Economy Watch

Kia ora,Welcome to Wednesday’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 news the US Fed is meeting but flying blind on both inflation and jobs data. But other indications suggests the US economy is fading faster than previously assumed.In the US oil patch, the Dallas Fed said service sector activity contracted further in October with the revenue index, a key measure of service sector conditions, falling to its lowest reading since July 2020. Employers are shedding jobs, they notedThings weren't great in the mid-Atlantic states region but not as tough as in Texas. The Richmond Fed's factory survey contracted less in October than September, but they also reported employers shedding jobs.Despite those two reports, the ADP Employment Report indicated that private payrolls rose an average of +14,000 jobs per week in the four weeks ending on October 11, as they move to fill the labour market data void because of the BLS shutdown. If that pace holds for October, US jobs growth in the month will be about +57,000 and better than the -32,000 in September decline. Both are unusually low levels. (In October 2023, the US reported +186,000 job gains, so they have fallen a long way since then.)Also not as negative as expected is US consumer sentiment as measured by the Conference Board. It did ease lower in October, but not as low as some had feared although it is now at a six month low. Those on low incomes (under US$75,000/year) or over 55 years were more negative than those 35-55 and on higher incomes.But overnight a range of large employers announced job cuts. UPS said it has shed -48,000 jobs, Amazon -14,000. They aren't the only ones. On top of the US Federal Government furloughs, they are facing some significant labour market strainThe Fed will likely deliver a -25 bps rate cut tomorrow.Across the Pacific, South Korea said its economy grew +1.7% real in Q3-2025 from the same quarter in 2024, building on a widening expansion. Over the past year, all of their growth has come in Q2 and Q3-2025.Chinese president Xi and US president Trump are due to meet to try and work out a trade accommodation. It will be ironic that Trump can compromise with another dictator, but not with elected representatives in his own country.In India, they reported that their expansion of industrial production held up better than expected. It rose +4.1% in August and that was expected to ease to +2.6% in September. Burt in fact their fast expansion rolled on with a +4.0% gain last month. Their factory sector rose +4.8% on the same basis. This is a very good result for them.In Europe, inflation expectations dipped slightly to 2.7% in OctoberLater today, Australia will report its September inflation results, both their quarterly CPI and their monthly inflation indicator. Both are expected to rise to the 3% level. Recent comments by the RBA governor suggest they are in no hurry to cut their policy rate, given inflation remains high and their labour market is still expanding. They next review their cash rate target on Tuesday, November 4, 2025.The UST 10yr yield is now at 3.99%, dipping another -1 bp from yesterday.The price of gold will start today at US$3956/oz, down another -US$37 overnight.American oil prices are down -US$1.50 from yesterday at just on US$60/bbl, with the international Brent price just under US$64.50/bbl.The Kiwi dollar is now at just on 57.8 USc, and up +10 bps from this time yesterday. Against the Aussie we are down -10 bps at 87.8 AUc. Against the euro we are up +10 bps at 49.6 euro cents. That all means our TWI-5 starts today at just under 62.3 and up +10 bps from yesterday.The bitcoin price starts today at US$115,406 and down a minor -0.2% from this time yesterday. Volatility over the past 24 hours has again been modest at just on +/- 1.0%.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.

