Headline American employment growth slows, US services sector expansion slows but new orders grow; SEC uncovers massive fraud; Apple stumbles, investors don't case; UST 10yr 4.50%; gold and oil slip; NZ$1 = 60.2 USc; TWI-5 = 69.4

Here's our summary of key economic events overnight that affect New Zealand, with news all about US payrolls.

The US economy added +175,000 jobs in April, on the headline, seasonally adjusted basis, the least since October and a deceleration compared to the upwardly revised +315,000 jobs added in March. It fell short of market expectations for a +243,000 increase. This data underscores a significant slowdown from the brisk pace observed in the first quarter and trails behind the average monthly gain of +242,000 jobs over the preceding 12 months. 

But in fact, on an 'actual' basis employer payrolls rose +803,000 to 158.0 mln and a record high. On a household basis, including the unincorporated self-employed, they rose +234,000 to 161.6 mln and showing the continuing shift from self employment to company payrolls that we have observed in prior 2024 months. Either way, there are actually significantly more people employed that the headline levels suggest. Full time jobs rose, part time job levels shifted lower.

But the American labour force is growing slightly faster than these employed levels show so the jobless rate ticked up slightly to 3.9% and although that is similar to last month it is at the upper range of what they have had since August 2023. (The New Zealand jobless rate was 4.3% in March 2024.)

Average weekly earnings rose +3.9% in April from a year ago, lower than the March level of 4.1%, so there are signs of less labour market pressure.

And we should not forget that labour market data is a lagging indicator.

A leading indicator is a metric like the PMIs. And the ISM services PMI for April turned negative, dropping sharply to a contracting 49.4 in April from an expanding 51.4 in March. This is their first contraction in the services sector activity since December 2022, and it surprised markets who had expected a continuing expansion. But before we get too carried away, we should note that the new order component remained expansionary, so this overall drop might be just a blip.

The internationally-benchmarked Markit services PMI is still showing an expansion, albeit a slower one.

So despite the headlines today of a labour market and service sector undershoot, the markets liked the implications. Risk appetites returned with the S&P500 rising, bond yields falling, and the USD easing. Basically markets now feel US rate hikes are less likely as inflation pressures are easing - just as the US Fed itself seemed have suggested. The expectations of one 2024 rate cut late in the year are creeping back.

Staying in the US, their SEC has charged audit firm BF Borgers and Its owner with massive fraud affecting more than 1,500 SEC filings. (BF Borgers is the auditor for Trump Media. Apparently you use this firm as a way to inject false returns into the SEC monitoring system. All for a fee, of course.)

Apple's product sales have fallen in almost every market across the globe, according to the latest results from the tech giant. Overall the decline was -10%. But investors think the worst is over, and its stock rose +6% today.

In China, their publicly traded companies took a net profit hit for the first time in five years in 2023, as the protracted property sector slump bled into other industries. The roughly 5,200 non-finance companies listed in mainland China logged a combined net profit of NZ$655 bln last year, according to DZH data. This amounts to a -3% or -NZ$20 bln overall retreat. In Q1-2024 the decline swelled to -5% on that basis.

Real estate services provider CBRE first-quarter profit beat analysts' estimates for Q1-2024, helped by higher leasing demand at a time when commercial property sales remain under pressure from elevated interest rates. Their revenue rose +7%,

The UST 10yr yield is now at 4.50% and down -8 bps from yesterday and down -13 bps for the week. The key 2-10 yield curve inversion is still at -31 bps. And their 1-5 curve inversion is more at -65 bps. Their 3 mth-10yr curve inversion is now at -89 bps and 8 bps more. The Australian 10 year bond yield is now at 4.42% and down -5 bps. The China 10 year bond rate is unchanged at 2.31% during their holiday. The NZ Government 10 year bond rate is now at 4.89% and down -4 bps. A week ago it was at 5.08% so a large -19 bps fall since then.

Wall Street has rose +1.3% the S&P500, enough to book a weekly +0.3% weekly gain. The relief is palpable that rate rises seem off the table now  Overnight European markets all closed up about +0.5%. Yesterday Tokyo was closed for a holiday. Hong Kong however rose +1.5% to be a spectacular +6.6% higher for the week. Shanghai remained closed. Singapore was down -0.1%. The ASX200 ended its Friday session up +0.6% for a +0.7% weekly gain, and the NZX50 ended up +0.5% for a +1.1% weekly gain.

The Fear & Greed index is still in the "fear" range as it was the last two weeks.

The price of gold will start today down a minor -US$5 from this time yesterday at US$2300/oz. From a week ago it is down -US$35/oz.

Oil prices are down more than -50 USc from yesterday at just under US$78/bbl in the US while the international Brent price is down -US$1 at just over US$82.50/bbl. Both are more than -US$5 lower than week-ago levels.

The Kiwi dollar starts today up +¾c from yesterday at just over 60.2 USc. Against the Aussie we are up at 91 AUc. Against the euro we are almost +½c firmer at 55.9 euro cents. That all means our TWI-5 starts today just on 69.4 and up +40 bps from yesterday, up +20 bps from this time last week.

The bitcoin price starts today at US$61,761 and up +4.4% from this time yesterday. It is down -3.5% from this time last week however. Volatility over the past 24 hours has stayed moderate at just on +/- 2.4%.

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