Here's our summary of key economic events over the weekend that affect New Zealand with news expectations of flatter demand are hurting commodity prices. And that includes some key food prices which are also impacted by healthy supply levels.
But first, this coming week will bring more attention to inflation rates. We will get monthly updates from the US, China, and India. And we will get industrial production data from India. There will also be sentiment data from the US and Australia. The ECB meets again this week and the results will be released Friday morning (NZT). Most see a -25 bps cut coming then, to 4.0%. And locally the focus will be on Wednesday's migration and tourism data.
Over the weekend the data showed the US economy created fewer new jobs in August than expected, adding +142,000 in August, and below market expectations of +160,000. July's increase was revised sharply lower. Most job gains occurred in construction and healthcare while manufacturing employment declined. But their jobless rate edged lower to 4.2% in August from 4.3% in July.
But we do need to note that the +142,000 rise is the seasonally-adjusted number. The actual rise is +263,000 from July which is pretty healthy, it must be said. From a year ago, payrolls are +2.3 mln larger. The economic impact of +2.3 mln more people employed is not insignificant. And that is after the March revision.
Weekly earnings are up +3.5% from a year ago, hourly earnings up a bit more, and that was better than expected.
The US job market is cooling, but not cracking. This fact will give the US Fed more room to maneuver at their meeting on September 19, in ten days time.
Separately, Canada said it added +22,000 jobs in August, a recovery from the small dip in July. Almost all the August increase was for women.
But their local, and widely-watched Ivey PMI fell sharply in August, down to its lowest level since December 2020. However it wasn't matched by the internationally benchmarked S&P/Markit version which reported a stable situation. One of them isn't right.
In China, the end is nigh for struggling developer China Vanke. They reported terrible July metrics, and their liquidity situation worsened notably. Not helping them, China's regional banks are moving faster to quit nonperforming real estate loans. That is leaving the majors holding the bag as the government urges them to lend more to support a weak housing market. It is hard to see how the management of their real estate crisis won't end very badly. China's neighbours are increasingly concerned.
Germany reported a very tough situation for industrial production in July, down -5.3% from the same month a year ago and worse than the June result. But at least exports are limiting the downside. These were up +1.7% from June and that was a gain that was better than expected and one that clawed back its year-on-year dip.
In Australia, home loan activity for owner-occupiers picked up in July, adding +AU$18.9 bln in the month and the most in two years. For investors the rise was +AU$11.7 bln which was an even faster rate of increase and the most since January 2022.
Prices for iron ore, nickel, cobalt, and lithium are all falling, and are all at or near their five-year lows.
World food prices actually dipped in July with declines in cereal and meat prices in the month. (Dairy prices rose.) Overall prices remain their lowest in three years. Good agricultural conditions have persisted for some time now, boosting output. Updated forecasts for global cereal production point to a weather-driven drop in coarse grains offset by expected increases for wheat and rice. So far there is no indication yet that the world can't feed itself, and more than adequately, despite some high-profile pressures.
The UST 10yr yield is now at just on 3.72% and unchanged from Saturday. That is a -20 bps fall for the week. The key 2-10 yield curve is now a positive +6 bps, the most since June 2022. Their 1-5 curve inversion is less at -62 bps. But their 3 mth-10yr curve inversion is unchanged at -144 bps. The Australian 10 year bond yield starts today at 3.90% and down -8 bps. The China 10 year bond rate is at 2.14%, down -1 bps. The NZ Government 10 year bond rate is now just on 4.20% and unchanged from Saturday, but down -10 bps for the week.
The price of gold will start today up +US$4 from Saturday at US$2497/oz.
Oil prices are -50 USc lower at just over US$67.50/bbl in the US while the international Brent price is now at just on US$71/bbl. Both are down -US$6/bbl in a week, or -7.5%.
The Kiwi dollar starts today at 61.7 USc and unchanged from Saturday. That is -¾c lower in a week. Against the Aussie we are +10 bps firmer at 92.6 AUc. Against the euro we are also unchanged at 55.7 euro cents. That all means our TWI-5 starts today at 69.7, unchanged from Saturday, but down -75 bps in a week.