Kia ora,Welcome to Tuesday’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 news expectations are gyrating around the upcoming US-China leaders meeting. Markets have high expectations and are pricing in a positive outcome. For US markets, this is relatively modest and a 'relief'. For Chinese markets, and Asian markets more generally, it is very positive.A surge in market euphoria could well bring a surge in commodity prices, and in turn, inflation. This will complicate the US Fed's Thursday decision - but they won't know the final outcome of the Xi-Trump meeting when they make their decision later this week and that is awkward for them.Even before the results of the key meeting are known, Chinese industrial firms' profits rose more than +20% in September from the same month a year ago amid ongoing policy measures to revive business and consumer sentiment. Private-sector earnings strengthened markedly, while losses among state-owned enterprises narrowed quickly.Meanwhile, the stutter China had in foreign direct investment in the April to June period also seems to be over. In September, they attracted +¥68 bln in FDI, more than the +¥61 bln in the same month of 2024. But that earlier hesitation still means they are running more than -10% lower than last year, and 2024 was the weakest year they had for foreign direct investment in more than a decade. It may be improving slightly, but they are still in a serious shadow.And we should probably note that the hesitation about relationships with the US are expanding. Countries may 'engage' with the US transactionally to hold on to trade links, but China is winning. This is clear from Indonesia ordering Chinese fighter jets for its air force, and other naval equipment.In the US the data isn't quite so positive, although you wouldn't know it from the Wall Street signals today. Despite 'improving', the Dallas Fed factory survey is still reporting negative overall conditions. New orders shrank less, and manufacturing conditions remained below average. Perceptions of broader business conditions worsened somewhat in October and optimism about the next six months waned. But prices and wage pressures eased, the survey showed.Over the weekend, the US released its September CPI inflation data and it rose to 3.0%, up from 2.9% in August. This was slightly less than the expected 3.1% but it is still its highest level since June 2024. Energy costs, food and rents came in higher than that but petrol prices were lower.One factor to watch is that the rate of increase in the past two months is closer to +4% on an annualised basis. The number reported today relies on the low increases they had in 2024 and February to May. When those months work their way out of the annual calculation, the higher pressure outside those periods will come into play.Meanwhile, the University of Michigan consumer sentiment survey reported that Americans feel inflation is running at 4.6% and they downgraded their earlier confidence reading to now be -24% lower than year-ago levels.The internationally benchmarked PMI report for the US for October reported a strong start to the fourth quarter, with expansions in both the services (55.2) and factory sectors (52.2).If there is a relaxation of trade tensions after the China-US meeting, Australia could be a big beneficiary. And markets are starting to price that in.We should also probably note that the price of aluminium (or aluminum if you prefer) is rising fast again, back up to levels first reached in the pandemic spike. Causing this current surge is the price the Americans are prepared to pay because of their self-imposed tariffs, as producers avoid that market. Those American buyers are being hit twice.Also worth noting is a sudden rise in the price of sulfur (or sulphur if you prefer). Causing this spike is a fall in supply from some key oil producers (sulfur is a bi-product), when demand is rising for fertilisers.The UST 10yr yield is now at 4.00%, dipping -1 bp from yesterday. The price of gold will start today at US$3993/oz, down -US$118 overnight.American oil prices are -holding from yesterday at just over US$61.50/bbl, with the international Brent price still just on US$66/bbl.The Kiwi dollar is now at just on 57.7 USc, and up +20 bps from this time yesterday. Against the Aussie we are down -40 bps at 87.9 AUc. Against the euro we are up +10 bps at 49.5 euro cents. That all means our TWI-5 starts today at just under 62.2 and up +20 bps from yesterday.The bitcoin price starts today at USD$115,614 and up +1.8% from this time yesterday. Volatility over the past 24 hours has again been modest at just on +/- 1.3%.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.

