Weekend briefing; Australians lock themselves in
Here is our recap of the major overnight economic events affecting New Zealand with news that the US labor market has not grown as fast as expected.
Non-farm payroll in the United States only increased by +199,000 in December in a disappointing result, half of the expected gain. Although these payrolls are now +6.5 million higher than a year ago, they are still but still -2.7 million lower than the level before the December pandemic (-3 million less on a seasonally adjusted basis).
A lack of available labor receives the blame. Are they close to “maximum employment”?
There are a few bright spots though; their unemployment rate fell to 3.9%, which is better than expected. Their participation rate did not change at 61.9%. And their average hourly wage increased by + 4.7%, which was more than expected. Average weekly earnings also increased by + 4.7%.
The US Fed will likely feel the pressure from falling unemployment rates and rising wages, even if labor market growth is weaker than expected.
we consumer credit has increased double the rate expected in November (although the October hike was slightly revised downwards). It grew by + US $ 40 billion in the month, the biggest monthly increase in more than a decade (and ever, if you look past a few one-off statistical corrections in 2005 and 2010). The main impetus for this growth has come mainly from bank lending, rather than non-bank sectors.
Canada’s labor market has improved more than planned. There was a jump of +123,000 full-time jobs and a drop of -68,000 part-time jobs, pushing their unemployment rate to 5.9%. Canada’s participation rate is 65.3% and unchanged. However, the average hourly wage only increased by + 2.7%. Overall, these results likely also strengthen the case for a Canadian rate hike “soon”.
China’s foreign exchange reserves edged up in December to reach US $ 3.25 billion. But that caps a year of increases bringing them to their highest since the end of 2015. But let us remember that they touched 4 billion US dollars at the end of 2014, so they are still well below.
from Taiwan export growth slows slightly, but it is still 23% higher than last year’s levels.
Yesterday we noted that German inflation was 5.3% in December. Today the full EU rate was published, reaching 5.0% block-wide and this is its highest level on record for the EU as a whole.
In Australia, ANZ says spending in Sydney and Melbourne is now close to levels typical of lockdown conditions. Indeed, the total spending seen by ANZ in Sydney is at its lowest level since the start of COVID, they say. The cautiousness about attendance in public places is compounded by staff shortages to stifle spending in restaurants, retail and travel. Catering spending in Queensland and Western Australia is similar to previous lockdown conditions.
Now their treasurer has tested positive and is locked in isolation.
In NSW there was 38,625 new community cases reported yesterday, as the day before, with now 234,066 locally acquired active cases (and no doubt an undercoverage) and 11 additional deaths. Hospitals in NSW are facing a critical staff shortage, and they have been told the number of people living with HIV requiring hospital care could exceed 4,500 within a month. They are already at 1738. 21 727 pandemic case in victoria were reported yesterday, as the day before. There are now 69,680 active cases in the state – and there have been more than 6 deaths again. Queensland is report 10,953 new cases and no new deaths. In South Australia, new cases slipped slightly to 3,070 yesterday. ACT has 1,246 new cases and Tasmania 751 new cases. Overall in Australia, 72,705 new cases were reported yesterday and their hospitalization rate are now above Delta maximum levels in some states. NSW is limiting admissions to hospitals and nightclubs to preserve their ability to fight the pandemic. Supermarkets report that more than 20% of their staff report ill.
It is not just Australia that is struggling with a permissive political response to the pandemic. We all know the we and the UKpublic health failures, but Sweden is another subject to the pressure of significant hospitalization.
The 10 year UST yield opens today at 1.77% and another +4 bps higher than yesterday this time. The UST 2-10 yield curve starts off a little steeper today at +90 bps. Their 1-5 curve is again steeper at +108 bps, while their 3m-10 year curve is also steeper at +172 bps. The benchmark ten-year Australian government rate was up +1 bps to 1.87%. The ten-year Chinese government bond is unchanged at 2.84%. The ten-year New Zealand government is also unchanged at 2.46%.
Wall Street appears to have taken the jobs data in stride, with the S & P500 down just -0.1% in Friday afternoon trading. Overnight, European markets all fell around -0.5% although London rose with a late jump. Yesterday, Tokyo stagnated while Hong Kong finished up + 1.8% and Shanghai fell -0.2%. The ASX200 recovered + 1.3% while the NZX50 slipped a tiny bit -0.1%.
The price of gold started today at just under US $ 1,797 / oz and has recovered + US $ 6 from this hour yesterday.
And oil prices today start at around -50 USc lower to just under US $ 78.50 / bbl in the US, while the international price of Brent is now just below $ 81.50. US / bbl.
The Kiwi dollar opens today by strengthening slightly to 67.8 USc. Against the Aussie we are slightly firmer at 94.3 AUc. Against the euro, we are slightly lower at 59.6 euro cents. This means that our TWI-5 starts today with little change at 72.3.
The price of bitcoin fell again from this hour yesterday, down -3.0% to US $ 41,832. That’s a drop of over -10% since the start of 2022. Volatility over the past 24 hours has been high at +/- 3.5%.
The easiest way to stay on top of the risks of events today is to follow our Economic calendar here ».