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New Zealand exodus since reopening worsens labour crunch – Al Jazeera English

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New Zealand’s easing of its strict border curbs has triggered a rush of new departures among locals seeking fresh opportunities abroad, adding further pressure to the country’s already tight employment market.

A net 10,674 people left the country over the 12 months to May, according to government data released on Tuesday, extending a drain that ran over the past year and is expected to last until new immigrants arrive in greater numbers in 2023.

That exodus comes as New Zealand struggles to fill jobs with the number of foreign workers still very low and the economy close to maximum employment.

The issue has become somewhat politically contentious with Australian Prime Minister Anthony Albanese last week deflecting questions about health services in his country poaching New Zealand nurses to fill their own shortfall.

After months of lockdown in New Zealand’s largest city Auckland, Mark Beale and his family were ready for a new adventure. When the offer to relocate to Australia’s Gold Coast came at the start of the year, he did not hesitate.

The lockdown gave him time to reflect on what he wanted to do, said the 49-year-old export manager, who concluded if he did not travel now he’d never get around it.

“We were on the first plane into Queensland that didn’t require mandatory quarantine,” said Beale.

New Zealand had some of the world’s toughest border controls during the first two years of the pandemic, as the government tried to keep the coronavirus out.

Although there were no restrictions on leaving the country, the prospect of delays in returning discouraged people from heading abroad, creating a long line of residents waiting to depart, with many like Beale doing just that.

‘The Kiwi way’

New Zealanders have traditionally gone offshore in their 20s and early 30s to work and travel, largely in Europe. Historically, Australia has also been a popular destination for Kiwis looking for job opportunities or warmer weather.

Roughly one million New Zealanders, or more than 15 percent of the country’s population, live overseas, raising perennial concerns about a brain drain.

Jarrod Kerr, chief economist at Kiwibank, expects annual net emigration to be around 20,000 by the end of this year, adding to wage and inflation pressures as workers seek employment and other opportunities abroad. By contrast, New Zealand, where roughly one in four people were born overseas, attracted a net 72,588 in 2019, before the pandemic.

“Kiwis who would have otherwise left over the last two and a half years are leaving now and we expect that to continue,” he said. “It’s the Kiwi way.”

That would further frustrate the labour market, which was already very tight.

“Businesses are really struggling to find workers, and we’re losing workers in their prime,” Kerr said.

He expects things could improve next year with a pick-up in migrants from places like India, China and South Africa.

Aukland
New Zealand is struggling to fill jobs [File: Jason Reed/Reuters]

Consumer research from Australian firm MYOB released earlier this month found around four percent of New Zealanders planned to move overseas to live and work, citing expectations of a better salary, improved quality of living, or for a particular lifestyle.

“This has the makings of a real crisis in the local jobs sector, with the lack of available employees making it even more challenging for many businesses to operate or expand to meet local demand,” MYOB head of employee services Felicity Brown said in a statement.

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Soft landing hopes for U.S. economy brighten outlook on stocks – The Globe and Mail

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Optimism is seeping back into the U.S. stock market, as some investors grow more convinced that the economy may avoid a severe downturn even as it copes with high inflation.

The benchmark S&P 500 has rebounded about 15% since mid-June, halving its year-to-date loss, and the tech-heavy Nasdaq Composite is up 20% over that time. Many of the so-called meme stocks that had been pummeled in the first half of the year have come screaming back, while the Cboe Volatility Index, known as Wall Street’s fear gauge, stands near a four-month low.

In the past week, bullish sentiment reached its highest level since March, according to a survey from the American Association of Individual Investors. Earlier this year, that gauge tumbled to its lowest in nearly 30 years, when stocks swooned on worries over how the Federal Reserve’s monetary tightening would hit the economy.

“We have experienced a fair amount of pain, but the perspective in how people are trading has turned violently towards a glass half full versus a glass half empty,” said Mark Hackett, Nationwide’s chief of investment research.

Data over the last two weeks bolstered hopes that the Fed can achieve a soft landing for the economy. While last week’s strong jobs report allayed fears of recession, inflation numbers this week showed the largest month-on-month deceleration of consumer price increases since 1973.

The shift in market mood was reflected in data released by BoFA Global Research on Friday: tech stocks saw their largest inflows in around two months over the past week, while Treasury Inflation-Protected Securities, or TIPS, which are used to hedge against inflation, notched their fifth straight week of outflows.

“If in fact a soft landing is possible, then you’d want to see the kind of data inputs that we have seen thus far,” said Art Hogan, chief market strategist at B. Riley Wealth. “Strong jobs number and declining inflation would both be important inputs into that theory.”

Through Thursday, the S&P 500 was up 1.5% for the week, on track for its fourth straight week of gains.

Until recently, optimism was hard to come by. Equity positioning last month stood in the 12th percentile of its range since January 2010, a July 29 note by Deutsche Bank analysts said, and some market participants have attributed the big jump in stocks to investors rapidly unwinding their bearish bets.

With stock market gyrations dropping to multi-month lows, further support for equities could come from funds that track volatility and turn bullish when market swings subside.

Volatility targeting funds could soak up about $100 billion of equity exposure in the coming months if gyrations remain muted, said Anand Omprakash, head of derivatives quantitative strategy at Elevation Securities.

“Should their allocation increase, this would provide a tailwind for equity prices,” Omprakash said.

