The number of dairy farm sales going through is down 29 percent and prices have dropped slightly, while the services sector rebounds in June
Rural sector hanging tight: While residential property sales have shown little impact so far from the economic slowdown, farm sales haven’t fared so well. Dairy farm sales slumped by almost a third over the past year as farmers were forced to contend with tighter lending conditions and uncertainties in the sector itself.
Farm sales slump: The latest REINZ data shows dairy farm sales fell by 29 percent, grazing farms sold dropped by 19.2 percent and finishing farm sales were down 21.9 percent. The institute’s all farm price index sank by 10.1 percent on an annualised basis. That index, which adjusts for the differences in farm size, location and farming type, was down 3 percent compared to the prior three months to May, indicating that the results were not specific to the Covid-19 response. The median price per hectare for the quarter, at $23,136 across all farm types, was slightly less than that achieved to May.
Services sector reviving: There are signs the country’s services sector has begun to rebound from the dramatic downturn during the lockdown. But businesses are continuing to lay off workers, indicating they are less certain about the future outlook. The BNZ/BusinessNZ performance of services index jumped 16.6 points to 54.1 in June from the month prior, the first-time activity has grown since February. A level above 50 indicates the sector is expanding. In April, the reading had plummeted to 25.8, reflecting the massive contraction in activity as a result of so many businesses being closed.
Employment easing: The employment sub-index still showed the sector shedding staff, with a reading of 45.1 in June, despite improving almost 5 points from May. The results mirror those of the manufacturing sector released last Friday which showed a similar reduction in headcount. BNZ is forecasting employment to fall around 2 percent, or 56,000 people, in the second quarter.
Shedding staff: The Warehouse Group confirmed to staff yesterday that it plans to proceed with redundancies, potentially involving the loss of up to 900 jobs. The company said it wants to better align staffing with changing customer shopping trends, including an increasing shift to online shopping and changing shopping patterns during the day.
Closing stores: Last month it advised it was starting a consultation process involving the closures of its Noel Leeming Henderson Clearance Centre and Tokoroa store, The Warehouse Whangaparaoa, Johnsonville (Wellington) and Dunedin central stores as well as its Warehouse Stationery store in Te Awamutu. In addition, it plans to convert Dunedin’s central city Warehouse into a “dark store”, to be used only for online order fulfilment. Warehouse Group shares closed down 1.9 percent at $2.02.
Dividing the spoils: European leaders are meeting for a fourth consecutive day today to continue tense negotiations over a €750 billion (NZ$1.3 trillion) recovery fund. In May the European Commission, the executive arm of the EU, suggested tapping the markets to mitigate the economic shock from the pandemic. However, European capitals have not agreed on how to divide the funds between grants and loans, how to link them to the EU’s democratic values, and how to oversee how the money is invested.
Frugal four revolt: The original proposal, which was put forward by Germany and France in May, suggested €500 billion in the form of grants. However, the so-called “Frugal Four” countries (The Netherlands, Austria, Sweden and Denmark) plus Finland have proposed a much lower amount of €350 billion.
New taxes coming: In order to make repayments for some of their additional debt, European countries have been asked to consider new taxes on digital companies, plastic waste, and carbon. Ahead of the start of the summit last Friday, European Council President Charles Michel proposed the introduction of a digital tax by the end of 2021.
More UK retail pain: Iconic British retailer Marks & Spencer is reportedly planning to cut hundreds of jobs later this week in the latest blow to high street retailers hit hard by Covid-19. Retail analysts believe total redundancies in the sector could potentially reach several thousand when existing restructuring plans are taken into account.
Job losses rising: The news comes at a difficult time for the British high street, with thousands of job losses already announced this month including John Lewis (1,300 jobs gone) and Boots (4,000 jobs gone). Topshop owner Arcadia, furniture chain Harveys and menswear retailer TM Lewin have also confirmed plans for thousands of redundancies.
Ivory towers not immune: Not even academics are immune from the economic downturn with universities in the UK set to let go thousands of academics on short-term contracts as the sector prepares to make sweeping cuts. Institutions across the country have dropped hundreds of hourly posts and let temporary contracts expire.
Foreign students absence being felt: Universities are expecting a sharp drop in income as the number of foreign students falls owing to the pandemic. The UK Institute for Fiscal Studies estimates the sector could lose anywhere between 8 percent to half of its yearly income over the next four years.
Striking it rich 1: Share investors able to correctly pick which drug companies might be on to something related to Covid-19 treatments stand to be richly rewarded. Take the case of little known UK pharmaceutical company Synairgen Plc which saw its shares surge from £36.30 to £175.00 in one day (a gain of 373 percent) after the company said its experimental drug cut the risk of developing the worst symptoms of Covid-19.
Favourable trials: In a clinical trial involving 220 subjects, the probability of a patient requiring ventilation or dying dropped 79 percent for those who got Synairgen’s SNG001 treatment versus those who received a placebo, the Southampton based company said in a statement. Those receiving SNG001 also were more than twice as likely to fully recover from the illness, it added.
