Tough conditions ahead

Kia ora,

Welcome to Friday'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 pandemic resurgence is snuffing out any chance of a near-term economic recovery.

In the US, the level of jobless claims came in higher than expected for last week at +840,000 and similar to the previous week. But the number of people still accessing unemployment benefits fell again as more people are seeing this support expire. This fell by more than -1 mln in a week and is now down to under 11 mln. There is still no Congressional or Admininustration agreement of benefit extensions.

And most experts don't see the American jobs numbers turning up until "2023 or later". That's two or three years of tough conditions ahead.

Yesterday the US Fed released its August household debt data. Instead of the expected +$14 bln rise from July, this debt fell by -US$7.2 bln, an unexpected -US$21 bln shift lower, and indicating American households are not helping their economic recovery by extra spending. The August level is only +0.4% more than the equivalent 2019 level.

In Canada, their central bank governor said that negative policy rates are an other there too.

And Canadian housing start data for September came in way less than expected and the August data was also revised lower.

In Australia, their August level of building consents was flat year-on-year, masking a huge -18% fall in approvals for apartments and townhouses.

Wall Street is up today by +0.6% in afternoon trade on the S&P500. European markets were up a similar amount last night. Yesterday Hong Kong was down -0.2% and Tokyo closed up a full +1.0%. Shanghai is back trading later today. Yesterday the ASX200 ended up +1.1% and the NZX50 Capital Index was up +1.8%.

The latest global compilation of COVID-19 data is here. The global tally is 36,281,000 and up at the new faster pace of +334,000 per day. Europe, and especially in South America and the UK which is where the next wave is occurring. Global deaths reported now exceed 1,057,000 (+5000) but clearly many are going unreported.

The largest number of reported cases globally are still in the US, which is up +57,000 in one day to 7,793,000 which is a rising pace. Their death total is over 217,000 and still rising at about +1000 per day.

In Australia, there have now been 27,206 COVID-19 cases reported, and that is +24 more cases than yesterday with a spike in NSW. Deaths are unchanged, up to 897.

The UST 10yr yield is down -1 bp to 0.77%. 

The price of gold is down another -US$4 this morning at US$1882/oz in New York trade.

Oil prices start today up by about +US$1.50, now just over US$41/bbl in the US, while the international price is up to just under US$43.50/bbl.

The Kiwi dollar starts today marginally lower at 65.8 USc. Against the Australian dollar we are down at 91.9 AUc. Against the euro we little-changed at 56 euro cents. And that means our TWI-5 has slipped slightly to 69.1.

The bitcoin price is higher today, now at US$10,921 and +2.8% higher than this time yesterday.

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, on Monday.