Kia ora,
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 with news the data can't keep up with the global economic shutdown.
First up, the March US ADP Employment Report came in much less negative than was expected. Analysts had expected it to show a decline in employment of -150,000 US jobs but in the end it only showed a decline of -27,000 jobs, driven by a sharp reduction by SMEs - companies who couldn't hang on in March. Apparently mid-sized and large companies took full advantage of the payroll subsidy programs and held their staffing levels. A burst of hiring in the health sector also kept overall jobs levels up. The other point to note is that this is a snapshot as of the 12th of each month, and things got much worse after than in the US.
There were also two American PMI reports out overnight and both also showed contractions, and both somewhat less than expected. The early-in-the-month timing of these surveys also weighed on the reported results. Both reported sharper falls in new orders than the overall result pointing to impending trouble. The ISM one is here. The Markit one is here.
The depth of the global manufacturing downturn is revealed in a Markit report, with only China's uptick the sole bright spot.
And February aircargo activity slumped, even before the March lockdowns.
Scepticism was high when we reported recently that the official Chinese PMI rose spectacularly to show an expansion. However, now the private Caixin Markit survey showed basically the same recovery even if just marginally less. Meanwhile, Japan, South Korea and other ASEAN economies all posted rather substantial contractions. The exception was Taiwan which is still expanding although they are also downbeat on immediate prospects.
[Advert]
Now, we have an urgent message for you today.
If you value this report and want to ensure to is available in the future, we ask you go on to interest.co.nz and show that support by clicking on the “Become a Supporter” button at the top of any page.
If you have already done so, our grateful thanks. But we urgently need more readers and listeners to join in.
Good journalism and independent financial news coverage is an expensive business and we need your support to keep doing what we do.
There are now 708 Covid-19 cases identified in New Zealand, with another 61 new cases today and very similar to the increase yesterday. The number of clusters has halved to seven. One person has now died here. There were nine people in hospital with the disease yesterday but this number has not been updated today yet.
Worldwide, the latest compilation of Covid-19 data is here. The global tally is now 887,000 with another global pickup in infections overnight especially in the USA where more than 22% of all cases globally are, and up +49,000 in one day to 191,000. Australia has almost 5000 cases, and 20 deaths. Global deaths now exceed 44,000 and more that 4100 deaths have occurred in the USA, 10% in New York alone. Italian deaths now exceed 12,000 and more than 9000 have died in Spain so far. Deaths in the USA are expected to pick up sharply from here and paralyse the country with fear.
Equity markets are starting to realise no amount of 'liquidity' or subsidies will beat the virus, and with a complete shutdown the economic toll will be enormous and long lasting. In New York, the S&P500 is down -3.9% and sinking today. European markets shed nearly -4% in their sessions too. Yesterday the main Asian markets were all down. If there were a bright spots yesterday they were in Australia (the ASX200 was up +3.6%) and New Zealand (the NZX50 Capital Index ended up +1.3%).
The UST 10yr yield is lower today so far by -3 bps at just under 0.64%.
Gold is down again today by -US$9 today, to US$1,583/oz.
US oil prices are holding at their new low levels today, at just on US$20/bbl. The Brent benchmark is also low at just under US$25/bbl. How long they can last at these levels is unclear - the US reported a monumental rise in unsold petrol inventories, and a WTI price below US$15.50. It is hard to see any of this improving soon. Buyers like China are achieveing big discounts because they may be the only buyer at present.
The Kiwi dollar is starting today unchanged from this time yesterday at 59.3 USc. On the cross rates we just a little firmer at 97.4 AUc. Against the euro we are also marginally firmer at 54.2 euro cents. The TWI-5 is unchanged at 65.8.
Bitcoin is now at US$6,182 and down -4.2% since 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.
Kia ora. I'm David Chaston. We will do this again, tomorrow.