Here's our summary of key economic events over the weekend that affect New Zealand with news the big northern hemisphere countries are starting to report their August activity levels - and most of them are fine.
But first in China, their official August PMIs were released over the weekend. Their factory PMI fell a bit further into a minor contraction. New orders, foreign sales, and buying levels all dropped for a fourth consecutive month. Their employment weakness also persisted in this sector.
However, the Chinese service sector lifted to maintain a minor expansion, but is still far below the February to May levels. In that broader perspective the August lift seems within the margin of error.
The private Caixin versions of these PMIs should be released later today.
Unofficial data of housing sales volumes and values in China weren't encouraging in August. More developers are being ordered to liquidate, unaided by any return of demand for housing. The top 100 developers faced a -10% retreat in sales in August from July, down more than a quarter from August 2023.
South Korean exports were more than +11% higher in August than a year ago, but that undershot the expected +13% rise, and they rose almost +14% in July. The growth of exports to China lagged the overall gains but those to the EU and the USA outperformed. But China remains their top export destination.
Japanese industrial production expanded in July, a good recovery from the June dip. But Japanese retail sales rose at a slightly slower rate than expected.
In the US, they are ending their summer with a major national three-day-weekend holiday, Labor Day. Their markets return in full on Wednesday NZ time.
But before this weekend started, another piece in the policy jigsaw was put in place for the US Fed, the PCE inflation level and that came in low and little-changed, confirming the conditions for a September rate cut. The July core PCE price index rose just +0.2% from the previous month and the market-expected change. The +0.2% monthly increase in headline PCE prices was also in line with expectations. That puts it +2.6% up on a year ago. Nothing disturbed market expectations here - although it probably means the chance of a -50 bps Fed cut is now off the table.
Perhaps helping, there was a slight improvement in the Chicago PMI from the American industrial heartland although this is more of a "contracting less" situation rather than an expansion. New order levels edged up.
Canada said its economy grew at a good +2.1% rate in Q2-2024 and that was better than what was expected by analysts there (+1.8%). Higher wages and savings helped, which drove more government spending.
India also released its Q2-2024 GDP and that rise was in a different league - up +6.7% from a year ago. However analysts had expected a +6.9% rise so that result was tinged with a slight disappointment.
The annual inflation rate in the Eurozone fell to 2.2% in August from 2.6% in the prior month, matching market expectations to result in the smallest rise in consumer prices since July of 2021. Much lower energy costs allowed the moderation.
Australian retail sales were a disappointment in July, with no rise from June and up +2.3% from the same month a year ago, well short of inflation's impact. It is worse on a per capita basis. And given the elevated inflation level they face the real prospect of an interest rate hike. (Financial markets however are not pricing in a hike.)
For the rest of the week, there will be a full dairy auction on Wednesday morning.
And a slew of PMIs from all the major economies are due this week. Australia will release its Q2-2024 GDP and Canada will have a rate decision (where a -25 bps cut is expected). And this week will end with the US non-farm payrolls report which is expected to show a solid +163,000 jobs gain. If it does, that will bolster the expected Fed normalisation move the following week and the rate cut by them.
The UST 10yr yield is now at just on 3.91% and unchanged from Saturday, up +11 bps for the week. The key 2-10 yield curve inversion has virtually disappeared, now only -1 bp. Their 1-5 curve inversion is still at -71 bps however. And their 3 mth-10yr curve inversion is still inverted at -136 bps. The Australian 10 year bond yield starts today at 3.97% and down -3 bps. The China 10 year bond rate is at 2.18% and down -1 bp. The NZ Government 10 year bond rate is now just on 4.30% and unchanged from Saturday, up +7 bps from this time a week ago.
The price of gold will start today up +US$2 from Saturday at US$2503/oz.
Oil prices are little-changed from Saturday, still just under US$73.50/bbl in the US while the international Brent price is still just under US$77/bbl. Despite all the obvious tensions in the usual places, actually global supply is more than enough and keeping prices low.
The Kiwi dollar starts today up +10 bps from Saturday at 62.5 USc, up a full +1c from a week ago, up +3c from the start of August. Against the Aussie we are firm at 92.4 AUc. Against the euro we are up +10 bps at 56.6 euro cents. That all means our TWI-5 starts today at 70.5 and up +10 bps from Saturday, up +100 bps in a week and up +200 bps since the start of August.
