Here's our summary of key economic events over the weekend that affect New Zealand, with news that so far, central bank brakes on inflation or optimism don't seem to be working yet.
First up today, global food prices were stable in February from January according to the FAO monitoring. That puts them -8.1% lower than year-ago levels when they were rising sharply. They are now -19% below their March 2022 peak and back to levels we first saw in October 2021.
In China, their National Congress, which marks the end of the road for Premier Li, is underway in Beijing, and has set its lowest economic growth target in decades, aiming for "about +5%" GDP growth this year, a relatively conservative target for them. But this comes after just a +3% advance in the tough 2022 year wracked by pandemic and big-power rivalry stresses - not to mention the property sector woes which are still high on their risk agenda.
But they are off to a positive start. China's private Caixin service sector PMI reported a good expansion in February, a bounce-back from January and confirming the official measure. New orders and employment rose in a direct response to their re-opening.
The expansion in the services sector was even stronger in India in February, out-shining both the US and China.
Singapore is doing it tough however. Their PMI turned negative in February as firms there pulled back, and the retail sales dived worryingly from the prior month in a report for January.
In the US, there were two respected services PMIs out over the weekend, both positive. The widely-watched local ISM one didn't dip from its strong January expansion when a dip was expected. Its employment component was especially strong. New order levels however were what really starred.
The internationally-benchmarked Markit one moved from a contraction to a minor expansion. They said new orders contracted but that employment rose.
Both reported that cost pressure reduced, although one noted that firms are still taking the opportunity to raise prices.
This coming week Fed chairman Powell is testifying in Congress and will use the opportunity to warn (that is, 'lay the groundwork') that interest rates still have some way to rise from here.
And other Fed speakers also said (and here) they will need to raise rates to higher levels than previously anticipated to prevent inflation from rising further, if the recent strength in hiring and consumer spending continues. ECB officials are saying similar things. Oddly both the bond and equity markets ignored the warnings last week.
In Canada they get a central bank rate review this week, currently at 4.50% and likely to rise. But the expected bounce back in building consents didn't happen in January after the sharp fall in December. They got another fall. So maybe the Bank of Canada will hold off. Inflation is falling quickly there now, down to 5.9%.
Germany reported that its exports rose in January from December to be +8.6% higher than the same month a year ago. Meanwhile they say their imports fell, mainly because their imports from Russia dropped -37% in January. They are learning fast how to do without Russian energy.
In the EU, they say producer prices fell in January from December and the year-on-year rise is moderating fast. This was a much larger monthly fall (-2.3%) than was expected (-0.3%).
In Australia, home lending was weak in January, dropping the most month-on-month since July 2022. Lending to investors fell the most. House price declines are suppressing listings and are likely to reduce loan sizes, putting downward pressure on total lending.
And tomorrow, their central bank will almost certainly raise their policy rate again, going from 3.35% currently to 3.60%. Pushback forces are growing, but until inflation looks like it is beaten, they are unlikely to sway the RBA. Markets have now priced in rises to 4.20% by September. (Those same markets have priced in the New Zealand OCR rising to 5.50% by August.) It is worth remembering that RBA rises pack more punch and have an immediate impact solely because most borrowers are on floating rates and are leveraged more.
The UST 10yr yield starts today at 3.96% and down -1 bps from Saturday but little-changed in a week. The UST 2-10 rate curve is marginally more inverted at -90 bps. Their 1-5 curve inversion is similar at -78 bps. Their 30 day-10yr curve is also a little more inverted at -72 bps. The Australian ten year bond is down -2 bps at 3.85%. The China Govt ten year bond is unchanged at 2.94%. And the New Zealand Govt ten year is starting today at 4.76% and also unchanged.
The price of gold will open today at US$1857/oz and up +US$10 since Saturday. It is up +US$46/oz for the week, or a 2.5% rise.
And oil prices start today up +50 USc at just under US$80/bbl in the US. The international Brent price is now just under US$86/bbl. These are weekly rises of +US$4/bbl.
The Kiwi dollar is little-changed at 62.2 USc. Against the Aussie we are still at 92 AUc. Against the euro we are also little-changed at 58.5 euro cents. That all takes the TWI-5 to 70.5 and up only up +30 bps in a week.
The bitcoin price is virtually unchanged from this time Saturday, still at US$22,453. And volatility over the past 24 hours has been modest at +/-1.1%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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81 Comments
222 days to go ... October 14 can't come soon enough ...
.... your time is running out , Labour : just 222 days to go on your programme of trashing NZ's economy & morale ...