Kia ora,Welcome to Friday’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 news of a sudden jump in international crude oil prices as the US sanctioned the main Russian oil companies.In the US, existing home sales in September rose to just over a 4 mln annual pace, slightly more than in August and +3.3% better than year-ago levels. But it was to levels less than markets expected (4.1 mln pace). The weakest regions were the South and the Midwest. But both coasts got good increases, especially in California.Because the Chicago Fed's National Activity Index collates a range of data that includes from US Federal government sources, and those are shutdown, the NAI is not published this month.However the October Kansas City Fed factory survey reported a strong rise in activity. But new export orders fell, and the average workweek shrank which was unexpected. Apparently some facilities are "doing more production with less people". There is a general worry about where new orders will come from.In Canada, they said their September retail activity retreated in the month and only held up by car-buying activity. Canadians aren't travelling either, and in an unusual twist the tourism flow into Canada from the US is now greater than the other way. But their factory activity rose by a good amount in the month.We should probably note that China is putting the final touches to its latest Five-Year Plan. These have been the catalyst for the country's economic rise, despite their dismissal in the West. Their state planning has brought them up to be the alternate world superpower. And China and the US will be meeting in Malaysia in a few days to see if they can iron out some knotty disagreements and pave the way for a Xi-Trump summit. It will likely happen because the Americans seem on the back-foot now, but startlingly blind to their growing weakness. And TACO.Singapore reported September inflation of just +0.7% from a year ago, a pick-up from August's four year low.Taiwan said its retail sales fell -2.2% in September from a year ago, reversing August's rise. They said public uncertainty levels are high and spending plans are conservative. But the same view isn't shared in their factory sector where industrial production was up +15% from a year ago, consistent to order information we reported yesterday and which is likely to drive output even higher in coming months.The EU reported its September consumer sentiment survey results and this was little-changed, remaining quite negative although a bit less so than in prior months. In fact, it is now its least-negative since February.Container freight rates rose +3% last week, largely on the China-to-EU trade. Overall they are now -45% lower than year-ago levels. Bulk cargo rates rose +8.5% over the past week and are now +40% higher than year-ago levels.The UST 10yr yield is now at 3.99% and up +4 bps from this time yesterday.The price of gold will start today back up sharply at US$4129/oz, a gain of US$81 from yesterday, a +2.0% firming. Silver has risen less, now at US$49/oz.American oil prices are +US$3.50 higher at just under US$62/bbl, with the international Brent price now just on US$66/bbl.The Kiwi dollar is at just on 57.5 USc, and again little-changed from yesterday. Against the Aussie we are down -20 bps at 88.3 AUc. Against the euro we are also unchanged at 49.5 euro cents. That all means our TWI-5 starts today at just under 62.1 and essentially unchanged.The bitcoin price starts today at US$110,047 and up +1.5% from this time yesterday. Volatility over the past 24 hours has been modest at just over +/- 1.6%. (Trump has pardoned a major crypto fraudster.)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 on Monday.

Kia ora,Welcome to Thursday’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 news the US federal Government shutdown is now the second longest in their history having just overtaken the 1995-96 one where Republicans were trying to prevent a Clinton budget being passed. The longest was the 2018-19 one induced by Trump. The current one has seen about 1 mln federal workers stood down, and that is the largest of this type of impact. If this one runs another two weeks it will then become their longest.Separately, US mortgage applications inched lower last week although it was their fourth consecutive weekly decline. The weakest part of these mortgage applications are those to buy a new home. This came despite benchmark 30 year mortgage interest rates falling again and back near their one-year lows.There was another US Treasury bond auction overnight, this one for their 20 year Note. It drew is normal modest support, and delivered a median yield of 4.46%, down from the 4.56% at the prior equivalent event a bit more than a month ago.Ratings agency Moody's is pointing out that the rise of non-bank debt providers are building stress into the global financial system. Loans to non-depository financial institutions (NDFIs) are now 10.4% of total bank loans, nearly three times the 3.6% exposure a decade ago they said. It is aggressive growth that has outpaced all other lending activities since 2016.Japanese exports rose in September from August, but their imports jumped more than expected and catching analysts a bit by surprise. Basically they are now at the same level, oscillating around balance, as was expected. But some observers cheered that this result indicated Japanese consumer demand was improving.The Indonesian central bank reviewed its policy rate overnight and left it unchanged at 4.75%, surprising observers who had expected and priced in a -25 bps rate cut. But to be fair, it had lowered rates at the three previous reviews.In China, we should note that Shanghai's recent change in their house-buying restrictions has brought a spectacular surge in transactions - September home sales in this key city rose by more than +70% (they measure sales activity by m2).We should also probably note that the aluminium price rose again overnight as it has done since early April and is now at its highest level since May 2022 when it was in the pandemic bubble. Other than that, it is now at a record high.The UST 10yr yield is now at 3.95% and down -1 bp from this time yesterday.The price of gold will start today sharply lower again at US$4048/oz, down -US$74 from yesterday, another -1.8% correction. Silver has fallen less.American oil prices are +US$1 firmer at just over US$58.50/bbl, with the international Brent price now just over US$62.50/bbl.The Kiwi dollar is at just on 57.5 USc, and little-changed from yesterday. Against the Aussie we are up +10 bps at 88.5 AUc. Against the euro we are also unchanged at 49.5 euro cents. That all means our TWI-5 starts today at just under 62.1 and up less than +10 bps.The bitcoin price starts today at US$108,105 and down a rather sharpish -4.8% from this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 2.5%.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.