The bitcoin price starts today at US$57,989 and down -1.2% from this time Saturday. Volatility over the past 24 hours has been modest at just on +/- 1.5%.
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71 Comments
Our Australian owned insurance companies appear to be consistent in their practices across the ditch
"Predatory lowball cash settlements from insurers to victims of flood damage are a serious issue, with the peak body for financial counsellors revealing underquoting is rife."
https://www.abc.net.au/news/2024-09-02/insurers-flood-damage-low-ball-s…
Hello
What a disgraceful shambles our country has become:
https://www.nzherald.co.nz/nz/healthcare-crisis-desperate-patients-queu…
This guy is either a lier or has no idea: “I understand this particular practice may have faced challenges for some time, but of course that doesn’t make current queuing any more acceptable,” Reti said.
It’s the entire chain of Local Doctors (including White Cross) as far as I can tell. Our Local Doctors also has a 4 hour plus walk in time and 1 month appointment time. Friends said “try my doctors, I can get an appointment the next day”, so I rang around about 5 recommendations and none were enrolling new patients. I said to them “you are taxpayer funded and I’m a taxpayer, don’t you have to enrol me?” and they said no we don’t.
We should switch to the Singapore system and bring some personal responsibility in to healthcare.
"Doctor Anywhere, Singapore’s leading telemedicine provider, offers services for just £12."
"Singapore’s healthcare system is the most efficient in the world, according to the latest Bloomberg health systems ranking; further, according to the Economist Intelligence Unit, Singapore has the second-best healthcare performance in the world. The country also has the fourth-highest life expectancy at birth in the world.
Singapore’s healthcare system differs significantly from those in Europe, as well as the US and Commonwealth countries. Much of the credit for the quality and sustainability of Singapore’s healthcare system goes to its unique financing structure. It rests on three pillars, expanded on below, which combine individual personal responsibility with a government ‘safety net’. Yet, most health services in Singapore are fee-for-service. The range of prices is quite wide and depends on the provider (public/private), the quality of additional services, the location, and whether the patient is ‘subsidised’ or ‘private’."
https://www.epicenternetwork.eu/blog/why-singapores-healthcare-system-i…
https://thecritic.co.uk/what-britain-should-learn-from-singaporean-heal…
God help me NO! The US proves that private health doesn't work.
But I do wonder about the original model that was wrecked and aborted to become ACC might have been an effective model for free public health care across the board? It was after all a model to fund and provide that health care. Instead the politicians gave us a troll that is really a shambles.
Worse, the increased demand has largely come from low-wage workers and their families who are not contributing enough skills or in taxes for infrastructure and public service expansion. We've been running an economic refuge attracting cooks, waiters, cleaners and Uber drivers in large numbers through our skilled migration programme, expecting to build a prosperous economy in the process.
Correct.
The 2021 Resident Visa resulted in a 212,000 headcount while border was closed.
Opened the border and record immigration
https://www.1news.co.nz/2022/01/26/migrants-queue-overnight-for-residen…
https://www.immigration.govt.nz/new-zealand-visas/waiting-for-a-visa/vi…
As I’ve said before our media are so lazy, they have this massive problem right in front of their faces and choose to write about green shoots in house prices.
Our local doctors has a 1.6/5 google rating, almost all 1s (the lowest), and almost all the reviews read something like this:
Waiting time is worse than anyone could ever imagine, 4 + hours is straight away waiting time they give you, they either needs to restrict the patients as per locality or get more doctors on the floor for a better experience.
Exactly right. A once in 50 year opportunity to go hard out on health investment. One would also think it’s a winner politically. Who wouldn’t want a much better healthcare system?
And the chance to be much better prepared for the next pandemic, natural disasters etc etc
How are Wellington’s hospitals going to cope when the ‘Big One’ strikes?
This x1000
Our "Health infrastructure" is the ambulance at the bottom of the cliff.
Our health, both physical and mental, is our most valuable commodity. Yet we are barreling down a road where we are trashing our body and our minds, and relying on medical science to compensate.
Expensive, and foolish.
""throwing money at cancer drugs etc so that old people can live a few months longer "" - I used to agree with you but then I became older - now I value every day.
