A review of things you need to know before you go home on Tuesday; business confidence drops sharply, housing consent levels ease, debt growth slows, going after Chinese tourists hard, swaps up, NZD firms

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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
No changes to report.

TERM DEPOSIT RATE CHANGES
None here either.

MORE THAN JUST A FUNK
Yikes. Business confidence has slipped sharply lower, again. The overall level is now down to levels we last saw in 2008; now the optimists-less-pessimist score is a whopping -45 (Zero is where there are equal numbers of optimists and pessimists). The ‘own activity’ levels aren’t negative but at just under +4, it is as low as we have seen that indicator since early 2009 in the depths of the GFC. The accelerating nature of the declines should be worrying policymakers because we are now in territory matching the Clark/Cullen ‘winter of discontent’. Back then, growth was ok at about the same level it is now, but following that rocky period, it fell away markedly, diving negative. This time around we are starting at a lower confidence level. If they are not careful, workers will get hurt.

EASING CONSENT LEVELS
New dwelling consents eased in June but remain higher year-on-year. They rose strongly in Wellington. The detail also shows sharp twists in Auckland. New housing in the leafy inner suburbs is drying up with year-on-year drops of -50% on the North Shore, and -75% in the Waitemata local board area. Albert-Eden-Roskill is down -33%. But on the fringes, the growth is startlingly large. Out West, it is up +76%, and in South Auckland consent levels are up +200% to +350% in a range of local Board areas.

SERIOUS QUESTIONS
An MBIE report shows the projected infrastructure investment pipeline is lacking, and critics are pointing the finger at the Government.

NON-RESIDENTIAL CONSENTS RISE
Infometrics says: “The value of non-residential consents in June totalled $530m, up 17% from June last year. The value of consents in Auckland was up $174m from a year earlier, but this boost was partly offset by a $107m drop in consents in Canterbury. The latter region’s monthly total was the lowest since January 2016.”

GOING ALL-IN
The new Government is going after Chinese tourism in a serious and co-ordinated way, launching and funding “2019 China-New Zealand Year of Tourism” If it works, we could be receiving seriously huge flows. This is not incrementalism. Currently, inbound tourism from China is worth $1.7 bln/year.

HARMONEY NARROWS LOSS AS FEE INCOME SURGES
Harmoney has posted a March year loss of $1.9 mln, down from $6.5 million the previous year. The licensed peer-to-peer lender recorded a near doubling of revenue, which consists almost entirely of fees, to $26.2 million from $14 mln. Expenses rose 34% to just over $28 mln. Accumulated losses reached $28.737 mln at March 31, with Harmoney having share capital of $32.8 mln. Having gone live in September 2014, Harmoney’s website says it has matched borrowers and lenders for loans worth $750 mln. Meanwhile Squirrel Money, another P2P lender, narrowed its March year loss 13% to $492,379 with revenue up 84% to $393,733.

STILL SHIFTING OVER FAST
Growth in online retail is four times higher that at physical retail. For the past 4 months, spending at domestic online stores has been growing at a faster rate than spending at international sites, according to the BNZ/Marketview monitoring.

DEBT GROWTH SLOWS
Total private sector debt now exceeds $440 bln according to the June data released by the RBNZ today. That is up +$22.7 bln in a year, or a +5.4% gain. Growth in housing debt is stable at +5.9% pa, the same growth rate as for every month in 2018. Personal debt (credit cards and personal loans), is up +6.0% and that is the slowest rate of increase in 15 months and is the sixth consecutive moth of retreating growth. Business debt grew +5.7% in the year to June, its fastest rate in 2018. Rural debt grew just +2.8%; it hasn’t been above +3% in sixteen consecutive months.

HOUSEHOLD DEPOSIT GROWTH PICKS UP
Household bank deposits grew +$10.8 bln in the year to June, up +6.7% over that period. Business balances are up just +1.2%. Overall term deposit balances (which include business TD accounts) are up +4.0% year-on-year.

SWAP RATES RISE
Local swap rates are up +2 bps across the board today. The UST 10yr is up by +1 bp from yesterday and now at 2.97%. The Aussie Govt 10yr is at 2.70 and up +5 bps today, the China Govt 10yr is at 3.55% down -1 bp, while the NZ Govt 10 yr is at 2.81%, also up +5 bps. The 90 day bank bill rate is unchanged at 1.91%.

BITCOIN STABLE
The bitcoin price is now at US$8,123, down -1% from this time yesterday, although in the meantime it did dip briefly by -3%, most of which is since recovered.

NZD UP THEN BUFFETED
The NZD is a little higher at 68.2 USc. But it is unchanged on the cross rates at 91.9 AUc, and the euro at 58.3 euro cents. That puts the TWI-5 up a little at 71.6. Theses levels were all higher prior to the shock business confidence number which took -20 bps off the Kiwi dollar.

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