Kia ora,Welcome to Wednesday’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 news the market assumption that Trump's upcoming meeting with Chinese president Xi would calm trade matters seems up in the air again, with that meeting now suddenly less certain. And a Trump-Putin meeting chance is fading. As well as the Gaza truce holding. Markets are in a wait-and-see mode today. But precious metals prices are giving back some of their recent gains in sharp moves lower.But first, today's full dairy auction delivered an average price of US$3881/tonne, down -1.0% from the prior full event two weeks ago. But the key WMP price fell a sharp -4.6% as the derivatives market had signaled, while the SMP price fell -2.1%, only half the derivatives market signal. Butter and the cheeses fell, but there was a big gain for AMF. Apparently. The auction system suffered glitches so these details are interim and are subject to change.In the US, their Federal Government shutdown is getting ever more toxic, now in its third week. A key White House economic advisor said yesterday the shutdown is “likely to end sometime this week,” though warned that if it doesn’t, the Trump administration may resort to “stronger measures” to pressure Democrats. There seems no resolution in sight amid the partisan standoff. Republicans are pushing for a short-term funding bill to maintain current spending levels (something they railed against when Biden was President), while Democrats insist any deal must include expanded health-care provisions, specifically an extension of Obamacare tax credits set to expire at the end of 2025. Curiously, Obamacare has its deepest hold in Republican states.In American private sector data released overnight, there was quite a dive in the Redbook retail sales data tracking for last week. As its a one-off, it is not possible to say whether this is an anomaly or an indication of some sharp retail cooling. But it is worth watching. It could well be that tariff-tax price hikes are sapping retail demand.In Canada, they got an inflation surprise. Their CPI inflation rose to 2.4% in September from 1.9% in the previous month, and higher than analyst expectations of 2.3% and the highest inflation rate since February. It was the first time inflation crossed the Bank of Canada's 2% threshold in six months. Even their core inflation rate rose more than expected. But some of this jump can be explained by base effects related to their petrol price. The Bank of Canada next reviews their policy rate next week and more than a 50/50 chance of a -25 bps cut is priced in by financial markets. That would take their policy rate to 2.25%.Across the Pacific in Taiwan, their export prowess actually gained momentum in a spectacular fashion in September. Orders for Taiwanese exports surged by more than +30% year-on-year to an all-time high exceeding US$70 bln in the month, accelerating from a 19.5% increase in the previous month and far surpassing market expectations of a +18% gain. Demand for AI products surged.In Japan, Sanae Takaichi has won the prime ministership, building a coalition with the Japan Innovation Party, and will now chase spending reforms and expansionary fiscal policies, in the style of ex-PM Shinzo Abe. The Yen weakened sharply as a result.In Argentina, despite more overt US support, the peso has fallen sharply again.In Australia, they are glowing after successful Albanese deals with the US. But now delivering meaningful rare earth production become the priority. It will likely reinvigorate an already successful mining sector. If demand from China slows, as some expect, this could keep their mining sector party going for a while longer.The UST 10yr yield is now at 3.96% and down -3 bps from this time yesterday.The price of gold will start today very sharply lower at US$4121/oz, down a massive -US$225 from yesterday, a -5.2% correction. Silver has fallen proportionately more, down to US$48.50/oz.American oil prices are +50 USc firmer at just under US$57.50/bbl, with the international Brent price now just under US$61.50/bbl. But even American plans to refill its strategic reserves with more than 1 mln barrels hasn't shifted the price.The Kiwi dollar is at just under 57.5 USc, and little-changed from yesterday. Against the Aussie we are up +20 bps at 88.4 AUc. Against the euro we are also up +20 bps at 49.5 euro cents. That all means our TWI-5 starts today at just over 62 and little-changed.The bitcoin price starts today at US$113,511 and up +2.7% from this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 2.7%.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.