The bitcoin price starts today at US$54,341 and up +1.5% from this time Saturday. Volatility over the past 24 hours has been low at just under +/- 1.0%.
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89 Comments
Offtopic: Christian leaders sign open letter asking MPs to vote no
Overjoyed to see this "It is beyond grievous that David Seymour is intentionally pitching the sacredness of Te Tiriti O Waitangi and the significance of democracy against each other. He is tricking New Zealanders into thinking that to honour our founding contract is to demerit democratic representation. This is a lie.
"As a Christian leader, I steadfastly oppose this falsity."
https://www.rnz.co.nz/news/political/527412/treaty-principles-bill-440-…
Just watching how triggered people get over what language a weather reporter uses... this bill would lead to riots.
A lot of MPs probably feel sick to the stomach that it's even going to be read out. The whole parody is ACT positioning to take a bite out of National at the next election.
If we went with "majority rule" gay people would have no rights, nor would any minority race. I voted for ACT in the past (not last election) and will never again.
https://en.wikipedia.org/wiki/Tyranny_of_the_majority
We'll see majoritarian tyranny in action at the next local-body elections, when majorities gleefully trash any restoration of Māori wards.
"Constitutional Law Expert David Round, a former Law Lecturer at Canterbury University, is highly critical of Sir Geoffrey’s legacy:
“Sir Geoffrey seems strangely unaware of the insane complexities and delays and preposterous expenses of the present Resource Management Act system, which is often little more than a gigantic racket and can easily descend into outright corruption.
...David Round believes New Zealand is now in a perilous position: “New Zealand now is at a very dangerous time. Now is about our last chance to turn the tide against the divisive racism which fanatics in the Labour Party have long been pushing, and which cowards in the National Party have for far too long been tolerating. If we do not turn the tide back now we are goners as a nation.
...“The latest news is that there has been an agreement for Meridian and Genesis Energy to pay Ngai Tahu, the Department of Conservation ‘and others’ over $180 million in return for them not objecting to applications to renew resource consents for electricity generation from Waitaki River waters. Those payments, of course, ultimately come out of our power bills.”
The reported payment of well over $100 million to the $2-billion Ngai Tahu corporation in return for resource consents is so extortionate, that an inquiry should surely be held into the deal.”
...not exactly the majoritarian tyranny Jacinda exercised trashing the peoples democratic right to vote on creating them.
Noting that while Labour had not announced any such election policy to claim a mandate for such change, the Coalition parties are delivering the policy they were elected to do.
Incorrect. It was published in their Fiscal plan before the election (=referendum).
Edit: you also failed to acknowledge that Labour didn't publish their intention to remove the long standing & hitherto legitimate business debt interest deduction before their own 2020 election.
I am not arguing about whether governments are mandated to make changes or not. In NZ they can pretty much do what they want, and we can judge them on it. So go argue with someone else about that.
I am saying that forcing councils to have referendums is not being done in good faith. Act would never suggest a referendum for the type of minority who donates to their party. For example, why not have referendums on all the types of council wards? Lets ask the townies if the rural folk should have special specific representation..
Also this government keeps going on about giving more control to councils, while also saying the councils need to cut out the non-essentials. And then legislating that the councils must hold expensive referendums. The hypocrisy also grates on me.
"If we went with "majority rule" gay people would have no rights, nor would any minority race. I voted for ACT in the past (not last election) and will never again. "
Thankfully this is demonstrably false, as majoritarian democratic systems around the world have extended equal political rights and legal treatment to minority ethnic groups and LGBTQ+ groups? Bit early for the glass BBQ mate
The Treaty Principles Bill does not exist yet. It is only being written now.
But these are ACTs proposals for it.
1. The New Zealand Government has the right to govern New Zealand.
2. The New Zealand Government will protect all New Zealanders’ authority over their land and other property
3. All New Zealanders are equal under the law, with the same rights and duties.
The silly "Christian Leaders" oppose these apparently. If they oppose these they believe that. The government does not have the right to govern. We have no property rights. New Zealanders are not equal.
So ??? Really!.
