A review of things you need to know before you go home Wednesday; dairy prices inch up, service sector booming, more job vacancies, new Christchurch home-buying fund, Shanghai markets wobble, swaps hang in there

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

MORTGAGE RATE CHANGES
There are no changes to report today.

DEPOSIT RATE CHANGES
No changes here either.

DAIRY PRICES INCH UP
This morning's dairy auction was not as strong as the derivatives market expected. But there are gains. Overall, prices are up +3.1% in USD terms, up +2.2% in NZ dollar terms. The key WMP price is up a disappointing +3.5%. However, it is now three small but steady rises in a row, making back all of the -6.4% fall on March 7. Today's result won't be changing any forecasts one way or the other, although some futures market traders might be nursing some bruises. Still, things are very much better than they were a year ago when we were deep in a hole. Today's prices represent more than a +50% increase over that low period.

HIGH, AND STAYING LIKE THAT
The local services sector is expanding strongly. The PSI for March was 59.0.  This was 0.3 points higher than February, and the second highest level of expansion over the last 18 months. Especially encouraging is the strong results in the  new orders/business sub-index. This was at its highest level since June 2007, which should feed through to activity/sales in the months ahead.

MORE JOB VACANCIES
Employers are struggling to find qualified applicants. The All Vacancies Index in the MBIE monitoring increased by +1.3% in March 2017, nearly twice the average monthly growth since March 2015. Over the past year, online vacancies increased by +14.2%. Vacancies increased in six out of eight industry groups. The biggest shortages were in hospitality, tourism, sales, retail, marketing and advertising. The only fall was for information technology. Vacancies increased in all occupation groups. The largest increases were for technicians and trade workers and sales.

AN AUSSIE BATTLER
Car sales are declining in Australia. In fact, it has now been twelve straight months since there was growth in car sales. The slack has been taken up by SUVs and they now represent 52% of the market. But between both categories, the Aussie car market has stalled at 920,000 passenger vehicles per year. Commercial vehicle sales are brighter however, growing +6.7% in the twelve months to March from the same period a year earlier.

OMINOUS SIGNAL
Keep a wary eye on China's stock markets. They are not places of stability because they lack deep professional investor commitment. In the past three full trading days the Shanghai Composite Index has fallen -2.4%, the steepest fall since mid-December. The key 3,200 index level has been breached. Volatility is climbing. So far today there is another ½% drop. This is all a swift turnaround. Just a week ago the Shanghai Index was at heights not seen for 15 months, and volatility was at a decade low. Everyone is noticing; in fact the NZX50 is down -0.5% today and it is hard to find any markets gaining in our timezone (although Jakarta is one).

TARGETED ASSISTANCE
The Christchurch City Council and the Government are equally funding a $6 mln plan to assist between 25-40 households over three years to buy their own homes. The new fund will use several criteria for deciding who will receive this financial assistance. It will prioritise households at or below the median income level for Christchurch, households with children, and those with existing savings. The price cap on applicable housing will be the same as that for KiwiSaver HomeStart Grants – $500,000 for existing properties or $550,000 for new builds.

ENERGY UPDATE
We have ended summer with normal inflows into our hydro lakes, and these lakes two thirds full. This is a better situation that in many prior years. There is no reason for electricity markets to raise prices. Demand is stable at 100 GWhr/day, lower than a few years ago.

WHOLESALE RATES HANG IN THERE
The UST 10yr benchmark rate fell sharply earlier today. Local swap rates are down in sympathy but not as much as might be feared. They are up +1 bp for two years, down -1 bp for five years and down -4 bps for ten years. The 90 day bank bill is unchanged at 1.97%

NZ DOLLAR HOLDS FIRM
The NZD still has a touch of firmness about it and is currently at 70.4 USc. Against the AUD, we have risen almost 1c to 93.5 AUc. Against the EUR we are trading at the 65.7 euro cents level. The TWI-5 is at 75.2.

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