Kia ora,Welcome to Tuesday’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 news Australia seems to have avoided American ire when Prime Minister Albanese visited Washington overnight. They ended with a rare earths agreement, confirmation of the AUKUS submarine deal, and unchanged 10% tariff rates into the US.Albanese also seems to have avoided being forced into an overt anti-China position, and has resisted committing to defence spending above 2% of GDP. Trump wanted 3.5% but that seems sidelined.It is also pretty clear that having US support can be a toxic advantage - for the US. Despite the US committing more than US$20 bln of US taxpayer funding to bolster its currency, Trump support of Argentina is leaking those funds fast with traders taking the support funds as fast as they can (the peso is still weakening fast), and Argentina rushing to sell China soybeans to replace American farmers. You couldn't make this stuff up.In Canada, producer prices rose 4.0% in September from a year ago, the most since January, and prior to that the most since January 2023. But this strong rise was mostly caused by the rise in precious metals, especially gold.Meanwhile, the latest Business Outlook Survey for Canadian businesses undertaken for their central bank shows a modest recovery in sentiment, but conditions remain quite subdued.In China, their central bank kept their key lending rates at record lows for a fifth consecutive month in October, as was expected.The rate of fall in China's new house prices mellowed in September according to official data. They were down overall by -2.3%. Shanghai remained the outlier with a +5.6% rise, slightly below August’s +5.9% increase for that city. But for resales, it is still tough, with none of their 70 largest urban areas reporting a gain, either month-on-month or year-on-year, not even Shanghai. If you buy new, you can only still sell into a falling market.In a surprise to no-one, China said its Q3-2025 GDP was up +4.8% from a year ago. But that showed weaker than expected consumer demand. They also reported that retail sales were up only +3.0% in September (and a one year low, compared with +3.4% in August) whereas industrial production was up +6.5% in September (+5.2% in August. Regular readers will know that we also track electricity production as a hard check against these other top-line claims. That only showed a +1.5% rise from a year ago. It regularly trails claims of big industrial output and is a core reason we are sceptical of those outsized official claims.The latest trade and tariff threats from the US is causing trans-Pacific freight rates to spike again as goods are rushed to beat the threatened imposition. But this spike is much more muted this time as most Chinese firms have transitioned away from US supply in a significant way.On the import front, some decoupling by China is stark. China's monthly soybean imports from the US have fallen to zero for the first time in seven years. They were replaced by mostly South American sources. China is also strangling rare earth magnet exports to the US, which could be serious for some American companies, including defence contractors.In France, after a tense political week, S&P downgraded France's credit rating in a rare, unscheduled adjustment, citing political instability that threatens the government’s efforts to repair its finances. Basically their public purse can't afford their generous retirement benefits, but the population insist they be kept irrespective of the damage to the State.In Germany, producer price deflation stayed well embedded, with prices falling -1.7% in September from a year ago, although this was less than the -2.2% retreat in August.The UST 10yr yield is now at 3.99% and down -2 bps from this time yesterday.The price of gold will start today at US$4346/oz, up +US$95 from yesterday, a +2.2% surge to start the week. Silver hasn't had the same surge.American oil prices are -50 USc lower at just on US$57/bbl, with the international Brent price now just on US$60.50/bbl.The Kiwi dollar is at just on 57.5 USc, and up +10 bps from yesterday. Against the Aussie we are down -10 bps at 88.2 AUc. Against the euro we are up +10 bps at 49.3 euro cents. That all means our TWI-5 starts today at just under 62, up +10 bps.The bitcoin price starts today at US$110,505 and up +1.6% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.7%.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.

