US jobless claims fall again. US service sector still expanding above trend. China meets to set goals. Taiwan suffers blackout. Aussie trade booming.
Kia ora,
Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.
I'm David Chaston and this is the International edition from Interest.co.nz.
Today we lead with news that so far the international economic implications of the eastern European war remain relatively limited given what is going on.
In Ukraine, the northern and eastern cities are still holding in truly heroic circumstances despite very heavy bombardment, Russian speaking Kharkiv in particular, but also in the Donbas region. However Russian forces are making 'progress' with their invasion in the south.
In the US, jobless claims fell to 194,700, a larger decrease than was expected. There are now 1.86 mln people on these benefits, the lowest number in more than 50 years.
Job cut data is now at its lowest level since that data was collected in 1993.
However, the ISM services PMI for the US fell for a third month to 56.5 in February from 59.9 in January, below market forecasts of 61. The reading pointed to the slowest growth in the services sector in a year, although still a good expansion and above their long-run average. The internationally-benchmarked Markit services PMI for the US recorded a bounce-back, but to the same level as the ISM one.
In their manufacturing sector, the factory durable goods order data for January was unexpectedly positive, and backing up the strong manufacturing PMIs we noted yesterday. Factory durable goods orders were up more than +16% from a year ago, and rose at an even faster rate in January from December.
In China, they are set to kick off its annual “two sessions” of the National People’s Congress, the top legislative body, and the Chinese People’s Political Consultative Conference. Eyes are on the GDP target they set, expected to be 5.5% (and the lowest they have ever set).
The private Caixin services PMI in China came in lower than the official version, essentially recording a stall in their services sector in a retreat that wasn't expected.
Coal prices set another new record high yesterday, largely on Chinese demand
Taiwan has been hit with a massive power outage, affecting its two largest cities and much key manufacturing. The cause is not yet clear, but it should be noted that they have had things like this in the past and they were not related to hacking or national security failures.
In Turkey, consumer inflation is now running at more than +50% pa, and that's according to official data. That is a 20 year high. And apart from a brief spike in later 2021 when their crisis first hit, the Turkish lira is now at an all-time low.
Australia's merchandise trade surplus rose to almost AU$13 bln in January and near a record high again (the record was +AU$13.3 bln in July 2021). Their exports began 2022 on a strong note, as commodity prices found a second wind. The Russian invasion and resulting boycotts won't hurt Australia's trade performance.
But building consents retreated sharply in January in Australia. The total number of dwellings approved fell -28% in seasonally adjusted terms in January, following an almost +10% rise in December. Omicron is getting the blame for the sharpness of the retreat. Approvals for houses are the weakest, less so for multi unit dwellings.
The UST 10yr yield opens today at 1.85% and little-changed from this time yesterday.
The price of gold starts today at US$1929/oz and up +US$9/oz from this time yesterday.
And oil prices are higher again today and by +US$1.50/bbl level. In the US they are now just over US$108/bbl. The international price is just over US$111.50/bbl. But it has retreated as talk of a deal with Iran runs around markets.
The Kiwi dollar will open today at 67.9 USc and a small rise. Against the Australian dollar we are at 92.8 AUc and a -¼c slip. Against the euro we at 61.4 euro cents and almost a +½c rise. That means our TWI-5 starts today at just on 72.8 and a new 2022 high.
The bitcoin price is lower today, down -4.2% from this time yesterday to US$42,450. Volatility over the past 24 hours has been moderate at +/- 2.5%.
You can find links to the articles mentioned today in our show notes.
And get more news affecting the economy in New Zealand from interest.co.nz.
Kia ora. I'm David Chaston and we’ll do this again on Monday, Omicron permitting.