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Podcast: Economy Watch
Episode:

Food and shipping costs rise ever higher
Category: Business
Duration: 00:03:58
Publish Date: 2021-09-02 19:39:14
Description:

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 of no respite from ever higher shipping costs and higher food costs.

But first in the US, the number of people claiming jobless benefits fell last week to 288,000, and the number of people on these programs is down to 2.6 mln. Both represent substantial progress

All eyes are on tomorrow's non-farm payrolls report. In the meantime American factory order data brought no surprises with a small rise in July from a healthy June level.

The US trade deficit didn't widen in July, and given the track of the past eight years, this is somewhat unusual and better than analysts had expected. Their exports rose faster than their imports.

Canadian building permit levels fell in July, and that was not expected.

We have previously noted there is an election campaign underway in Canada. One of the planks of the ruling party is for a 3% surtax on profits of large banks and insurance companies. Doom scenarios are being rolled out there by opposition forces. But Australia has had a "major bank levy" profits for some time and they have barely noticed it.

In Europe, they reported that producer price inflation rose by more than +12% in July from a year ago, faster than expected and at an accelerating rate. The range is very wide from a dramatic explosion higher in Ireland to negligible in Hungary. In Germany it is a +9.4% jump, France +8.6%.

Ireland has serious imbalances building and their central bank governor unloaded on their government about the way they are dealing with them. He is worried. (Their central bank Governor used to be our Treasury Secretary until 2 years ago.)

Globally, the cost of freighting a container just keeps on rising, now averaging NZ$14,250 and a rise of +1.7% in a week. That is up +345% in a year.

And there is no let-up in rising food prices globally. Worldwide, there is a shortage of labour to harvest, another contributor to high prices. Automation is on the way now.

In Australia, July delivered a back-to-back fresh record high for the merchandise trade surplus. It was +AU$12.1 bln and well above most analyst’s expectations. 

The UST 10yr yield opens today at just under 1.30% which is down -1 bp from this time yesterday. 

The price of gold is down again and by -US$3 from this time yesterday, now at US$1810/oz.

Oil prices have risen +US$2 today so in the US they are now just on US$70/bbl, while the international Brent price is just on US$73/bbl.

The Kiwi dollar opens today firmer again, up +40 bps to be just on 71.1 USc and its highest since mid-June. Against the Australian dollar we are up at 96.1 AUc. Against the euro we are firm too at 59.9 euro cents. That means our TWI-5 starts today at just on 74 and right at the top of the 72-74 range of the past ten months.

The bitcoin price has risen +1.1% from this time yesterday to US$49,313. Volatility in the past 24 hours has been moderate at just over +/- 2.4%.

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.
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