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 news Australia is facing some hard choices in their relationships with China and the US. Can you have security without economic stability? Can you have stability with a disrespectful and unreliable partner?But first, this coming week will be dominated by today's New Zealand CPI release later this morning. And a full dairy auction on Wednesday.In the US, there is some expectation that they will get their September CPI data at the end of the week (expect higher than 3%) despite the shutdown. But most focus there will be on the Q3 earnings season announcements. CPI data will also come from Japan, Singapore and Malaysia. But there will be PMIs from all over this week and well as interest rate decisions from Indonesia and Korea. And the Chinese will review their Loan Prime rates although no change is expected.From China, they will release Q3 GDP data, which is expected to show a small sag (to 4.8%?), along with a range of other core economic metrics which should give a broader fix on how they are trackingOver the weekend in India, bank loan growth accelerated to its fastest pace of expansion in September, for all of 2025, up +11.4% from year-ago levels to US$2.3 bln.After two months of declines, Singapore's exports rose almost +7% in September from a year ago, largely on the back of recovering exports of electronic goods.In Malaysia, their Q3 GDP result shows them expanding +5.2% from a year ago, accelerating from +4.4% growth in Q2. It is their fastest expansion in a yearIn Australia, there is growing concern about the building of uneven wealth distribution and how inheritances embed both inequality and entitlement. A failed attempt to address it through their superannuation system reforms has just raised the pressure to 'do something'.A more immediate stress is also building in Australia; American pressure to de-couple from China. This seems quite unlikely given the local wealth-weight dependent on the China trade. But it will make for 'interesting times' in the AU-US relationship.In the US over the weekend President Trump seemed to back off his sharp rhetoric against China in another TACO moment. Markets went into temporary relief mode on Friday. There was more TACO for Ukraine, even Gaza but both of them just added to the mess he made.The UST 10yr yield is now at 4.01% and unchanged from Saturday but down -4 bps for the week.The price of gold will start today at US$4251/oz, up +US$30 from Saturday. Over the past week, gold is up a net +5.8%, silver is up a net +3.3% and platinum is now marginally lower.American oil prices are holding lower at just on US$57.50/bbl, with the international Brent price now just over US$61/bbl.The Kiwi dollar is at just on 57.4 USc, and up +10 bps from Saturday. Against the Aussie we are unchanged at 88.3 AUc. Against the euro we are up +10 bps at 49.2 euro cents. That all means our TWI-5 starts today at just on 61.9, up +10 bps.The bitcoin price starts today at US$108,732 and up +2.4% from this time Saturday. Volatility over the past 24 hours has been modest at just on +/- 1.3%.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.

Kia ora,Welcome to Friday’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 news that while the 'real economy' is barely able to expand - but is in fact doing so modestly - there are two extreme bubbles brewing - in AI firm valuations, and in precious metals valuations. One or both will end sometime, and the losses will be extraordinary when they do, likely hurting the 'real economy' when it happens. But who knows when? Financial market risk aversion is in evidence today in the bond markets.There are other stresses of course (geopolitical, retribution stupidity, commodity distortions, climate, etc.) and they have to play out at the same time.But first in the US, their economic data is dominated today by the October version of the Philadelphia Fed factory survey for the important Pennsylvania rust belt region. That reported an unexpected sharp slowdown in activity and a six month low in this index. If there is a silver lining however, it is that new order levels picked up from what were very low levels. Not helping however is that firms are again reporting higher than average cost increases. Most firms reported struggles passing on those higher costs in higher prices.American house-building activity has been struggling for the past five months but sentiment in the industry picked up in October somewhat, mainly on the expectation that lower interest rates would help. It's a sentiment improvement,not an activity improvement however.Yesterday we noted slightly improved factory sentiment in the New York state area. But today we can report that their services sector is in a tough spot, in fact its lowest since the pandemic-affected January 2021. It is glum there and firms are not expecting much improvement.In Canada, their small business sentiment has turned negative too.But Canada's housebuilding sector is on a roll, reporting strong housing starts again in September and well above what analysts were expecting. That is now five of the past six months with elevated housing start data.Across the Pacific in Japan, core machinery orders, excluding the large volatile sectors, fell -0.9% in August from July to ¥8.9 tln but it was much less than the sharp -4.6% drop in July. Analysts had expected a small gain however.And staying in Japan, it now looks like Sanae Takaichi will in fact become prime minister after more coalition talks.In France, the Macron-allied new prime minister has survived a no-confidence vote (on the second attempt) bringing some stability to their political mess.In Australia, their September jobless rate ticked higher to 4.5% and their jobs growth, especially full-time jobs growth, came in lower than expected.For the first time since June when rates started falling fast, global container freight rates rose last