Here's our summary of key events overnight that affect New Zealand, with news the background economic data is still pointing to a trade-induced global slowdown.
It is a national holiday in the US, Thanksgiving Day. Limited financial market activity will resume tomorrow (their Friday) but it will be very limited. All eyes however will be on retail sales and there are palpable nerves. Bad weather may just accentuate the rise of online shopping and many traditional retailers will be fearing the possibilities.
Americans may be celebrating on this holiday, but they are not having enough babies to sustain their population. The final data for 2018 shows they had a birth rate of just 11.6 per 1000 population. Any rate below 21 is below sustaining their population without immigration. New Zealand has a similar issue with our birth rate at 11.9 on the same basis.
In the trade war, the new US law that supports Hong Kong democracy is being seen as an obstacle to the 'phase one' deal, but perhaps not a major one. Markets brushed aside the potential of China walking away. The OECD sees trade volumes fading everywhere.
Canada's current account deficit in the third quarter rose, but not by as much as analysts were expecting. Their goods deficit widened largely related to trade retaliation from China, but their services deficit shrank as Canada benefited from a number of shifts by others away from the US to them. Canada doesn't run a large current account deficit, only about -2.6% of GDP and shrinking.
In Mexico, they have trimmed their growth forecast on the basis that the US is slowing faster than they expected.
Japanese retail sales have plunged in October after a sales tax hike and more importantly a typhoon that kept shoppers at home. It was a worse-than-expected result. They fell -14.4% in October from a month earlier, more than the drop suffered after a similar tax increase five years ago and the worst drop on record for data stretching back to 2002. Clearly hosting the Rugby World Cup had zero influence there, unlike the out sized influence it had here.
German CPI for November came in at +1.1% and holding its new lower rate. Analysts has expected it to tick back up after the October fall, but like just about everyone else, they can't shake low inflation.
The UN-FAO databases for October show that globally, meat prices are up +13.9% in a year and dairy prices are up +5.6%. While this is good for producers, they are concerned about the sharp impact on consumers. Of course, much of the meat price rise is due to China's bad ASF situation in its pork herd. The impacts are being felt far wider however. So far the price of cereals haven't risen over the past year, and some of these are caught up in the trade war between the US and China.
In Australia, capital expenditure in the September quarter was down -1.3% year-on-year while plant and equipment investment was down -2.4%. A big pull-back in the mining sector is a big part of this, but not all of it.
The UST 10yr yield is now back at 1.77% and will likely stay here until Wall Street returns in earnest on Tuesday our time. Their 2-10 curve is still lower at +14 bps. Their 1-5 curve is narrower, now at just under +3 bps. Their 3m-10yr curve is a positive +12 bps. The Aussie Govt 10yr is at 1.01%, another -2 bps lower as it continues on it reversing track. The China Govt 10yr is holding at 3.20%. The NZ Govt 10 yr is now at 1.28%, down another -3 bps.
Gold is unchanged at US$1,455/oz.
US oil prices are marginally lower and now just under US$58/bbl. The Brent benchmark is under US$63.50/bbl.
The Kiwi dollar is marginally softer at 64.1 USc. On the cross rates we unchanged at 94.8 AUc. Against the euro we are at 58.6 euro cents. That puts the TWI-5 at just under 69.6.
Bitcoin is little-changed at US$7,585. The bitcoin rate is charted in the exchange rate set below.
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46 Comments
Minimum wages laws coming for entry level jobs.
https://www.npr.org/2019/11/27/783036724/99-bottles-of-beer-on-the-touc…
Yep. Locally I'd say financial concerns. Time taken to save for house deposit + generally both parents needed to be working to support + the expense in raising children in itself.
It still kinda baffles me how with all the economic and social 'progress' we are moving backwards in key wellbeing indicators like this!
The problem is severe in South Korea and not a lot better in Japan. The causes are suggested to be:
- High pressure to excel academically
- High costs of housing
- Lack of affordable childcare facilities
- Lack of income tax breaks for having more children
- Cultural emphasis on "taking responsibility for your actions" which leads intelligent, responsible youngsters to decide that they can't afford to have children, as to do so would be irresponsible
- Long working/commuting hours leaving little time for romance or housework
- Pressure to have both husband and wife in fulltime employment just to pay for basic essentials such as rent, education, food
- High rates of increase in food costs
- Overconcentration of the population into the capital city region
- The stigma of "living in the countryside"
- A dearth of young opinion-leaders (pop stars, talents) who have large families (more than 2 children)
- Over-emphasis on consumption of luxury products
All the other reasons come back to one thing, peak resources per person is an event that is in the rear vision mirror. The birth rate is the leading indicator, if we had wealth (conversion of resources) we would breed. Just like the bacteria in a jar, or yeast in a wort, if there is food it will be consumed, when there isn't we die off.
First two reasons yes. I'd love a little of the third - boomer partner and myself are still propping up our adult kids with no end in sight. Admittedly two grandchildren and they are a joy - there would be a massive increase in children if the decision was left to the grandparents.
I'm married, 30s and considering kids.
Financially it's difficult. I don't earn a great wage, with my wife out of the workforce for a while it'd be hard to pay the rent. Basically we'd have to go on benefits.
We're both university-educated btw, but if you haven't entered the corporate or public service cohort by the time you're 30 you're basically consigned to low-income jobs (or retraining, which is impossible to afford if you've already used up your student allowances getting a first degree)
And the early-onset USA winter ain't gonna help....crops cannot lie about insufficient GDD....
My book of the week
https://www.amazon.com/East-Penguin-Twentieth-Century-Classics/dp/01401…
The US birth rate data presented here is conflating two different statistics. Birth rates are declining in the US but it is not as dire as presented here. On average, American women are giving birth to about 1.7 children in ther lifetime whereas the required number for long term population mainenance is 2.1. But the American population will continue to increase for quite some time yet given that births exceed deaths from a pyramid-shaped population. Most estimates suggest the American population will increase by a further 30% or thereabouts by 2060 - about another 90 to 100 million. The two key parameters will be birth rates and immigration rates, with death rates easier to predict. Similarly, births still exceed deaths in NZ, despite a birth rate at around 1.8 births per women being a little less than the magic 2.1 for maintenance, given the population pyramid. However, most of NZ's population growth rate, which is remarkably high by OECD standards, is due to immigration.
KeithW
I don't rate Don Brash, I debated with him online once and he lost. However his comments here on immigration are worth listening to. https://www.youtube.com/watch?v=Iz-hmcicRC0&feature=youtu.be&fbclid=IwA…
. . populationpyramid estimate that NZ will only grow to 6.094 million by 2100 ... a 1.1 million increase in the next 80 years ...
Unless the Gnats win power in 2020 ... and reopen the immigration sluice gates ... in which case we'll probably hit the 6 million mark by 2023 ...
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