Here's our summary of key economic events overnight that affect New Zealand, with news growing labour markets are thwarting central bank efforts to slow things down.
We start with positive surprises all over the place in the US today. The biggest was from their labour market where the headline gain in non-farm payrolls came in very much higher that anyone expected, up +516,000 in January. That's its best January increase ever. Only a +185,000 gain was expected. And this data is from the usual "Establishment Survey" of employers. The data from the "Household Survey", which in the past has been less positive, is in fact even more positive this month, up +894,000 employed on the same seasonally adjusted basis. Unadjusted both surveys give a January level the best in more than a decade, probably longer.
Their unemployment rate is now its lowest since 1969.
Any way you look at this, it is strong. More people are in paid employment than ever before; either 160.1 mln in the Household Survey, or 155.1 mln in the employer survey (and the difference is probably unincorporated sole traders).
Also 'positive' in an economics way, wage growth is slowing. Average weekly earnings in January were up +4.7% from a year ago.
But the strong American results don't end there.
The widely-watched ISM services PMI reported a strong recovery in January, up from a small retreat in December. New order levels were the star here. The January level reports a healthy expansion again, and largely confirms the non-farm payrolls report. This is in contrast to the US Markit services PMI we reported earlier last week, which didn't show these gains; a rise to be sure, but that report was contracting still.
In Canada, housing sales in their largest city, Toronto (population 6.3 mln), "collapsed" to just 3100 in January, -40% below year-ago levels and prices down -20%.
The private services PSI survey for China confirmed the official PSI rebound in their services sector in January. (Recall this same private survey did not confirm the factory improvement.)
The end of pandemic restrictions is restarting a migration of China's wealthy to move overseas taking their money with them. Canada is the most favoured destination but the shift to Singapore is substantial too. Other countries will get this flow too. A feature of the 2023 flows is the urgency that these migrants bring with their desire to leave.
Meanwhile, Hong Kong retail sales fell -0.7% in December on an inflation-adjusted basis, but that was a lesser decline that the -5.3% drop in November. For the whole 2022 year, sales fell -3.4% on an inflation-adjusted basis.
In the EU, their producer price data didn't come down in December as it had trended earlier. In fact it rose unexpectedly, but 'only' at a +13% annualised rate from November, about half the year-on-year rate.
In Australia, the value of new home loans for owner-occupied homes in Australia fell -4.2% in December from November, sliding for the seventh straight month and coming in worse than forecasts for a -2.75% decline. Refi is strong there however.
Overall, commodity prices are reacting today to the rising US dollar, but other than that are holding their levels after a steady run-up over the past few months.
The UST 10yr yield starts today at 3.52% and up a sharp +14 bps from this time yesterday. It has been a rocky week, pressed down by the Fed signals, now back up by the jobs report and the net result is unchanged in a week. The UST 2-10 rate curve is slightly more inverted at -75 bps. And their 1-5 curve is less inverted at -111 bps. Their 30 day-10yr curve is a lot less inverted at -105 bps. The Australian ten year bond is up +9 bps at 3.49% and reversing much of yesterday's shift lower. The China Govt ten year bond is unchanged at 2.93%. And the New Zealand Govt ten year is starting today at 3.96% and another -14 bps lower and its lowest since September 2022.
Wall Street is ending its Friday session with a -1.0% reversal on the S&P500 but will likely end the week up +2.2%. Overnight, both London and Paris rose about +1.0% but Frankfurt fell -0.2%. The means for the week, Frankfurt is up +2.7%, Paris is up +2.6% and London is up a lesser +1.8%. Yesterday, Tokyo ended its Friday session up +0.4% for a weekly gain of +0.5%. Hong Kong fell -1.4% on the day to be -4.1% lower for the week. Shanghai ended down -0.7 yesterday to be -1.4% lower for the week. The ASX200 ended up +0.6% yesterday for a weekly gain of +0.9%, while the NZX50 ended up +0.4% on the day to finish the week +1.4% higher.
The price of gold will open today at US$1862/oz and down a very sharp -US$54 from this time yesterday. It is down -US$67 in a week, or -3.5% lower.
And oil prices start today down -US$3 at just under US$74/bbl in the US. The international Brent price is now just on US$80/bbl. That pushes the weekly drop to more than -US$5 or -6.3% for the week.
The Kiwi dollar is soft as the greenback surges. It is now at 63.5 USc and down almost -1½c. Against the Australian dollar we slightly softer at 91.4 AUc. Against the euro we are down -¾c at 58.7 euro cents. That all means our TWI-5 starts today at 70.7 and down -75 bps from yesterday and from where we were this time last week.
The bitcoin price is now at US$23,606 and down -0.9% from this time yesterday and up +2.1% from a week ago. Volatility over the past 24 hours has been modest at +/- 1.9%.
Finally, a reminder that this is a long holiday weekend in New Zealand and most businesses will be closed on Monday for Waitangi Day. This update will return on Tuesday, February 7, although there will be additional content posted over the whole weekend.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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