week, overall by +2%. In the meantime they had fallen -52%, so that suggests these costs may be bottoming out. They are now -50% lower than year-ago levels. There were modest rises everywhere, even in outbound China rates. There will be activity trying to front-run potentially new tariffs by the US, and there is Christmas-goods flows starting too.Bulk cargo rates rose a net +2% last week too, but in between it was unusually volatile. These latest levels are now +12% higher than year-ago levels.The UST 10yr yield is now at 3.97% and down -8 bps from this time yesterday.The price of gold will start today at US$4273/oz, up +US$77 from yesterday and far away a new ATH. Silver is up to just under US$54/oz and an ATH. Platinum is roaring too, now at US$1732/oz and up +71% from the start of the year and approaching its 2011 highs.American oil prices are down -US$1 at just on US$57.50/bbl, with the international Brent price now just on US$61/bbl.The Kiwi dollar is at just on 57.3 USc, and up +10 bps from yesterday. Against the Aussie we are up +60 bps at 88.4 AUc. Against the euro we are down -10 bps at 49.1 euro cents. That all means our TWI-5 starts today at just on 61.8, up +10 bps from yesterday. Also, see this.The bitcoin price starts today at US$108,652 and down another -2.0% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.9%.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 on Monday.

Kia ora,Welcome to Thursday’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 news inflation is getting entrenched in the US and policymakers are starting to look away from the threat under political pressure.But first, US mortgage applications fell for a third consecutive week with both refinance and new home applications decreasing. This came even though benchmark 30 year mortgage rates fell too. But the overall activity level is significantly higher than at this time last year.In New York state, factories there reported that their new order levels stopped falling. And they shipped more in the past month. That brought a good rebound in the New York Fed's Empire factory survey in October, making back September's drop and almost back to the August levels. One of the reasons respondents feel better about the situation is that their price increases are sticking and they are absorbing less of their tariff-tax cost increases.Supporting that are two private CPI tracking services who say that consumer prices picked up even more in September, one even suggesting CPI inflation ran at over +6% in September.And that inflation is rising is confirmed in the October Beige Book release today by the Fed. They noted tariff-induced costs were reported in all districts, as input costs increased at a faster pace due to both these higher import costs and the higher cost of services. Overall, they say American economic activity changed little on balance since the previous report, with three Districts reporting slight to modest growth in activity, five reporting no change, and four noting a slight softening. Consumer spending, particularly on retail goods, inched down in recent weeks.Across the Pacific, China said its consumer prices stayed in mild deflation, now running -0.3% lower in September from a year ago. Beef and lamb prices are rising now, but milk prices are still falling.Meanwhile Chinese producer prices, already in moderate deflation, eased back to a -2.3% decrease, from August's -2.9%.China also released its monthly new yuan loan data overnight. They came in at almost ¥1.3 tln, double the unusually low August level but still short of the almost ¥1.5 tln expected. September's get a seasonal boost normally and those factors were evident this year too. But still, the latest level was lower than the ¥1.6 tln in September 2024. Credit demand remains slightly subdued.India said its September exports rose +6.1% to US$36.4 bln, building on the August increase. Their exports to the US are only 20% of all their exports and less than half of those are caught up in punitive tariff-taxes. And even among those, it is the Americans paying, it seems.The EU said their industrial production rose again August from a year ago. Although the rise was a modest +1.1% from a year ago, that is an inflation-adjusted 'real' gain. In fact, their have reported gains on that basis for the past seven consecutive months which is unusual for them. For the prior 38 months they consistently reported year-on-year decreases. It's a turn up they will take.In Australia, the Westpac-Melbourne Institute Leading Index for Q3-2025 suggests that the Australian economy is only expanding at the long term trend pace, but the pace is picking up marginally. They expect 2025 to come in below trend, but 2026 to edge up to trend levels.And Australia fell almost -66,000 homes short in the year to June of the aspirational +240,000 new homes built needed to the Government's target of 1.2 million new homes in the five years to 2029. That's a -27% shortfall in year one, not a great start because it is actually the weakest annual rise in three years. A shortfall like this will underpin prices for existing houses and make housing sharply less affordable.The UST 10yr yield is now at 4.05% and up +2 bps from this time yesterday. The price of gold will start today at US$4196/oz, up +US$52 from yesterday.American oil prices are little-changed at just under US$58.50/bbl, with the international Brent price now just over US$62/bbl.The Kiwi dollar is at just on 57.2 USc, essentially unchanged from yesterday. Against the Aussie we are down -320 bps at 87.8 AUc. Against the euro we are down -10 bps at 49.2 euro cents. That all means our TWI-5 starts today at just on 61.7, down -10 bps from yesterday. Also, see this.The bitcoin price starts today at US$110.890 and down another -1.5% from this time yesterday. Volatility over the past 24 hours has been modest at just over +/- 1.3%.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.