1. The New Zealand Government has the right to govern New Zealand - but in partnership KH - its not your way or the highway
Although rangatira were aware that a colonial administration would require some concessions to allow it to exercise power, they were assured by officials that their own authority was left in place by Article Two of te tiriti (in the Maori-language text). This suggested that authority would be shared between the government and rangatira. This shared authority would be enhanced by the other treaty articles, to Māori advantage.
I think you make a good point Baywatch. The implication is clearly there, even in the English language version, but here's the question; what happens when that Chieftainship (Rangatiratanga) comes into conflict with the "sovereign authority"? I understand, although I may be wrong, that Maori tribal society was not what we would recognise a a democracy, but rather a feudal system of power. I'm not sure that this has been specifically settled in discussion, negotiation or the Courts. The nearest possible interpretation essentially implies another (tacit) clause defined by the modern adoption of "Partnership", which I don't believe is the same thing.
Perhaps you are rewriting that treaty Baywatch. No "partnership" in it.
Try this
https://www.bassettbrashandhide.com/post/dr-lawrie-knight-fact-checking…
LOL your ponting me to an website featuring these 3 goonies...good lord ?
Good luck with your Hobsons pledge
What part of this sentence do your not understand?
they were assured by officials that their own authority was left in place by Article Two of te tiriti (in the Maori-language text).
"Hobson's pledge" is all about how Governor William Hobson said “he iwi tahi tatou” as each of the chiefs signed the treaty. Translated as “we are now one people”. If you started a organisation that fights against a written document that was signed by naming your organisation after what someone supposedly said as the treaty was signed, then you are obviously not being honest about your intentions. They don't care what was written in the treaty, they want to focus on the 'vibe' of the thing. Nowhere on their website is the actual text of the treaty, they don't want that to be part of the discussion.
Respect the Treaty Baywatch. And don't make stuff up.
Pretty clear from that link (the content of which you have carefully avoided) that the Treaty was an agreement to have a single government.
ACT's first proposed "principle" applies. And and repeats the Treaty.
If there is any partnership, it is with every citizen. But there are better ways to describe it.
This is the best translation I could find.
https://www.waitangitribunal.govt.nz/treaty-of-waitangi/translation-of-…
The main argument is what is meant by 'chieftainship over Maori lands, villages and treasures'.
Act say it is nothing, don't worry about it.
Baywatch do you think the 2nd ammendment (the right to bear arms) is prehistoric or not relevant to a more modern society. You are sounding a bit like those US rednecks who believe it's a God given right for any US citizen to be able to walk into a shop and just buy a AR 17. Times change countries change what could or was proposed and written or the context of what was written is not what is right for the future of a country to be able to move forward. The 2nd ammendment needs to be change has more legal providence than the TOW as it was signed by people of the same philosophy and enthinicity, and understanding. But is prehistoric now for a modern US. Hence wether you are right or wrong about the TOW and its implications it is past its use by date and a point to ponder. The Maori then were all full blooded especially the chiefs. There is now not a full blooded Maori left all have more blood from different ethnicities than Maori me included so they need to remeber that.
What frustrates me is that all these clever people never seem to drill down with the perpetual "why" questions. The problem is not David Seymour and his Treat policies. The problem is the nature and outcomes of economic policies put in place by generations of governments that favours wealth and political influence. They to all intents undermine democracy in this country. The policies are not racist in intent but they disenfranchise everyone in the lower middle classes and below, increasing poverty and dependence across the board. Maori are just more impacted than virtually any other group.
Further down this stream Macroview has a comment pointing to a consequence of this which is the young flight to Aussie and other places where they have better chances economically.
Which new principle do you object to?:
- Article 1: Kawanatanga katoa o o ratou whenua. The New Zealand Government has the right to govern all New Zealanders.
- Article 2: Ki nga tangata katoa o Nu Tirani te tino rangatiratanga o o ratou whenua o ratou kainga me o ratou taonga katoa. The New Zealand Government will honour all New Zealanders in the chieftainship of their land and all their property.
- Article 3: A ratou nga tikanga katoa rite tahi. All New Zealanders are equal under the law with the same rights and duties.