And the latest braindead piece of moronic policy : to take the $ billions required for road repairs , and funnel it into bus lanes & cycle ways ... beyond stupid , Labour , far far beyond plain stupid ...
The year is 6 Billion AJ (After Jacinda). After exhausting its supply of hydrogen, the Sun started burning helium, expanding and consuming the Earth (some say powerdownkiwi had tried in vain many millennia ago to warn the Sun Gods of the "limits to hydrogen", on a now-forgotten financial commentary website that acted as a vessel for socioeconomic prophecy)
While all other life was snuffed out, a privileged few humans managed to escape into space on a Rocket Lab spaceship; NBR rich listers, distant relatives of Nania The Great, and senior Wellington civil servants.
As the burning, dying Sun shrinks to nothingness on the horizon and the Solar System fades away, the lucky few survivors - tasked with carrying on the hopes and dreams of the human race - come to a stark realisation; mankind was still feeling the impacts of those nine long years of National neglect.
There was a strange matter reported in the NZH whereby Mahuta our Foreign Minister had refused to allow NZ to supply Ukraine with specialised machinery to assist them with their grain harvest because she didn’t consider it to be humanitarian aid? At one stage it was being thought that the prevention of Ukrainian grain exports would create a world shortage afflicting particularly the poorer nations. Somehow though, apparently for our government, there were no dots available to be connected.
How did nz get such a terrible government, they are truly the worst, most incompetent, ideologically driven idiots ever. I despair with the damage they have done to this country…
I'll say. Right at this moment there will be some Russian guys freezing in a foxhole, some missing fingers, one bleeding out through an open chest wound, and their last words will be "at least we didn't fall victim to woke politics....."
"Right at this moment there will be some Russian guys freezing in a foxhole, some missing fingers, one bleeding out through an open chest wound, and their last words will be "at least we didn't fall victim to woke politics....."
Only Russians ? Where do you get your news ? TV1 ?
You can spot the partisan fanboys from a mile with their tantrum posts, filled with hyperbole devoid of any real substance. It'll be the same if National get in.
"Worst Government in living memory". I have people in my circle that are still going on about Cindy, while living lifestyles and earning incomes that many would envy.
A big chunk of money will have to be there to pay for damaged wheel rims.
Personally I steer around potholes because I have driven on many dirt roads in the past: problem is when it is raining and the pot holes are covered in a puddle of water.
Note: When you buy a car do not get the low profile tyre option. Stick with the fat 'uns.
Hospitals chocka, roads jammed with traffic and full of potholes, truancy high & functional literacy low, social housing now has over 23k on the waitlist. You would think a 5-10% year-on-year growth in tax take would buy us the premium package on public infrastructure but that's not the case.
That's right. There have also been sharp increases in welfare payments since Labour took office. MSD budgeted spending has increased a whopping $16b since 2017 (excluding one-off Covid support payments). The spending increase alone is over 4% of NZ's current GDP (over 5% of 2017 GDP)!
And for all the talk of retirees costing the taxpayer too much, the share of super actually fell as a proportion of MSD's spending from 52% to 44%.
Only if they leave the starting age unchanged. It is also worth reading about recent progress with understanding aging and experiments on rodents that increase lifespan and vitality. Soon to be applied to humans. Probably most Kiwis will be living much longer - maybe all Kiwis or maybe only those with lots of money for the treatment.
You don't mean 'expected' but you do mean 'if nothing changes'. Similar to the prediction in 1890 that horse manure would cover the streets of London to six feet deep.
It takes resource to do things differently. You are obviously a fan of the status quo, pour more money into road’s, have untold DHBs all doing the same thing differently, water’s owned by councils that can’t afford to run them, no climate change action just talk, etc. luckily for you the national party exists.
Realistically the culprit trending among most of these posts is that we as humans have not been held to account for our actions and have been acting in self interest for decades by kicking things down the road such as water infrastructure, rate rises, necessary tax indexation etc, in the interest of saving a few bucks and thinking we live in utopia.
Well it turns out we as humans aren't that special nor sensical, and now we have to pay the piper. We are, simply put, our own worst enemy, and as per usual we want someone else's head to roll. It would help to have leaders that take ownership, show true accountability and transparency, tell us that not everyone will come out better off this year, and we have to take the hit.
There’s the problem. If they don’t know their job then they become reliant on the department beneath them . Then it just means that when they get it wrong with advice or whatever, the boss can’t see it. Then you need more staff to try and fix it all up, or preferably cover it all up. Northcote Parkinson explains this in part as “work expands according to the time allotted for its completion.” Add to that ability to expand as well, the number of people employed.
