Kia ora,
and welcome to Thursday's Economy Watch where we follow the economic events and trends that affect New Zealand.
I'm David Chaston and this is the International edition from Interest.co.nz.
Today we lead news China is juicing up more economic stimulus to weigh against slowing growth.
But first, the third quarter American economic growth number has been revised up marginally, now at +2.1% pa and up from +1.9% in the earlier estimate. It is still low compared to US growth rates in 2017 and 2018, but it was an unexpected improvement.
The inflation rate the US Fed watches most closely, core personal consumption expenditure or PCE, slipped back a little to +1.6% (excluding food and fuel) in October reversing the rise we saw in the prior two months.
American personal income growth stalled in October and the first time that has happened in more than a year. Disposable income fell and that hasn't happened for more than four years. Consumption spending however rose but that can't happen for very long if incomes aren't growing. Having said that, the healthy American savings rate is still positive even if it did slip to near its lows for the year.
US pending home sales, the level of house sales that have been signed up but haven't formally closed yet, fell in October from September but still remain higher than the same month last year.
American durable goods orders in October have come in marginally better than expected. A small retreat was expected but a small gain was reported from September. But compared to October 2018, durable goods orders are -1% lower. The capital goods component however rose +2.3% year-on-year.
Contraction in their industrial heartland continues however and that is not a good sign.
The Americans are now into their long Thanksgiving holiday weekend and market activity will be limited there. But all eyes will now shift to retail sales levels and many retailers are nervous.
[Advert]
With Hatch, anyone can invest in the US share markets.
Through Hatch, Kiwi investors can easily invest in over 2900 of the world’s best-known companies like Apple, Microsoft, Berkshire Hathaway, and Alibaba. With no minimum investment and fractional investing, investors can buy portions of companies they might not normally be able to afford and quickly build an exciting investment portfolio.
Visit www.hatch.as/investing to learn more.
In China, officially reported industrial profits fell -9.9% in October from the same month last year. The September drop was -5.3% year-on-year. Interestingly, this is essentially a drop by large SOEs even though mining SOEs reported higher profits. And privately owned businesses in the survey show a profit gain on the same basis. So the core SOE businesses are doing it hard with steel, chemical and paper industries faring the worst. This is a report of a decline in profitability; it isn't reporting losses.
More stimulus is on the way in China. Their Ministry of Finance announced an early allocation of 2020 special-purpose bond quotas totaling 1 trillion yuan (NZ$220 bln) to provincial governments to step up investment in infrastructure such as roads, sewers and public services.
In Australia, there was some grim construction data released today. The value of commercial building work completed in the September quarter was down -5.5% in a year, the value of residential building work was down -10.1%. The value of engineering work was down -11.4%. Strip out price increases and the real volumes will have been larger declines.
Overnight equity market activity has posted small gains. The S&P500 is up +0.3% so far today and that follows similar rises in European markets. Yesterday Hong Kong and Tokyo rose about the same but Shanghai fell slightly. Local markets did better. The ASX200 rose +0.9% and the NZX50 rose +0.7%. Just for the record, over the past ten years the ASX200 has risen +117% and the NZX50 has risen +340%. These two compare with the S&P500 benchmark of a gain of +315%.
The UST 10yr yield is now back at 1.77% which is +3 bps higher than this time yesterday.
Gold is down -US$4 to US$1,455/oz.
US oil prices are lower and now just under US$58/bbl. The Brent benchmark is under US$64/bbl.
The Kiwi dollar is continuing its stable run against the greenback, up slightly at 64.3 USc. On the cross rates we are also firmer at 94.8 AUc. Against the euro we are firm at 58.4 euro cents. That puts the TWI-5 up at just over 69.7.
Bitcoin is still volatile, and now up at US$7,502 which is a jump of +6% from this time yesterday.
You can find links to the articles mentioned today in our show notes.
Get more news affecting the economy in New Zealand from interest.co.nz and subscribe to receive this podcast in your favourite podcast app - we're on Apple Podcasts, Google Podcasts, Spotify or subscribe on our website.
Tell your friends and leave us a review - we welcome feedback from listeners.
Comentarios