Echoing many comments made to the recent interest co.nz article about tax, New Zealand's continuing loss of young skilled labour is now attracting international attention:
https://www.cnbc.com/2024/09/06/economic-refugees-flee-from-new-zealand…
For anyone with the ability to move - which is anyone without commitments and a few thousand bucks to relocate (most young people) and anyone with commitments and a few more thousand bucks to relocate (many skilled workers with families) – this is and always will be a cost versus benefits question.
The degree of social benefit is a subjective and personal factor. I suggest many people are increasingly asking themselves what is most important to them, and reaching different answers from just a few years ago.
Nearly half of all households pay no net tax ex gst (a staggering statistic indicative of a very unhealthy economy), and the means to buy shelter is out of reach of many young people, and many people with families, despite their skills. So only a proportion of the productive economy is supporting the non- productive government sector and the remainder of the productive sector. The absolute level of tax here compared to other countries is less important; as our tax base is becomes smaller, the tax burden increases relative to the benefits. Those (non-social) benefits are in aggregate the relative purchasing power in nzd of salaries after tax versus asset and other local prices.
The balance is now moving well and truly out of whack. Aggregate effects can often be observed directly albeit with variable lags. A very good indication that the administrative state’s econometric based policy analysis of this sort of thing is deeply flawed, is simply the outcome. Thousands of people have left and are continuing to leave.
There are two main persistent errors: 1) a relatively small tax base and the relatively high tax burdens of relatively few residents (policy; big government), and 2) relatively high asset prices (policy; years of low interest rates).
People should, using legal immigration channels,go to where the opportunity is geographically. Most OECD countries have declining workforces and are starting to look for young, educated workers.
New Zealand is in a war for workers, if we don't offer them a better quality of life we will lose.
The previous gov spent 18 months denying the issue by pointing to the 'net migration' figure and calling it a 'net brain gain' / 'pent up OE demand'. The current gov is calling out the issue while also doubling down on all the factors causing it.
The only "bipartisan" policy response to the ongoing brain drain in NZ has been to stamp out more visas for chefs and Uber drivers, hoping such a move would balance out the skill equation.
We might be getting into a downward spiral, losing talent because of a drop in our living standards, forcing more Kiwis to leave and so it goes.
Oil prices are -50 USc lower at just over US$67.50/bbl in the US while the international Brent price is now at just on US$71/bbl. Both are down -US$6/bbl in a week, or -7.5%.
Music to my ears, the lower oil goes the more probable it is inflation will be dragged back and growth given a leg up.
Not really. Tradeable Inflation is almost at 0% (helped by oil and other matters)
Non-tradeable (domestic) inflation is still hot at 5.5%. Propped up by insurers and government / council spending which shows zero sign of even slowing. The only good news for non-tradeables is that rents are falling
"At Vertice, we have identified what we believe to be almost 10,000 Tier 1 wells that are potentially prime candidates for refracturing.
Given the fast cycle times of the shale sector, initial rates of return on refracs are also often north of 100%. With such returns, which often exceed those of new wells, refracs have increasingly become a key strategy for operators, and activity is expected to more than double this year."
https://jpt.spe.org/guest-editorial-where-are-refracs-going-and-can-we-…
Billionaire backs wealth tax:
https://www.nzherald.co.nz/business/kiwi-billionaire-backs-wealth-tax-w…
He makes a very good point, which I have raised before, around how the tax revenue is used. More tax revenue is fine, even great, if it is used well (better healthcare etc). A key issue is that the revenue is often squandered.
HouseMouse, Sorry, I need to pull you up.
"More tax revenue is fine, even great, if it is used well (better healthcare etc)."
Reconfiguring our tax system isn't about collecting more tax.
1. It is about delivering tax cuts for the bulk of the people who are currently paying tax.
2. While re-directing investment decisions towards more productive enterprise.
3. While collecting tax from people earning income from sources that are currently untaxed.
Any political party considering a tax system overhaul should be selling their changes on the points above AND IN EXACTLY THAT ORDER.
"A key issue is that the revenue is often squandered."
