Here's our summary of key economic events overnight that affect New Zealand, with news that is full of unexpected data and outcomes.
US jobless claims fell last week to 190,000 and this was lower than expected. The number of people still on this unemployment insurance is lower too, at just over 2 mln. Neither signals growing labour market stress.
The Philly Fed's factory survey was expected to retreat in March following a good rise in February. But it surprised with another good expansion. And these heartland rust-belt manufacturers are looking ahead with surprisingly strong optimism.
Existing home sales jumped and by more than expected in February, up +9.5% from January on a seasonally-adjusted basis. But year-on-year, sales declined in all regions.
Meanwhile the US economic expansion kicks along. The latest internationally-benchmarked PMIs show their service sector activity growth eased to a three-month low amid reports that price pressures that had restricted customers' ability to commit to new projects, while manufacturing production expanded the most since May 2022. Overall, new orders increased but at a slower pace, while the rate of job creation ticked higher, marking the fastest in 2024 so far.
We should also note that a California referendum to raise property taxes to finance 11,000 treatment beds and housing units with health care and social services for homeless people suffering from mental illnesses and addiction, has passed. This is somewhat unexpected given the range of opponents and their well-funded opposition.
In Japan, March is delivering their strongest rise in private sector activity in seven months. Their factory PMI 'rose' to a smaller contraction in March while their services PMI expanded much faster. New orders featured as the driver.
In India, their March PMIs showed a surging manufacturing sector, but it was still overshadowed by even faster expansion in their services sector. India is on a fast-track.
The March 'flash' EU PMI is being held up to a stable level by its services sector which is still expanding and covering a continuing contraction in its manufacturing sector. Things are similar in the UK although their factory sector seems to be in better shape.
And there were a set of European central bank decisions out overnight. First Turkey sharply raised its rate unexpectedly, up +500 bps to 50%! (I kid you not.) And Switzerland unexpectedly cut its key policy rate by 25 bps to 1.5%, making it the first major central bank to cut. And in between, the English reviewed and did nothing, holding their rate at its historically high 5.25%.
In Australia, their labour market report for February has delivered a big surprise. Analysts were expecting a very good +40,000 rise in the employed workforce, but actually they got an extra +78,000 full time jobs in the month, plus an additional +38,000 part-time roles. Their jobless rate slipped to 3.7%. While this is 'good', we should remember that 31% of their 14.3 mln workers are still part-time, an unusually large proportion. (In New Zealand, that level is less than 20%.)
Still, the jobs surge probably means any rate cuts in Australia are now further away.
Australia's population is probably now touching 27 mln. It was at 26.8 mln people in September according to official data, and is growing at a record pace, fueled by immigration and a longer life expectancy among boomers.
Global container freight rates eased another -5% last week but remain unusually high because the reasons for the January surge have not gone away - drought in Panama and pirate activity in the Red Sea. Interestingly, trans-Atlantic rates are now rising while the largest falls are China-to-Europe. Bulk cargo rates are staying elevated.
The UST 10yr yield started today at 4.28% and unchanged from this time yesterday. The key 2-10 yield curve inversion is less at -35 bps. And their 1-5 curve inversion is deeper at -81 bps. And their 3 mth-10yr curve inversion is a bit less at -110 bps. The Australian 10 year bond yield is now at 4.12% and up +7 bps. The China 10 year bond rate is lower at 2.30%. The NZ Government 10 year bond rate is now at 4.66% and little-changed.
Wall Street opened its Thursday session up +0.4% to a new all-time high. The Fed signals underpinned the gains. Overnight, European markets got a boost too which saw London rise by +1.9%, Paris by +0.2% and Frankfurt by +0.9%. Yesterday Tokyo ended up a stellar +2.0%. Hong Kong was up +1.9%, while Shanghai ended unchanged however as the state rescue team took the opportunity to sell down. Singapore ended up +1.4%. The ASX200 ended its Thursday session up +1.1% while the NZX50 was up +0.7%.
The price of gold will start today higher by +US$21 from yesterday at US$2157/oz but in between they surged to well over US$2200 and then fell back quickly too.
Oil prices are lower today by -50 USc at just on US$80.50/bbl in the US while the international Brent price is now just on at US$85/bbl.
The Kiwi dollar starts today at just under 60.5 USc and little-changed from yesterday at this time. Against the Aussie we are down nearly -½c at 92 AUc following their strong labour market news. Against the euro we are still just under 55.7 euro cents. That all means our TWI-5 starts today at just on 69.6 and essentially unchanged.
The bitcoin price starts today at US$66,649 and up +3.1% from this time yesterday. Volatility over the past 24 hours has been very high at just on +/- 4.2%.
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56 Comments
Follow the UK model of increasing debt to GDP from 35% to 100%. That kind of "austerity"? The kind of "austerity" where spending never went down?
https://fantasticanachronism.com/images/austerity_debttogdp-6b4d80fb485…
https://fantasticanachronism.com/images/austerity_spending-bf63a5332f32…
While the press is quick to jump to that word, I'm not sure what's happening here qualifies as Austerity. Austerity describes a contractionary set of fiscal policies through a reduction in public expenditure and/or raising taxes.
While they're reducing public expenditure, they're also reducing taxes to quite a significant degree. Peters is going on about a $5.4 billion budget hole implying that this, like almost all of Grant Robertson's budgets, will still be stimulatory.
