Here's our summary of key economic events overnight that affect New Zealand, with news of more of the same - continuing American economic strength, worries about China's prospects.
The number of American filing for new jobless claims fell to +190,000 last week which is their lowest since February. A rise to +234,000 was expected so this is a much better-than-anticipated result. There are now 1.75 mln people on these benefits, also much lower than expected. The US labour market is remaining much stronger than almost anyone thought by the end of Q3. With this sort of continuing run, it is hard to see their September non-farm payrolls showing the weakening that has long been foreshadowed - and hoped-for by the Fed.
American labour costs are rising (+2.2%) and with the extended labour market pressures this isn't really a surprise. But it is a surprise that pay rates are rising faster (+5.7%) than inflation (+3.0%), and they are getting good labour productivity at the same time (+3.5%). Rarely do you get a 'virtuous combination like this in tight labour markets. It is actually quite remarkable.
On the labour front, the GM workers union rejected the carmaker's +16% wage offer as far below their asking +46% demand. Such are levels in a hot labour market.
In Canada, they have their own positive surprises. Their widely-followed Ivey PMI came in in August with their strongest expansion since April, reversing a downtrend and a contracting July.
Also 'positive' in a back-handed sort of way, Canada's July building consents fell -1.5% which was a much smaller correction than anticipated after the strong +7.5% june rise, meaning most of the June momentum was maintained. In fact their residential consent level rose another +5.4%, so the housebuilding sector maintained it's push up.
China's August exports inched higher than in July, but were still -8.8% lower than year-ago levels and this was the fourth straight month of year-on-year declines - and comes despite a weakening yuan. They ran a +US$33 bln surplus with the US which accounted for about half their total trade surplus. They remain very dependent on their trade with the US. Versus Australia, they had an August deficit of -US$6.2 bln in the month, and with New Zealand a deficit if -US$220 mln.
China's FX reserves slipped -1.4% to US$3.16 tln, a fall of US$44 bln in the month and to their lowest level since February. But they are well up from just over US$3 tln in July 2022. The yuan weakened to a 16 year low today.
The EU's third estimate of its Q2 economic activity was revised lower to an expansion of just +0.1% in the period.
For most non-oil countries, an +$8 bln monthly trade surplus would be something to celebrate. But not for Australia. Their trade surplus declined to +AU$8.0 bln in July from a downwardly revised AU$10.3 bln in June, below market forecasts of a +AU$10 bln gain. It was the smallest trade surplus since February 2022, as exports shrank while imports rose.
Global container freight rates fell last week by -3.4%, continuing the recent retreat. The biggest falls were China to the EU; in fact China to the USWC rates actually inched up last week. Freight rates for bulk cargoes were little-changed.
The UST 10yr yield starts today down -3 bps at 4.27%. Their key 2-10 yield curve is less inverted at -69 bps. And their 1-5 curve is unchanged at -101 bps. Their 3 mth-10yr curve inversion is also little-changed at -109 bps. The Australian 10 year bond yield is now at 4.13% and down -2 bps from yesterday. The China 10 year bond rate is unchanged at 2.69%. And the NZ Government 10 year bond rate is now at 5.07% and just -1 bp lower.
Wall Street is lower in their Thursday session, by -0.4% on the S&P500 and mainly from fallout of China's decision to ban Apple iphone use by their public employees. Overnight European markets were mixed at +/-0.2%. Yesterday, Tokyo ended its Thursday session down -0.7%. Hong Kong ended down a sharper -1.3% and Shanghai fell -1.1%. Hong Kong may suspend trade today because of more typhoon weather. The ASX200 ended its Thursday session down -1.2% but the NZX50 was virtually unchanged in what was a better-than-most performance for the day on the global stage.
The price of gold will start today at just on US$1918/oz and essentially unchanged from yesterday.
And oil prices are down -US$1 at just over US$86.50/bbl in the US. The international Brent price is now at just over US$89.50/bbl.
The Kiwi dollar starts today little-changed from yesterday at 58.8 USc. Against the Aussie we are back up +¼c at 92.2 AUc. Against the euro we are also +¼c firmer at 55 euro cents. That all means the TWI-5 has edged up by +20 bps to 68.4.
The bitcoin price is virtually unchanged from this time yesterday, and is now at US$25,922, a net rise of just +US$6 in a day. Volatility over the past 24 hours has been low at just on +/-0.7%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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27 Comments
no comment?
Aussie feeling the effects of a China slowdown? Since they are a big supplier of raw materials and coal.
China's August exports inched higher than in July, but were still -8.8% lower than year-ago levels and this was the fourth straight month of year-on-year declines - and comes despite a weakening yuan. They ran a +US$33 bln surplus with the US which accounted for about half their total trade surplus. They remain very dependent on their trade with the US. Hmmmm....