Investors next week will be watching retail sales and housing data. Earnings reports are also due from a number of top retailers, including Walmart and Home Depot, that will give fresh insight into the health of the consumer.

Plenty of trepidation remains in markets, with many investors still bruised from the S&P 500′s 20.6% tumble in the first six months of the year.

Fed officials have pushed back on expectations that the central bank will end its rate hikes sooner than anticipated, and economists have warned that inflation could return in coming months.

Some investors have grown alarmed at how quickly risk appetite has rebounded. The Ark Innovation ETF, a prominent casualty of this year’s bear market, has soared around 35% since mid-June, while shares of AMC Entertainment Holdings , one of the original “meme stocks,” have doubled over that time.

“You look across assets right now, and you don’t see a lot of risks priced in anymore to markets,” said Matthew Miskin, co-chief investment strategist at John Hancock Investment Management.

Keith Lerner, co-chief investment officer at Truist Advisory Services, believes technical resistance and ballooning stock valuations are likely to make it difficult for the S&P 500 to advance far beyond the 4200-4300 level. The index was recently at 4249 on Friday afternoon.

Seasonality may also play a role. September – when the Fed holds its next monetary policy meeting – has been the worst month for stocks, with the S&P 500 losing an average 1.04% since 1928, Refinitiv data showed.

Wall Streeters taking vacations throughout August could also drain volume and stir volatility, said Hogan, of B. Riley Wealth.

“Lighter liquidity tends to exaggerate or exacerbate moves,” he said.

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Malaysian economy smashes forecasts, growing 8.9 percent in Q2 – Al Jazeera English

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Southeast Asian country continues strong pandemic recovery after reopening its borders in April.

Malaysia’s economy grew at its fastest annual pace in a year in the second quarter, boosted by an expansion in domestic demand and resilient exports, but a slowdown in global growth is expected to pose a risk to the outlook for the rest of 2022.

Gross domestic product (GDP) in April-June surged 8.9 percent from a year earlier, the central bank said. This was faster than the 6.7 percent growth forecast in a Reuters poll and was up from the 5 percent annual rise in the previous quarter.

It was also quicker than any annual rate seen since the second quarter of 2021, when GDP was 16.1 percent higher than a low year-earlier base.

Seasonally adjusted GDP for April-June was up 3.5 percent on the previous three months, when quarterly growth was 3.8 percent.

Malaysia’s economy has been on a strong recovery path since the country reopened its borders in April.

“Going forward, the economy is projected to continue to recover in the second half of 2022, albeit at a more moderate pace amid global headwinds,” Central Bank of Malaysia Governor Nor Shamsiah Mohd Yunus told a news conference.

Full-year growth for 2022 would likely be at the upper end of the previously forecast range of 5.3 percent to 6.3 percent, Nor Shamsiah said.

Headline and core inflation were expected to average higher in 2022, though Nor Shamsiah said any adjustments to the overnight policy rate would be measured and gradual to avoid stronger measures in the future.

The central bank lifted its benchmark interest rate for the second straight meeting in July.

Capital Economics said in a note it expected Malaysia’s economic growth to slow in coming quarters, as commodity prices dropped back and the boost from border reopening fades.

“That said, the slowdown is likely to be relatively mild, with the reopening of the international border set to provide decent support to activity,” said Gareth Leather, the group’s senior Asia economist.

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The UK Economy, and Sterling, Face Next Big Crisis This Winter – BNN Bloomberg

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(Bloomberg) — Headwinds for the UK economy spell trouble for sterling, and the real test for the Bank of England and the currency may still be in store.

The cost-of-living crisis is about to intertwine with the energy crisis this winter, leaving the BOE in a bind. UK wholesale natural gas prices have more than tripled in the last year and are more than four times higher than the seasonal average over the previous five years. Household energy bills are forecast to rise while the government plans for organized blackouts in a worse-case scenario in January.

If the energy crisis gets out of hand, the market might expect the BOE to pivot because rates can only do so much in the face of supply-driven forces such as Russian gas supplies, inventories, and alternate energy sources that are being tested by climate change.

There is also the question of fiscal support and the uncertainty surrounding it. The BOE has forecast inflation topping 13% in coming months and a recession through 2023 as it raises rates. The central bank is an apolitical body that has no say over government fiscal policies, making whoever becomes the next prime minister that much more significant. Front-runner Liz Truss is pledging an emergency budget and more borrowing to stimulate the economy, while the competing former chancellor Rishi Sunak is advising caution while also vowing to offer more cost-of-living support.

Currency traders aren’t convinced that economic data Friday is enough to prove the economy’s resilience, which is why even as money markets are raising their BOE tightening bets, the pound is the second worst-performing G-10 currency against the dollar on the day.

But it’s fair not to read too much into the curious gross domestic product print. A small contraction was expected given the Jubilee bank holiday, but June’s drop is smaller than in comparable periods, as Samuel Tombs, chief U.K. economist at Pantheon Macroeconomics, noted. July data will likely offer a better picture. It’s possible that numbers would either be revised lower or show that the economy has indeed been more resilient than many expect. Looking ahead, however, there aren’t many other concessions that the pound can give way to.

NOTE: Nour Al Ali writes for Bloomberg’s Markets Live. The observations are her own and not intended as investment advice. For more markets commentary, see the MLIV blog.

©2022 Bloomberg L.P.

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