Kia ora,
Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.
I'm David Chaston and this is the international edition from Interest.co.nz.
And today we lead with the 'final' week of shopping is here for the holiday season and most analysts are focussed on what that reveals about economies worldwide.
Also in the coming week the American data releases are mostly second-tier but there will be special interest in their PCE inflation, durable goods order levels, and a set of housing data. Japan has a big set of releases including from the Bank of Japan, and their inflation rate. Canada and the UK will also release inflation data. But of course everywhere hints about retail sales activity levels will be sought out
But first, China released a wide set of national data over the weekend. In the official data none of their 70 largest cities reported any house price growth based on housing resales. Overall their housing index was said to fall -0.2%, but sales of new units are low and now quite problematic. Sales of used units are showing much larger declines than the index they released, both month-on-month and year-on-year. In fact they are now heading for a multi-year retreat, the first they have had.
Going the other way, China reported that electricity production was up +8.4% in November from the same month in 2022. That supports the better than expected industrial production data they also reported, up +6.6%.
And also gaining were retail sales. Although very little changed from October, the jump from a year ago is an eye-catching +10.1% - at least until you realise the base was very stunted and they were just contemplating easing Covid restrictions. Correcting for that, the year-on-year gain seems to be about +4%.
China is getting ultra-sensitive about talk of economic problems - and their Ministry of State Security is on the case warning officials and commentators about not holding the Party line about the country's "bright future". And in Hong Kong the Party is putting on a show trial for an imprisoned publisher.
Meanwhile, foreign patent holders are finding that Chinese courts side with local companies and will chop royalties agreed in existing deals that they subsequently don't like.
In the US, retail shopping this year is even more focussed on the online sector. Turnover in traditional bricks & mortar stores is expected to just be level in volume terms.
Meanwhile an early look at their PMIs shows services rising while factory activity is contracting. The sharpest increase in new orders since July is pushing their dominant service sector to a quicker expansion, but the reverse is the case for manufacturing where new order levels are retreating.
The NY Fed Empire factory survey sank sharply in December from its unusual rise in November. But the longer term trend is still in place for a gradual move up from its deep negatives at the start of the year.
Meanwhile, overall American industrial production made a minor gain on November from October but is still slightly lower than year ago levels. Manufacturing output (led by business equipment), which accounts for 78% of total production, rose by +0.3% from October, marginally missing market expectations of +0.4%.
Canadian housing starts took an unseemly dive in October as they dropped to just an 213,000 annual pace and far below the expected 257,000 pace, or the 272,000 pace in October. For them, this is a huge and unusual miss probably reflecting the impact higher interest rates have on multi-family housing units.
And in Australia, the extent of bribery and corruption in China's environmental regulatory system is laid bare in the collapse of a public company there.
In India, export levels are neither growing nor retreating significantly. They were up in November marginally from October but down -2.9% from year-ago levels
In the eurozone, the early PMI surveys show activity is falling at an increasing rate in December and that is true for both their factory and services sectors.
Two of the world's largest container shipping groups stopped using the Red Sea and the Suez Canal. Germany's Hapag-Lloyd and Denmark's Maersk both said the dangers are too great at the moment and have instituted temporary halts. They have now been followed by two more European shipping lines, MSC, and CMA-CGM. This will put a giant spoke in global trade as more than 10% of world trade depends on the Suez canal.
The UST 10yr yield has fallen slightly today as things settle down in the new levels, now at 3.92% and little-changed from Saturday.
The price of gold will start today also unchanged at just on US$2033/oz and that is up +US$36/oz from a week ago.
Oil prices are marginally firmer from Saturday at just on US$72/bbl in the US. The international Brent price is now at US$77/bbl.
The Kiwi dollar starts today at 62.1 USc and little-changed from Saturday. but it is up more than +1c from a week ago. Against the Aussie we are still at 92.6 AUc. Against the euro we are still at 57 euro cents. That all means our TWI-5 starts today just on 70.4, unchanged too and +20 bps higher than a week ago.
The bitcoin price starts today at US$41,922 and up a mere +US$31% (<0.01%) from this time Saturday. A week ago it was at US$43,699 so a -4.1% drop since then. Volatility over the past 24 hours has been modest at +/- 1.2%.
You can find links to the articles mentioned today in our show notes.
You can get more news affecting the economy in New Zealand from interest.co.nz.
Kia ora. I'm David Chaston. And we will do this again tomorrow.