Says you. You are entitled to your opinion. But it is your opinion. Others may view that spent revenue quite differently. And others, like me, will accept all governments squander. As do senior leadership teams of companies big and small. Nobody gets it right 100% of the time. But if you don't try, nothing will ever get better. Grownups accept this.
The health sector also still has to roll out arrears payments for their holidays act remediation (years and years of incorrectly paying staff under the holidays act) and they have over $1B potted away for this. I have to wonder, when the govt said the health sector was found to have overspent by ~$1.3B was it this making up the most o it, or genuine overspend.
Can't answer that but this from a Herald article about the $1.4billion, it's premium so ...
Health Minister Shane Reti’s office has admitted an organisational chart of Health NZ - Te Whatu Ora, which allegedly proved the organisation had become bloated and inefficient “does not exist”. Reti used the chart to justify painful spending restraint at Health NZ. He now claims that there was not one organisational chart as initially claimed, but that he was referring to an amalgam of the many Health NZ organisational charts he had seen.
Labour’s health spokesperson Ayesha Verrall told the Herald the invented chart has made Prime Minister Christopher Luxon, who was standing beside Reti when he made the remarks, “look like an idiot”. “The claims made about Health NZ in July are made up and they used those claims to justify a commissioner and cuts of $1.4 billion to the health system,” she said.
Dangerous, non-sensical drivel... (Stuff should be ashamed!)
What is the ‘magic’ number of properties I need to buy to retire comfortably?
And also absurdly hilarious:
"All of that is hard to forecast. So, I hired someone who is in the top 20 in the world at Microsoft Excel. Yes, Microsoft Excel is now an e-sport and there is such a thing as the Financial Modelling World Cup. I asked them to forecast how many properties the average Kiwi could buy if they were motivated."
Yup. I too always use programmers and application gurus to do my economic forecasting. I find them far more accurate than economists with years of study. /sarc
Over to Juha.
Tad unfair. Stuff - like all traditional media - are really struggling. When a charlatan fools them into believing the charlatan's crooked, spruiking, ponzi-fuelling 'analysis' is news worthy, we can expect the occasional oversight. One hopes Stuff will publish a counterview calling out this charlatan's bollock.
And Mr. Nicol concludes:
"A more realistic target, even for well-off Kiwis, is three to five properties over 15 years."
But Mr. Nicol does NOT provide any information on how he came to those magical figures.
Nor does he - and this is absolutely critical - identify the critical factors in the current (& future) housing market that will result in significantly lower untaxed capital gains to the gains he got as he accumulated his 40 properties (using those unsustainable untaxed capital gains to do so).
Sadly - people will listen to Mr. Nicol, and in time wonder why people who invested in other asset classes got acceptable returns - while they got next to bugger all because the past capital gains Mr. Nicol received were not repeated, nor could they have ever! (I.e. with houses still requiring huge multiples of income, the phase "you can't squeeze more blood from this stone" springs to mind.)
Just an aside: Can the FMA do anything about this b.s.?
You sound triggered. There aren't enough hours in the day to go down every rabbit hole that could present itself. There are so many people going look at me - Twitter / X, Facebook , media , advertising etc - much of it is rubbish ( or alternative facts / "opinion " / victimhood chic) which doesn't help in day to day work and play - it just chews up bandwidth.
I jump across multiple platforms, sites, media outlet , talk to different people (rich, poor, young/old, left/right) etc to gauge the sentiment on different issues so you can see what the general consensus is among the herd and the strength of the opinion from the various perspectives and make decisions upon that - so I guess I generally agree with the statement Chris made.
This way of thinking is a mind virus. It does nothing to improve the individual nor society as a whole. It promotes fear and greed - neither desirable human qualities (ie ‘to be successful I must own as many houses as possible, I must buy as many as my mates own to be respected within my social circle..’)
We don’t need people aspiring to build property portfolio’s while our houses are historically (and dangerously) overpriced based upon any traditional fundamental analysis. We need people owning their own homes, paying down debt and saving for retirement - speculation with increasing quantities of debt so that you can own 3,5,10..20 homes while adding fuel to an overpriced housing market doesn’t do anyone a favour. In my view it’s just greed - the desire to have far more of something than you really need - and doing so at the expense of the financial and social stability/cohesion of the country as a whole.