Much can be done to reduce the nations health costs but it would be a long-term investment with hard to quantify results. Increased exercise classes at primary schools (replacing what the modern child has lost), cooking classes at secondary schools, heavily subsidised leisure centres and swimming pools for the elderly (non-peak hour memberships), sugar tax, fast food tax, subsidized electric bikes, increased prescription charges for families that don't immunise their children, etc.
I don't see why you think they are mutually exclusive! The money used on tax cuts could easily fund both and more.
It seems like a simple law change would make a big difference - you can't be a PHO unless you are accepting new patients (seems obvious to me). But I suspect that would annoy the people who do actually complain; its easier to force the new and poor people to use a really crap service than have everyone using a slightly crap service.
How is it acceptable for one "public health organisation" to have a 1 day appointment time and be too full for new patients, while the one down the road has a 30 day appointment time and is still taking on new patients? How are you a "public health organisation" if you are not open to the public?
"Don’t you think this should come above light rail and new highways in the order of priorities?" - depends on whether we should fix today's problems or tomorrow's problems. One is an investment, one is simply an ongoing cost. If they spend all the money on the ongoing costs, we will go backwards much more rapidly. So some kind of balance is needed.
And in that one statement you encapsulate perfectly the fake right that you represent!
- Why is rail considered virtue signalling in NZ? Many very strong economies rely on rail, including Japan (where your wife is from?) and Europe (where you are from?). One years tax cut could have paid for AT's above ground rail project to the Airport, the next years could have paid for the ferries, the next years could have improved health (obviously they are all multiyear projects, so they could have started them all at once plus more).
- Why can we not afford health and infrastructure, but we can afford tax cuts?
- Why cancel all of Labour's good policies like the clean car discount, NPS, light rail, reduced smoking, reduced speed limits, etc. Most of those would have made us richer not poorer, shouldn't the right embrace that?
I don't represent the left at all! I am very right wing in a lot of ways, but I can't vote right because they are just so backwards thinking. And corrupt.
It blows my mind people still defend light rail.
It was a mercy killing. Labour had made it so grotesque that it could never be built to the spec they had blown it out to and if they had, it would have mopped up transport spending in the Auckland region for decades - six times the original cost and only delivering a fraction of the initial proposed coverage.
Six years of burning cash, not a single meter of track built and it basically rail-roaded any rapid transit discussion in North West Auckland, one of the fastest growing regions in the country.
If this is an example of a 'good' Labour policy then I'd hate to see a bad one.
I actually don't live within walking distance, I doubt I would gain much. Mt Roskill is a big area and LR only covered the northern end.
The reason I live where I do is that after living in Europe I liked having things within walking distance or being able to use quality public transport. I would prefer to live closer to the city but in Auckland that land is reserved for the rich. So it wouldn't matter where the LR went to, if it encouraged people to live closer to the CBD I would support it.
We tend to spend all of our tiny public transport allocation encouraging people to live in suburbia, it is a very inefficient approach. Surface level LR on all the routes through the central Isthmus (like we used to have) would transform Auckland for not much money. When people go to Melbourne they rave about the trams, we could easily have something better. No one goes to Melbourne and raves about their $20 a week tax cut.
"Labour had made it so grotesque that it could never be built to the spec they had blown it out to and if they had, it would have mopped up transport spending in the Auckland region for decades "
Agree, I'm not sure what they were thinking. But that doesn't make the original $3 billion project a bad idea.
But even with Labour's $13 billion project, when its Sydney spending twice that its considered a great project, but here in NZ its virtue signalling. Labour's LR was much better than Sydney's metro, it had many more stations that would have serviced many more people, and it could have been extended to Albany which would have been a fantastic solution. All of that may have costed less than a second harbour car crossing, a project that isn't even questioned.
It was $6b, and it covered the North West and South. And then it just became about the airport and it still ended up in the tens of billions, while the North West got nothing except vague allusions to a busway which became some painted bus lanes. During this time, the Northern Busway was extended.
It's insane how every single project in other parts of the city seems to need to benefit the North Shore for some reason. They've already had a busway for over a decade and for some reason we gimp other parts of the country because of the insane use-case of a person on the North Shore going to the thing that every transport project must improve in some way before it actually gets built.
Did I ever say the tax cuts were a good idea?
In terms of rail, a huge amount of money has been invested into CRL. That was a National initiative. I would favour large scale urban development in and around the stations of that investment ahead of the light rail project.