The net effect may or may not be more contractionary than what Labour was proposing... Nicola Willis has been trying her best lately to walk away from returning the books to surplus by 2026/27... note also that that implies every single budget between now and then will also be stimulatory as the government spends more than it earns...
Inflation is also tax. Buffet -
The arithmetic makes it plain that inflation is a far more devastating tax than anything that has been enacted by our legislatures. The inflation tax has a fantastic ability to simply consume capital. It makes no difference to a widow with her savings in a 5 percent passbook account whether she pays 100 percent income tax on her interest income during a period of zero inflation, or pays no income taxes during years of 5 percent inflation. Either way, she is "taxed" in a manner that leaves her no real income whatsoever. Any money she spends comes right out of capital. She would find outrageous a 120 percent income tax, but doesn't seem to notice that 6 percent inflation is the economic equivalent.
Fed has just signalled 3 cuts this year.
https://www.theguardian.com/business/2024/mar/20/federal-reserve-intere…
In California resides Governor Newson. Youngish, JFKish good looking, energetic, reasonably popular, and one day likely a presidential candidate. Probably if that day was now he would well be the next president which would fix the problem of the two geriatric, faltering and implausible contenders at present. That it would fix any other problems though is hardly guaranteed.
The Trump news cycle is huge with fresh info coming daily. Some say it's unfair biased indictments but the Don has done it to himself. Harassing and haranguing a female during the very trial. Breaching gag orders for which he got fined, and having his loyal company accountant weiselberg perjer himself in the NY civil fraud trial
I wonder why no one wants to lend him the money he needs. Look out if the Saudis or russians offer Trump a loan
I'm a high order cynic. I am happy that charity be extended to those that have come to hard times by no action of their own and actively apply this where I can. But I see many riding shamelessly on the coattails of the genuinely affected. Charity itself is frequently used as a vehicle for revenue collection as many high profile individuals are co-opted to start charities to 'Raise awareness' following some personal tragedy. Foodbanks that are well meaning but enable continuation of poor choices over hard but necessary ones. Champions of all arrivals as deserving sanctuary that seem unable to distinguish obvious economic migrants. Suppliers of social housing that are overrun with demand from those who, by their habits and behaviour, have become unwelcome elsewhere. I see genuine need but will do not see solutions in handouts.
Anything that is free can make money. For example the well honed Italian criminals collared millions by seizing control of Europe’s second hand clothing donations for Africa & elsewhere. Likewise in the UK the school lunch program was profiteered by reducing and reducing the calibre and nutrition of the food actually served.
A counter to that
School feeding programs take off in Africa
School feeding policies are now in place in 48 out of 54 countries in Africa, supporting 15% of all students in low-income countries and more than half of students in upper-middle-income countries. Meals are also becoming healthier and more diverse, including legumes, vegetables, fruits, meat and dairy. WFP
I used to disagree with the school lunches funding, but realistically it gets better nutrition to kids who's parents will never change and do the right thing by their kids. You can blame the parents, and in some cases rightly so, but if you focus on the kids and raising them up through education, supported by better diet then it will better their chances off breaking from being as much like said parents. Sad but true, and many teachers see this.
Why is Queen st Ak and similar so popular? Why not be homeless anywhere else on the planet? (Rhetorical).
Care? Many don't want care, they want easy supply of what they crave.
Again, I am a cynic, I am comfortable with the notion that some among us actively seek this lifestyle and may be beyond redemption. I see no difference between shortening your life by substance abuse, falling off a mountain or by any other potentially harmful activity, all are 'doing what you love'.
I couldn't rightfully say that a heroin or meth addict is doing what they love when they are at a point they either 1./ need the substance to survive (heroin after the body comes to depend on it) or 2./ need it simply to function at a normal drug free baseline as they're that cooked.
I do love the cynicism though, a good mix to the views on this forum.
Property taxes are the future.
Our regional council has come up with a sure fire winner.
Any activity they can force a resource consent on not only generates a one off fee but a guaranteed cashflow as they charge for annual inspections to confirm compliance.
NRC has just released a discussion document. To keep the maths simple they are going to raise the annual charges 20%.
Are they following or leading inflation?.
Any truth in the rumour that Maori land does not attract rates??
Addendum, seems it may be discretionary for normal freehold, not required for ancestral etc
https://communitylaw.org.nz/community-law-manual/chapter-2-maori-land/r…
Be a bit like the "charity" only paying small portion of tax, yet the operate freely in the commercial sector against other full taxable entities. If you want to collect some more tax fix this outdated loophole, I don't think too many Kiwis will think that's a bad idea.
No - it is rated - although I'm not sure what market value it can be rated on as it does not have a market value. However, as maori land cannot be forfeited in lieu of unpaid rates many don't pay them. I believe councils just write off the upaid rates every 7 years or so - not sure.
Great time to be born.
"The annual number of under-five deaths has fallen to 4.9 (4.6–5.4) million in 2022. The report reveals that more children are surviving today than ever before, with the global under-5 mortality rate declining by 51 per cent since 2000."
https://data.unicef.org/resources/levels-and-trends-in-child-mortality-…
I am sceptical on the benefits of the huge boost in premature birth survival rates. Less devastation for the family, but the increased risk of numerous medical issues later in life will definitely impact our systems given the huge proportions now surviving.
I do wonder the overall effect on birthrates it has, are couples less likely to try for a second if they have a higher needs premature birth, or had the premature child died would they have continued to pursue parenthood?
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