Kia ora,
Welcome to Wednesday'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 with news
China's population may now be shrinking.
But first, the US federal budget deficit widened sharply in January as the latest pandemic-relief package sent direct stimulus payments to millions of Americans. The monthly deficit widened to -US$165 bln in January, and for the first four months of the 2021 fiscal year the federal budget deficit rose 90% to -US$738 bln. On top of that, US$54 bln will be the cost of raising the minimum wage to US$9.50/hr (NZ$13.10) starting in June this year.
Last week, retail sales sagged somewhat with same-week year-on-year gains falling away.
December job opening data however came in on the positive side, even if the gains were minor.
The US WASDE report confirms that strong Chinese demand for grains, especially wheat and rice, is keeping prices high. American beef and dairy production is rising and prices for both are expected to slip.
China is reporting a sharp drop in births down from 14.6 mln in 2019 to 10.4 mln in 2020. That means China is aging at a very fast pace indeed when you get a more than -30% fall in births in just one year. Given that 2019 deaths were 10.0 mln, China's population growth likely stalled in 2020. Other official police data put the birth decline at -15%, still very major.
China is also reporting strong loan demand in January, with debt levels rising +12.7% year-on-year.
And that comes after a very positive report on car sales in the country in January, up +30% year-on-year.
And China is reinforcing its extra-territorial claims, saying anyone born in the country is a Chinese national, no matter what their passport says. You can't escape Beijing's grip if you are Chinese.
Japanese machine tool orders rose +9.7% in January from a year ago, and the December data was revised higher.
In Europe, carmaker BMW has contracted to buy "green aluminium" from the UAE (that is, aluminium made via renewable electricity) in a signal about how fast climate criteria is changing global supply chains. Tiwai Point may have a much longer life than even recently expected - and the conversation with Rio Tinto may be quite different at the next renewal.
In Australia, business conditions pulled back in January from unusually high levels in December. But business sentiment rose and to well above its long run average. Especially notable was the return of boardrooms to invest in capital expenditure.
And we should note that James Packer and his Crown casino company was deemed as unfit to run the new facility in Sydney. This decision will have knock-on impacts in other Packer/Crown casinos in Australia and maybe elsewhere.
The latest global compilation of COVID-19 data is here. The global tally is still rising, now at 106,617,000 and up +339,000 in one day.
The UST 10yr yield is down another -1 bp from Friday at just under 1.15%.
The price of gold will start today unchanged at US$1837/oz.
Oil prices are slightly higher at just over US$58/bbl in the US, while the international price is now just under US$61/bbl.
And the Kiwi dollar will open today firm at 72.3 USc. But against the Australian dollar we are a little softer at 93.6 AUc. Against the euro we are softer too at 59.7 euro cents. That means our TWI-5 is little-changed at 73.8.
The bitcoin price has risen sharply again overnight and is now at US$46,744 and up by +8% in a day. It reached a record high of US$48,226 in between. Volatility remains very high at +/- 6.6%.
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. We will do this again tomorrow.