And I am not saying light rail per se is a bad thing. But the debacle it had become under Labour most certainly was.
The CRL was started almost 10 years ago. If they don't start another project now it will be 20 years between deliveries, with god knows how many more people jammed in. And to call it a National initiative is just wrong, every other political party got on board well before National, it should have been done by now.
National are going to spend as much on a small stretch of motorway between Penrose and Onehunga, a project that could be the most expensive road in the world per km. But that is not virtue signalling, it is good common sense.
You can't prioritize health over transport or education, etc. They are all high priority. Just ask Northlanders who haven't had a working SH for months.
The last Andrew Little and the Labour govt's ideologically driven centralization and bi-cultural split created a $multi-billion dog's breakfast from a existing shambles. They spent all the money on organizational restructuring and not delivering services. So we're left with a toxic, dysfunctional health system and nothing to pay to get it fixed
No disrespect intended, but one would need to be a truly special person to go through umpteen years of med school and internship to end up working in a small cubicle on an overcrowded never ending convey belt delivering sick and impoverished peoples. My GP went back to Canada because he found it so brutal.
The intellect, drive and cash required to qualify as GP would only appear to a tiny group of people.
Effort verse reward a major part of the problem.
The intellect, drive and cash required to qualify as GP would only appear to a tiny group of people
The only real barrier to more GPs in your statement is the one about cash. There are plenty of New Zealanders who have both the intellect and drive to become a GP but they cannot afford the training.
This can easily be solved (not overnight) though taxing the rich who are using their money to inflate assets and their own wealth and using the money to provide state funding for training and jobs. But this is deemed to be communism, lefty nonsense.
How difficult is it to forecast the need for medical staff (across the board) and implement the required training positions to meet that demand ....it is a question of political will (and a modicum of ability)....it is apparent neither the Ministry nor our politicians have had either for a protracted period.
I think you are wrong. Have a think about the role of a GP in the community 30-40 years ago. Compare it to the job thy have now. Think about the alternative highly paying and more pleasant careers those of this intellect can now choose from.
Being a GP in a low decile area or region would be soul destroying.
... and it will remain a shambles until we have a government bold enough to attack the problem head on : A lack of competition ...
Shuffling the deck chairs as the current lot are doing will solve nothing ... neither this government nor the previous ones have a clue ...
Ain't human psychology a wonderful thing? The US$ value is driven primarily by demand, externally as well as internally. The total size of the US economy in itself supports that value to a limited degree. The debt is indicative of the level of denial amongst the bankers (mostly) and politicians. But at the end of the day the US is a democracy and for all it's issues still tries to act like it is at least a little civilised in the modern world. But the BRICs countries? China and Russia are dictatorships and are only seeking power over everyone else. Brazil is well known for it's corruption, and India is likely not far behind. They on their own will not be able to replace the US$ as the reserve currency. Such a move would need to be done by the World Bank, probably with the backing of the UN. I see a lot of issues with that.
The most-corrupted democracy is - wait for it, drumroll - the US. By a country mile.
It's been the biggest thug since WW2, to boot.
And what it is doing currently, is supporting apartheid, practiced to an extreme level.
Standing back, the rule is that hegemonies surge then ebb; no exceptions. They suck resource from 'elsewhere', until the effort required to do so, outweighs the benefits. They then retrench/triage, still posturing. That is what is happening to the US - like Rome, it could well fracture into two parts. Like Rome, it is getting diminishing returns for increasing effort (aging fleets, further afield). And BYD's outsell Teslas in Brazil, Europe....
Self-justification - be it personal, corporate or national - always has one standout hallmark; it starts it's recounting of history at a time supporting its story. Russian WW2 history ignores the Battle of Britain - Israeli history ignores the fact that the Palestinians were there first. Western history ignores the fact that their resource-suck impacts others. Reality is best seen sans self-justification. Just sayin...
Not necessarily disagree with your sentiment. yes the US is becoming more corrupt as time passes, but i do not believe it is as bad as Russia or China.
And anthropological historians identify Jews as being the descendants of a tribe that settled a stretch of the west bank of the Jordan river. An area that has been at war over land and resources for thousands of years. Religion just makes the problem worse, much worse. So they all originate from the area, and they all have been competing for the same bits of land forever......