Actually, the brain-dead are the corpulent spouters of dumb two-word couplets - like 'clean coal'. Ring any bells?
And given where energy contention is heading, bussing and cycling are looking to be valid goals. Except that nobody is realising that the existing roads, very soon, won't be full of SUV's and trucks.
Careful calling folk moronic, from such an ignorant starting-point, eh? We are at a stage where we need an intelligent, in-depth discussion about the future - maybe you could do enough research to be able to contribute?
I get your point, but this is where I have an issue with PDK's position. The human species has ALWAYS travelled. It is simply silly to think they can be stopped from doing that. In the drive to save our environment, there must be a drive to make travel significantly more efficient. Thus I am not against roads, but if we are going to have roads they must be the best possible as efficient travel will require high quality roads.
While I largely agree with PDK's position and gains, he does lose it a little in the detail. In the end though, the ONLY thing that will save us is a very significant population decline.
Always travelled? Yes, but how far?
Aucklanders used travel to their own beeches... many walked or biked. That's' is also how we got to school or to work. We didn't go that far. We went to local facilities, we didn't commute from Hamilton to Auckland to work.
We don't need to make travel more efficient....we need to make it less necessary.
As far as the available technology would take us. Anthropological evidence is that thousands of years ago we were sailing all the seas. The wheel cannot be disinvented, nor can we unscramble an egg. So as a species we will try our best to use technology to save us, but as PDK would point out, entropy would dictate that it is now too late for that (should have started 200 years ago!). But I would suggest that with significant population decline the degree required may be eased with technology.
Will make for an interesting election. Labour are doing some good climate change actions, national want to reverse them all. Can National continue to pretend to care about climate change while having no policies in place? Do voter’s really care enough about climate change or are they all talk too?
NZ's best-case scenario in reducing greenhouse emissions will be a rounding error on the global stage.
Meanwhile, the left-leaning governments in Canada, Australia and Norway are silently rubber-stamping further expansion of hydrocarbon exploration and drilling in their countries.
Not saying we need to ignore climate change action, but we need to ensure this can be done without impoverishing ourselves in the process. For example, a policy that allows investments in polluting industries, only to tax these and divert revenues towards climate research and green investments seems like a more sensible approach.
This coming week Fed chairman Powell is testifying in Congress and will use the opportunity to warn (that is, 'lay the groundwork') that interest rates still have some way to rise from here.
The quote below sounds like it was ripped from one of Jay Powell's recent speeches. The circumstances were eerily familiar, right down to the 3.4% to 3.5% unemployment rate. There was one huge difference, though, and it wasn't recession. https://youtube.com/watch?v=uV7Ey0 Link
I do not mind taking the bus, but AT has to do something about the limited park and ride spaces..... The lack of rail network maintenance (especially Auckland) is shocking. I think National could win on a fix up what we have campaign. Remember the collected bargaining wage increases will come through before Oct ensuring higher inflation pressure and tough talk from Mr Orr
Recent int commenters: despise Labour govt, are pro moderate house price falls/market correction (as long as they don't lose too much personally), genuinely desire positive social change for NZ, but can't agree to any policies being put forward (or come up with any of their own). Centre right Nimby-ists?
The main problem with policies being put forward is that they are simply not radical enough. Even the LVT proposed by T.O.P. is tempered so as to not rock the boat too much.
Until this country deals with the inequitable outcomes of our unfair tax system once and for all, there is no reason to get excited about pretty much any policy being put forward.
More appalling lack of delivery from Kainga Ora:
https://i.stuff.co.nz/pou-tiaki/131392512/appalled-kinga-ora-achieves-o…
Quote from the article: ""“When you consider disabled people make up 24% of the New Zealand population,”"" I find that very hard to believe; you have to include children under 14 as being 'disabled' since they need adult supervision. Even if true not every disability requires a house to be significantly redesigned - for example deaf people may only need a flashing light connected to the door bell.
However the message of the article is simple - a govt body making a commitment and then failing to deliver. Who will take responsibility?
Last week I overheard someone on the phone confirming 4.99% fixed for one year. It sounded more like a new mortgage though. He was trying to get some cash back too, it sounded like they said a very quick no to that! He may have even been a broker, sounded like it was on behalf of someone else.
A mortgage broker told me the 4.99% rates are for new lending only and only available if you've signed an S&P, and are essentially ready to go now. Oh and they won't be around for much longer. Who knows though, it's our good old friends, the retail banks at work here. About as transperent as mud
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