Here are the key things you need to know before you leave work today.
TODAY’S MORTGAGE RATE CHANGES
There were no rate changes announced today.
TODAY’S DEPOSIT RATE CHANGES
SBS Bank reduced rates across the board for its term deposit offers, with -5 to -15 bps cuts.
‘BACK IN BUSINESS’
ANZ’s Truckometer series came in quite positive today. “The Heavy Traffic Index lifted another 0.9% in October, while the Light Traffic Index, which leads growth in the economy by six months, largely held onto September’s 2.6% surge, dipping just 0.3%.2 The Heavy Traffic Index suggests that Q3 GDP growth may be in a 0.5-1.0% q/q range, which would be a clear improvement on the lacklustre rates seen in the first half of this year. The strong October result is also a good start to Q4.”
IMF PASSES JUDGMENT
The IMF has had staff here reviewing our economy. They say NZ’s economy is ‘resilient’ but faces significant risks tilted to the downside.
RETAIL RISING SLOWER
Retail spending using electronic cards was $4.9 billion in October 2015, up +$260 million (+5.6%) from October 2014, Statistics New Zealand said today. Spending rose in five of the six retail industries, with a fall in fuel spending. This retail data is an interesting contrast to the ANZ Truckometer series, and it is the Truckometer that better correlates to future GDP.
The latest REINZ house sales data has some sobering detail for October. The median price fall was the largest on record – down $24,650 from September. Auckland prices fell as well. Most years there is a seasonal volume lull from April to September, but not this year. So the October 2015 sales volumes changed very little to reflect the new season selling period. Except in Auckland where the drop in sales volumes was very noticeable. (It was a drop first flagged in the Barfoot data.)
The growth in new KiwiSaver signups is slowing faster these days. To October 2.564 mln people are signed up which is 70% of the working age population, but that number is growing at ‘only’ +6.1% year-on-year. There are now over 120,000 members on ‘active holidays’, the highest level ever. (The number of closed accounts is now almost 133,000.)
CHINA PRICES DEPRESSING
Consumer inflation took a sharper-than-expected shift lower in October in China at +1.3%. Markets were expecting +1.6%. Worse, China’s producer price deflation is now running at -5.9%, a level it has maintained for the past three months and can’t seem to shake. Everything hangs on the resilience of China’s large service sector. But with CPI falling, expect some significant stimulus soon.
NO INFLATION SIGNS HERE EITHER
Speaking of inflation, ANZ’s monthly inflation monitoring (remember Stats NZ only reports quarterly) shows low headline rates here too. Their Monthly Inflation Gauge “posted a +0.1% increase in October, the second consecutive month that was milder than the usual seasonal increase. Prices in the Gauge were up +0.4% in the three months to October. That’s sub-par for this time of year. Prices in the Underlying Ex-housing Gauge were unchanged in October and up just +0.2% over the last three months. Low inflation keeps further interest rate stimulus on the cards.”
Compared with over the ditch, NZ companies pay promptly. Local invoice payment times flatlined in the September quarter after declines in the previous three quarters, with recent economic data suggesting GDP growth is slowing says Dun & Bradstreet. Their Trade Payments Analysis shows that the average time taken by businesses to pay their invoices was steady at 35.3 days, compared to 35 days in the previous quarter. The result is an improvement of 5 days on the same quarter a year ago. This level of prompt business payment is now up there with US practice.
WHOLESALE RATES UNCHANGED
Local wholesale swap rates rose only marginally at the long end today, in contrast to the strong rises on Wall Street. In fact, we saw -1 bps falls for 1 and 2 year terms. The 90 day bank bill rate is unchanged at 2.90%.
NZ DOLLAR HOLDS
Our currency has hardly reacted to either the IMF warnings or to the softer REINZ data today. It is still at 65.3 USc, at 92.7 AUc and 60.7 euro cents. The TWI-5 is at 71.1. Check our real-time charts here.
You can now see an animation of this chart. Click on it, or click here.