But apparently viewing the world this way is an act of envy towards somebody else’s excessive greed.
Yes this argument always leaves me speechless - ‘you’re just envious of my success at being greedy and having more than I need’…lol no I’m not!
Im envious of people who live a life of higher ideals than myself - ie people of greater character than myself (there are many..). And greed isn’t one of those characteristics of a person living a life of higher ideals.
Simeon Brown is "golden balls".
https://www.newstalkzb.co.nz/on-air/wellington/wellington-mornings-with…
God help us .
Great article. It pisses me off that transport has been hijacked by the culture wars and anti-woke narratives, there is big money in getting these messages out and sucking people in. Key point for the article is right at the end:
Beyond hiking fuel taxes and RUCs even more, the transport plan can't add up in the 2030s "without further billions from the Crown", he said.
Net roading revenue is forecast to be $6b a year by the end of the decade, but NZTA's costs are expected to be $12b a year by then - in spite of big fuel tax and road user tax hikes towards the end of the decade, he said.
"The transport system is now being heavily subsidised from the money actually intended for the likes of schools and hospitals," he added, noting the Crown subsidy for the NLTP is already more than the $2b current cost of the new Dunedin hospital.
"Satire is dead" said comedian Tom Lehrer when Kissinger was awarded the Nobel Peace Prize. It remain so when the freight billionaire calls out government squandering after making substantial contributions to elect the wrecking ball triumverate who cut programs for the common good in favour of roading and tax cuts to the rich. Why are the uber wealthy so insecure in their lofty empires?
"Why are the uber wealthy so insecure in their lofty empires?"
Because ordinary people outnumber them by millions to one, and once enough ordinary people become motivated enough to act, the uber wealthy can become ordinary people in a blink of an eye. (Assuming they keep their heads, that is.)
A good graphical representation here: https://pbs.twimg.com/media/Edb84sIXoAIK5IK.jpg:large
"Labour Leader & Former Education Minister Hipkins must be held to account for his maths mistakes & dishonesty about the economic implications of population ageing"
"Our Worst Ever Treasury Secretary, Caralee McLiesh, leaves office with a brain wave on how to improve prosperity in NZ: put up your taxes"
From the D2EKiwi article,
He [Chippie] prefers capital & asset taxes (but not for Māori authorities which he wont dare tell anyone since that would mean an end to parliamentary sovereignty).
I suspect the Māori elite would be the last to go for Chippie's idea. If you aggregate all iwi assets, property is the crown jewel.
"Our Worst Ever Treasury Secretary, Caralee McLiesh, leaves office with a brain wave on how to improve prosperity in NZ: put up your taxes"
I remember Jenée Tibshraeny asking MCliesh intelligent and meaningful questions. The responses were not 'arrogant' but the facial expressions and manner did not create a good impression (to me). The Treasury Secretary did appear as if she believed she was something quite special.
Not sure why the treaty needs to be replaced with anything, just scrap, it and put it in a museum. Everyone has the same rights its pretty simple, any separation or special rights like the treaty provides for Māori's is clearly racist. Time to move on its been like what 150 years ? how long is it going to go on for ?
Until everything has been handed back to Maori. See South Africa as the example. And if you don't think NZ is heading down the same path as South Africa, then you are delusional. The fact that people scoff at the likes of David Seymour trying to prevent this roadmap to destruction means its even more likely to happen, and faster.
Another OMG moment from the RBNZ ...
“[And] how potent fiscal policy can be when you have something like the the wage subsidy.”
Source; https://www.nzherald.co.nz/business/reserve-bank-interview-rates-recess…
So nothing to do with free money you were throwing around, ay Christian? Seriously? Don't you know most will see through such smokescreens?
This unelected, virtually un-accountable, organization needs a through clear out.
Volvo is just about to experience what all software vendors experience when a major upgrade is rolled out ... backlash from people who have only just figured out the current software.
https://www.drivencarguide.co.nz/news/volvo-gives-25-million-cars-a-maj…
Should be fun.
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