Retail spending expected to remain sluggish all year after poor confidence figures, plus an announcement expected today from Eroad after trading in its shares halted over Australian news

Consumer confidence slips in September

The Westpac McDermott Miller Consumer Confidence Index fell 2.1 points in September, taking it to 95.1, its lowest level since 2008.

The low confidence level is flowing through to household spending, with the number of households who think it’s a good time to make a major purchase falling to lows only seen twice in the past three decades.

Those aged 18-29 have seen the largest drop in confidence across age groups since the last quarter, with a fall of 8.7 points to 100.6. Concern about future job prospects and the general decline in economic conditions were cited as the main reasons for the fall.

The survey indicates retail spending is likely to remain sluggish for the remainder of the year.

Trading in Eroad shares halted yesterday. Update expected today

Trading was halted in Eroad shares yesterday after the Australian Financial Review reported the company is preparing to raise fresh capital in Australia.

According to the AFR story Eroad is working with Australian based Bell Potter Securities and Canaccord Genuity to arrange a $25 million share placement for Australian funds and a $5 million share purchase plan.

Eroad announced in August it would pursue a secondary listing on the ASX to access more capital.

Chair Graham Stuart said at the time the company would remain domiciled in New Zealand but wanted buy-in from institutional and retail investors in Australia.

The company did not provide comment yesterday and a detailed statement is expected today.

Air New Zealand takes in over $4 million in in one day

More than 110,000 Air New Zealand seats were snapped up on Monday compared to the usual 31,000 sold per day pre-covid-19 as customers took advantage of cheap deals.

The airline marked the Government’s removal of physical distancing by releasing 180,000 of its cheapest fares, with 160,000 of these available for under $50, which drove the record sales day. The sales would have generated in excess of $4 million, an amount that will no doubt be welcomed by the struggling airline.

Air NZ chief executive Greg Foran said that as soon as the Government announced the removal of physical distancing, travel demand was strong, with 70,000 seats sold in the first six hours.

Masks remain a requirement for customers and crew will continue to wear masks and gloves.

Air NZ lounges will continue to operate with a cap of 100 people at any given time.

The airline said it is currently flying around 70-75 percent of its pre-covid-19 domestic capacity.

Air NZ shares closed up 1c at $1.35.

China’s economy bouncing back

China’s economy has been in recovery mode for months, and now consumers are starting to spend more, pushing retail sales up to 3.36 trillion yuan (NZ$739 billion) in August, a 0.5 percent increase over the previous year. While small, the gain marks the first-time sales have increased in 2020.

Chinese authorities touted the uptick at a monthly press conference yesterday while pointing out the country is seeing economic improvement elsewhere too, including stabilisation of its job market and a loosening of travel restrictions.

There was also a larger-than-forecast expansion in industrial production in the world’s second largest economy as virus restrictions eased. The positive data comes as China remains under pressure from its biggest trading partners. The US is banning some hair products, apparel, cotton, and computer components from the country.

China’s recovery makes it an outlier as the pandemic weighs on the rest of the globe.

The world’s other top economies — Canada, France, Germany, Italy, Japan, the United Kingdom and the United States — have shrunken dramatically in the first half of 2020. China was the only country for which the International Monetary Fund projected growth this year in its June forecast — it’s expected to eke out a 1 percent increase.

China has been steadily bouncing back since its US$14 trillion economy shrank 6.8 percent in the first quarter, the worst plunge for a three-month period since China started publishing quarterly figures in 1992.

IEA cuts its outlook for oil demand

The International Energy Agency has cut its forecast for 2020 oil demand growth, citing a “treacherous” path ahead amid weakening market sentiment and an upsurge in the number of coronavirus cases reported across the globe.

In a closely watched monthly report, the IEA trimmed its outlook for worldwide oil demand growth to 91.7 million barrels per day. That marks a contraction of 8.4 million bpd year-on-year, more than the 8.1 million bpd contraction predicted in the Paris-based energy agency’s August report.

“We expect the recovery in oil demand to decelerate markedly in the second half of 2020, with most of the easy gains already achieved,” the IEA said.

“The economic slowdown will take months to reverse completely, while certain sectors such as aviation are unlikely to return to their pre-pandemic levels of consumption even next year.”

International benchmark Brent crude traded at US$40.21 a barrel yesterday up around 1.5 percent.

Oil prices have dropped around 40 percent since the start of the year.

Domino’s announces major UK expansion

At a time when many UK businesses are cutting staff Domino’s, Britain’s biggest pizza delivery chain, has announced plans to create 5,000 new jobs and support more than 1,000 placements in the government’s fledgling Kickstart scheme as it gears up for its busiest time of year.

The 5,000 new positions include pizza chefs, delivery drivers and customer service staff, and are in addition to the 6,000 new jobs offered since the outbreak of the Covid-19 pandemic.

The company has also pledged to provide more than 1,000 work placements for young people in stores across England, Scotland and Wales under the Kickstart scheme.

Domino’s, which operates under licence from its US parent, has 1,184 stores across the UK and Ireland and employs more than 35,000 people. Most are run by franchisees, apart from 36 outlets in London that are directly owned by the company.

Andrew Patterson is Newsroom's Markets Editor and has worked for decades as a financial journalist, radio presenter and editor with Australia's ABC, Radio Live and NBR.

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