substantial improvement in their machinery orders for October. After a -4.4% monthly fall in September they were expecting a modest +3% rise in October, bringing the year-on-year result to -11%. But in fact orders poured in. They were up a huge +17% from September, meaning the October level is now almost +3% higher than the same month a year ago. That is a very substantial positive surprise. Export orders drove the gains. Data from their industry association on machine-tool orders for November will be released tonight.

GOLD PRICE FIRM
In Asian trade, the price of gold has slipped -US$2 from the ending New York price and is now at US$1868/oz. But that is +US$4 above the price at this time yesterday. The New York price ended at US$1870/oz and was +US$2 higher than the afternoon London fix.

EQUITIES UPDATE
Wall Street ended its session today up by a minor +0.3%. The ASX200 is trading up +0.7% in mid-day trade while the NZX50 Capital Index is up +1.0% near the end of today's session. Meanwhile, the very large Tokyo market has opened today up +1.0% in early trade. Hong Kong has opened unchanged, while Shanghai has opened up +0.2% in early trade today.

SWAP & BOND RATES SLIGHTLY SOFTER
We don't have todays swap rate movements yet. If there are material changes when the end-of-day swap rates are available, we will update them here. The 90 day bank bill rate is unchanged today at 0.27%. The Australian Govt ten year benchmark rate is up +1 bp at 1.03%. The China Govt ten year bond is down -1 bp at 3.30%. And the New Zealand Govt ten year is down -2 bps at 0.92% and marginally above the earlier RBNZ-recorded fix of 0.91% (-3 bps). And the US Govt ten year is unchanged today to 0.93%.

FLP WATCH
We should have noted yesterday that the RBNZ's Funding for Lending program had no takers the first time this was offered. No bank was interested in RBNZ money at 0.25%. As Jason Wong of BNZ noted: "Banks are currently flush with cash so there is no urgency to rush in. Future take-up will be driven by upcoming maturities of existing wholesale debt and the desired smoothing of forward funding needs over the coming year. The announcement of the scheme back in August has already been instrumental in reducing term deposit rates and thereby bank funding costs."

NZD HOLDS
Against the US Dollar, the Kiwi dollar is little-changed from this time yesterday at 70.5 USc. On the cross rates it is back up marginally against the Aussie to 95 AUc and against the euro we are little-changed at 58.2 euro cents. That all means our TWI-5 has hardly moved from this time yesterday at just under 72.6.

BITCOIN DROPS
Bitcoin is now at US$18,251 and down -5.0% from this time yesterday. The bitcoin rate is charted in the exchange rate set below.

This soil moisture chart is animated here.

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

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22 Comments

19
up

A shit load more public service jobs...the number of which has only gone up in the last 20 years, and the amount they are paid has only gone up. Just an increased burden on the tax payers, having to pay for these unproductive jobs that are only required due to an increase in government regulations.
Sounds like a great system we have going here...

Are they more unproductive than residential landlords and property speculators?

Are they more unproductive than Old Blokes?

Someone is a public servant I take it??

16% more jobs at akl council.

I live in hope that the new staff have replaced some of the Deloitte contractors on $3000/day.

Deloitte. KPMG, etc are really good at the flash proposals for consulting projects in South-East Asia. Usually massively over-priced and over-costed. Once the project is won, they bring in consultants from India on the cheap. No local understanding of the business culture. Usually, no meaningful transformation happens and the local client has to start again in the future. Good overview of the state of affairs.

https://www.vir.com.vn/what-digital-transformation-really-means-for-comp...

"FLP WATCH" - No banks have taken it up yet but the FLP announcement in August has reduced term deposit rates and thereby bank funding costs.

Nice move Orr...

Part of the money coming in to term deposits will be from Kiwisaver inflows. But at what rates are these put on? Banks will really not want this money from now on.
I have noticed that the unit prices of the portion of my money in the cash fund pays a really low amount already. Probably partly due to the fees that are charged. Whereas you would think that no fees should be payable for the cash fund.

31
up

I see Adern on TV again tonight re the remembrance of the Whakaari island disaster, and the Mosque attacks. Milking them for all their worth.
Enough of the ambulance chasing! Building a political career on disasters is not adequate. Time to grow up, get on, and address all the broken election promises and start running the country properly.

11
up

Very well said!

Did she mention Kiwibuild, or CGT, or not introducing any tax increases?

16
up

Milking them for all their worth

It saddens me to say that I think you're right.

I think it's appropriate our PM engages in commemorations of key events in our history.

Sure could be doing a bunch bettter running the country, but hassling her for being part of these events is pathetic.

12
up

No one would be hassling the Pm if her core responsibilities were taken care of

The creation of Taumata Arawai is about to lead to one of the largest asset transfers in New Zealand history. With the regionalization of roading management - forced by NZTA to qualify for funding support and the removal of all water assets district councils have basically been asset stripped. All that remains is some regulatory work and parks and libraries.

Where do I go to read about this ?

See lot of alarm bells but nobody seems to hear them.

That soil moisture map starting to look horribly familiar. surely not 3 years in a row.

It's all about adaptability solardb. Charles Darwin: It is not the strongest or the most intelligent who will survive but those who can best manage change. Surely some lessons have been learnt over the last 2 years by those who have had weather extremes for the last 2 years?

Yes , of course , most are carrying less stock. Its more the longterm efect on the watertable I'm worried about.

A fine example of the Parasitic Mind.
Radical Love! an idea pathogen.

https://mobile.twitter.com/RMarchNZ/status/1336213230599880704

When the rules are made for the wealthy elite it’s an act of radical love for our communities to be gay, do crime.

Today I pay tribute to everyone who has had to lie to WINZ or the immigration to survive in my maiden speech
Watch the full clip:
https://vimeo.com/488368177

https://www.amazon.com/Parasitic-Mind-Infectious-Killing-Common/dp/16215...
There's a war against truth... and if we don't win it, intellectual freedom will be a casualty.

The West’s commitment to freedom, reason, and true liberalism has never been more seriously threatened than it is today by the stifling forces of political correctness.

Dr. Gad Saad, the host of the enormously popular YouTube show THE SAAD TRUTH, exposes the bad ideas—what he calls “idea pathogens”—that are killing common sense and rational debate. Incubated in our universities and spread through the tyranny of political correctness, these ideas are endangering our most basic freedoms—including freedom of thought and speech.

The danger is grave, but as Dr. Saad shows, politically correct dogma is riddled with logical fallacies. We have powerful weapons to fight back with—if we have the courage to use them.

Congratulations to all Greens Voters, well played and richly deserved.