A review of things you need to know before you go home on Friday; deposit rate changes; NZ PMI; economic outlook; labour force; skills shortages; tourism funding; bond issue; swaps and NZD lower

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

No changes to report here.

Westpac has reduced its term deposit rates for 8 mnths and 1 yr by -20 bps to 3.30% and 3.50% respectively.

The PMI data, released by BusinessNZ, shows a marginal increase to 57.5 from 57.3, in seasonally adjusted terms. In actual terms, however, the PMI has spiked from 59.2 to 62.5. All subcomponents of the actual PMI were up, with production activity showing the largest gain. In terms of the regional subcomponents Northern New Zealand and Otago were slightly lower, whereas, Central New Zealand and Canterbury were significantly higher. In seasonally adjusted terms, all subcomponents except new orders were higher.

ANZ economists see the New Zealand economy navigating some headwinds and increased odds of a growth wobble. They say that beyond the housing market, two key growth drivers - construction and migration, have peaked or are close to peaking. While other growth drivers are expected to emerge, such a transition may cause some wobbles. The economic cycle is not quite at its end though and there are a number of stimulatory factors that may help the New Zealand economy. These include easing financial conditions, a far more stimulatory fiscal policy, an elevated terms of trade and a solid global economic backdrop.

As per Statistics New Zealand, the New Zealand labour force is expected to keep growing, driven by increasing population and people working into older ages. Currently there are 2.6 million people in the labour force, which includes both the employed and people looking for work. The labour force is expected to be at 3.0 mln in 2030 and 3.5 mln in 2068. Participation of people in their 60s is currently 59% but expected to grow to 64% in 2038 and 67% in 2068.

Seven building occupations have been added to the Immediate Skill Shortage List (ISSL) to help the building industry cope with skills shortages and to help the Government in its KiwiBuild endeavour. Employers whose occupations are on the ISSL and the Long Term Skill Shortage List (LTSSL) do not need to go through the labour market process and do not need to prove they cannot find a New Zealander for the job. A total of 34 occupations have been reviewed this year and, in addition to the seven building occupations, motor industry related professions, accountants and midwives have been added to the ISSL.

The Government has announced $14.9 mln worth of funding for tourism related projects. $14.2 mln will be allocated to 30 visitor-related infrastructure projects, such as carparks, walkways and toilets, and four feasibility studies. A further $700,000 will be invested in the upkeep of seven Great Rides of Nga Haerenga, the New Zealand Cycle Trail, which have delivered $37.4 mln per year of economic benefit to communities around the country.

The New Zealand Debt Management Office has issued $200 mln worth of nominal bonds bearing a 2.75% coupon rate and maturing on 15 April 2025. The issue saw the highest level of demand in the last six months, with a coverage ratio of 3.86x. The weighted average yield for the issue was 2.56%.

The New Zealand swap rates were unchanged at the lower end of the curve, down -1 bp for 4 yrs and 5 yrs and down -2 bps for 7 yrs and 10yrs. The 90 day bank bill rate still at a record low of 1.86%.

The NZ dollar is lower than this time yesterday at 69.9 USc. On the cross rates we are at 91.2 AUc and 59.3 euro cents. This puts the TWI-5 at 72.8. It's been another wild ride in the bitcoin market. Bitcoin is marginally higher from this time yesterday at US$16,981.

You can now see an animation of this chart. Click on it, or click here.

Daily exchange rates

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Source: CoinDesk

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Can anyone explain why the 90 day bank bill rate is at a historical low?

More buyer than sellers?! Seriously, Bank Bills are set by the market players at what they need to fill their book with on any given day. ( they need to invest funds by buying the actual commercial bills). That they are their lows indicates, to me, that interest rates are headed a lot lower. That's why the Bond Issue, is so overcovered and has gone at a discount to coupon rate.

Yes , that kinda what I am getting at, or wondering . I do not understand why this metric is not showing up in the others , particularly the one year rate , and floating mortgage rates.

Can anyone explain why accountancy is a key skill shortage?

Key skill shortage is a joke. When I got my residency for IT professional I needed web design and SQL. I did an evening class (cost $120) to get a web-design certificate. The SQL was harder - I had given SQL courses but never attended one so had no certificate - used my oracle course in lieu but never used Oracle in my life other than the course. Same month I received my residency visa aircraft engineers was on the list of skill shortages and Air NZ had laid off 50 engineers (servicing moved overseas).
It is just a joke - bureaucrats deciding what is a skill. The simple solution as used successfully in other countries - get the employer to pay a serious amount for a foreigner. Only the employer can judge who has a required skill. If your baker is worth say $10,000 then pay that fee and get them immediately rather than waiting months and of course a big fee like that might persuade you to take on Kiwi trainees?

China summoned Australia’s ambassador in Beijing amid friction between the two nations after Prime Minister Malcolm Turnbull’s government accused the Asian powerhouse of political meddling.

Ambassador Jan Adams was called in by China’s Ministry for Foreign Affairs on Dec. 8, while three days later China’s ambassador to Australia held talks with the Department of Foreign Affairs and Trade.
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Do China's future raw import demands need to include Australia?

If  you are looking for the latest breakthroughs in trans-Eurasian geoeconomics, you should keep an eye on the East – the Russian Far East. One interesting project is the new state-of-the-art $1.5 billion Bystrinsky plant. Located about 400 kilometers from the Chinese border by rail and tucked inside the Trans-Baikal region of Siberian, it is now finally open for business.

This mining and processing complex, which contains up to 343 million tonnes of ore reserves, is a joint venture between Russian and Chinese companies. Norilsk Nickel, Russia’s leading mining group and one of the world’s largest producers of nickel and palladium, has teamed up with CIS Natural Resources Fund, established by President Vladimir Putin, and China’s Highland Fund. Read more

Did anyone, other than Grant Robertson, go out today and borrow some money and invest it in a managed fund?

*past returns...

Pretty much everyone with a mortgage, and making kiwisaver contributions.