But it was the Semis and AAPL that ignited the pain trade after Beijing reportedly extended its iPhone ban to other state agencies. Link
China's FX reserves slipped -1.4% to US$3.16 tln, a fall of US$44 bln in the month and to their lowest level since February. But they are well up from just over US$3 tln in July 2022. The yuan weakened to a 16 year low today.
China buys 29 tonnes of gold in August, stretches buying spree to 10 months
Buying gold not going to help them much?
You can even eat it..
If my maths is right 29 tonnes is about NZ$3bn, so a pretty small number in the scheme of things for China.
NZers are more likely to buy shares of My Food Bag than gold. The former generates income and profit; the latter doesn't. Therefore, they believe it has more value than gold. They're told this by media and trusted financial professionals.
We've also been told that a shiny rock has "value" as does Bitcoin, and that we "create wealth" by making bigger numbers.
Value/worth/price/cost "measured" in fiat tokens... The Property Market, The Stock Market, Digital Assets Market, The Debt Market all believed to have more value than healthy planet, healthy people and healthy community. We're told this by economists, government, financial institutions, and trusted media...
Looks about right.
Looks about right.
I'd like to see education programs on state TV where we have special guests like Adrian Orr explain topics such as what money is and where it comes from.
To be honest, I'd be curious to see what he says.
Ugh. I awake to news National is promising to boost immigration to hElP th3 eCon0my.
The old sugar hit while making things worse trick - Maxwell Smart
So disappointing that we have to choose between is Labour and its chaotic economic dunce coalition partners and ole sugar-hit-cup-and-ball trick National bringing a different kind of stupid which ACT may or may not counter.
There are more than 2 political parties, unfortunately everyone likes to just make it simple "red or blue", but both deliver basically the same thing anyway, so neither really matters. Until people realise that there are more than 2 options, suck it up.
I'm not voting for a major party (I haven't since 2008 when I voted Labour), but you have to admit that historically the major party gets most of what it wants, which is the source of my lament. I'll be holding my nose when voting this year, but the stench will be pervasive whichever way I vote.
National is promising to boost immigration
That promise may be hard to keep, it appears Labour has not just opened the doors but removed the entire wall to enable maximum inwards immigration flow.
“There are no checks,” says Tan
“Immigration doesn’t have the resources to check the 70,000 accredited employers they’ve granted the status to. Only a small percentage is being checked.”
The Front Page: How a simple visa change became an immigration nightmare (msn.com)
Still, New Zealanders were given the opportunity to take a different direction and rejected it.
https://www.facebook.com/garethmorgannz/videos/1311553772219791/
Double hit. The Nats promise to allow more lower paid immigration.
That will screw New Zealand and the immigrants both.
TOP used to have a policy of limiting population growth to 0.5% which has quietly dropped by the wayside
Personally I reckon that's a mistake, there's definitely votes in it and as a policy it would solve a lot of our problems.
Agreed. It would have been a great differentiator from Greens, Nat, Lab, Act and even NZF could be called out as not being credible.
It would also assist their stated goal of affordable housing in conjunction with the taxation reform package (LVT/that-free threshold).
It just seems illogical for any party to say they want affordable housing while in the same breathe also stating they will pump up demand for housing with more people.
Our govt has a solution to your issue of not enough homes for immigrants; just squeeze them in tightly - ""40 men found living at a squalid Tāmaki Makaurau property"".
I'd prefer -0.5%. Set an example to the world by a planned decrease in population. Potentially save the world. Politicians pay lip service to the idea with climate change so why not the main cause of climate change - population growth.
But ignore my preference just have a target, any target will do so everything else can be planned. New roads - is it a good idea depends on population in the next three decades Free dental - if a good idea then it depends on training more dentists, how many depends on anticipated population.
The planet needs to go from like 8 Billion to 2 Billion by 2050, you and I both know this will not happen voluntarily.
As I have mentioned in the past, Africa is projected to have a population of 4 billion by 2050. So bye bye wild animals. The likes of Russia and China will help unleash waves of Africans to NZ, Australia, Canada, Europe and the USA by providing them with old merchant ships. We will have thousands of Africans in ships landing on our beaches to impoverish us.......it's a better tactic than going to war.
There's no doubt that David Attenborough is the most sensible authority on climate change and he blames over-population.
Haha some might suggest that was the plan with the virus and the jab.
Before previous elections both the Greens and Labour had policies of reducing our legal immigration to levels comparable with other countries. Quietly forgotten when they attained power.
It is a difficult policy to enact because employers and our universities have become addicted and dependent on a constant flow of migrants - their whole business model depends on it. So the chorus of bleating (enthusiastically taken up by the media) is deafening. Also the "pearls of wisdom" (not) of the likes of the NZ Initiative telling us how high migration is good, no essential, for the economy is published as if it were fact.
We don't need an 'immigration' target'. We need a 'population target'. Subtle difference.
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