Not necessarily disagree with your sentiment. yes the US is becoming more corrupt as time passes, but i do not believe it is as bad as Russia or China.
Yep. It's easy to get lost in America's, or capitalism's ills.
Spending some time in both Koreas can give you a quick reality check.
China and Russia are dictatorships and are only seeking power over everyone else.
The evidence for the second part of this statement?
An example of the kind of evidence might be a policy of 'full spectrum dominance', as practiced by the US and driven by neocons since the fall of the USSR. A policy that ensures the US is entirely unwilling to allow the existence or rise of any real competition (the real reason for their enmity towards Russia and China).
Nasty business I agree, but not what I would consider evidence for "seeking power over everyone else."
I view both of the examples you give as closer to examples of Russia and China taking cues from the US Munroe Doctrine - i.e. 'we will not tolerate you placing military forces in our neighbourhood'. Given the track record of US military activity, I don't blame them for viewing such behaviour as an 'existential threat'. Not to say I agree with the response(s).
So China cannot have the "South China Sea" but the USA can take all the rest ? Same problem as Russia faces, trying to put some space between you and the USA or NATO is getting harder and harder. The USA needs to back off and sort out its own serious domestic issues.
Japanese industrial production expanded in July, a good recovery from the June dip. But Japanese retail sales rose at a slightly slower rate than expected.
Japan’s record $58.7 billion defense-spending request includes satellites, drone security
The 2nd phase of Interislander IREX docos was released quietly on August 15th .
I'm only down to the 3rd document , but to me , it a bombshell.
The cheapest option , 3 *2nd hand ferries , non rail enabled. $ 1.3 B , but not available , and basically the same safety concerns as now.
The 2nd cheapest option , the 2 IREX ferries , rail enabled , , but with minimal landside development, $ 2.2 B
The original proposal , minus anything other than essential to load/unload the ships
The 3rd cheapest option , 2 large non rail enabled ships, $ 2.6 B.
Pretty much what Willis and co a hinting at going for now, more expensive than the rail enabled without trimmings.
4th cheapest option the original IREX proposal , 2 large rail enabled ferries , $2.7 B.
So all this delay and palaver , to end up with 2 large ferries , non rail enabled , for a saving of $83 million , on a $ 3 B project.
I suspect it gets worse , they were budgeting $300 million to exit the IREX contract, latest rumours are its the full price of the ferries, $ 550 million.
You can't tell me they could not have saved $ 200 million or so of the budgeted IREX cost , to bring it under the non rail enabled cost . In fact , Robertson allowed shaving $ 400 million off , prior to the election. I can't find Kiwirail's reaction to that .
Nothing short of corruption in my mind , obviously the only consideration was making sure the ferries were non rail enabled , might have something to do with road donor donations to the National party perhaps. And making Willis look as though she is saving us money with 2nd hand Corrollas, (that are not even available).
https://www.treasury.govt.nz/sites/default/files/2024-08/tr-2023-2191-i…
Its all there , though we don't know what was redacted.
What could be debated is the traffic and revenue projections. But that does not come into these costings , only justification for them . Clearly Willis had no idea how devestating to rail traffic , Auckland to Chch , non rail enabled ferries would be . to be fair , both the MOT and treasury advice does not take this into account either.
If it was so locked and loaded when it was nixed then why did the cost projections go up by $400m between the briefing to the incoming minister and a follow-up briefing within the same month?
Reminder: KR were already on notice about escalations from GR from the previous blow-out. It's entirely forseeable they would have made the same decision, given Robertson was already trying to trim billions on spending at short notice - how do you think an extra $400m increase would have gone down with him at that point? Unless we are to believe he was never that serious about reining in the cost escalations in the first place.
No , you have mixed 2 different things up . The amount taken to Robertson was around $3.2 B , around an $1.2 B increase on the original authorisation. Robertson then approved in principle, an increase of around 750m , about a $400m reduction on what Kiwirail was asking for. But it was too close to the election to take to caucus , and not fair to saddle the new govt with. (cynically , you could say not great to go into an election with either , though by then , the writing was on the wall for Robertson).
I can't find Kiwirail's response to that .
Given China has done an overbuilt on residential housing, and their population is falling, it's hard to see how there will ever be a recovery in their housing sector.
They have built all the houses they are ever going to need, job done. Enjoy cheap housing from now to forevermore.
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