Kia ora,Welcome to Wednesday’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 news both Fed boss Powell, and the IMF are increasingly concerned about financial stability.But first up today, there was a dairy Pulse auction overnight for milk powders. Prices for both SMP and WMP dipped -0.5% in USD terms, extending the easing we have noted recently. But the exchange rate fell faster, so in NZD both commodities were up about +1%.But the key economic influence today is the overnight speech from US Fed boss Powell. He (politely) bemoaned the lack of key current data, but is clearly worried about what is happening in the giant US labour market. He sees payroll about to shrink, not only because of the immigration crackdown, but softening economic activity and business hesitation due to tariff costs and uncertainty. He also said the Fed will likely end its reductions in its balance sheet because liquidity conditions are tightening. His speech sets the Fed up for defensive actions ahead of what they expect are growing economic risks. Basically, they are ready to cut rates.Financial markets noted his caution, and while they didn't retreat, they aren't as gung-ho as yesterday or last week either, despite the rate-cut implication.“My antenna goes up when things like that happen,” Jamie Dimon, said on a call with analysts about stresses like the First Brands debacle. “I probably shouldn’t say this, but when you see one cockroach, there are probably more. Everyone should be forewarned on this one.”In the absence of official data while their shutdown extends, trade data is filling the gap. Today the NFIB Optimism survey came in mich lower than expected, and a fall was expected. Small business owners are increasingly frustrated with supply chain disruptions and are seeing inflation emerging in what they are paying, and having a struggle passing on those costs as sales levels turn soft.Across the Pacific, China has set an ambitious new vehicles sales target for 2025 of 32.3 mln units, far and away the world's largest market (The US is second at about 18 mln vehicles.) They will likely hit that target. In September, sales were the strongest of the year at over 3.2 mln in the month, almost +15% higher than the same month in 2024. NEVs accounted for 1.6 mln, up be almost +25% from a year ago. This is now a globally significant sector driving both the Chinese and global economy.Singapore was bracing for a +2.0% year-on-year Q3-2025 GDP expansion, down from the +4.5% expansion they had in Q2-2025. But they actually got a +2.9% expansion in the September quarter. Services and construction did more heavy lifting there than was assumed when all the focus was on the troubles their factory sector was having.In Australia, the NAB Business Confidence Index rose tin September from August’s three-month low, staying above the long-run average. Business conditions were unchanged, as stronger sales and profits were offset by weaker employment. However, forward orders slipped into contraction indicating softer demand ahead.Through all these global changes, the IMF is trying to make sense of how this is affecting the world's economy. They are somewhat confused by "complex forces". Their World Economic Outlook update projects overall economic growth to slow to +3.2% in 2025 and +3.1% in 2026, down from 3.3% in 2024. They see the world adjusting to rising protectionism and fragmentation and we are now below pre-policy-shift levels. American growth is now expected lower at +2.0% in 2025 and similar in 2026, while China’s economy is projected to slow to +4.8% and +4.2% in 2026. Europe is forecast to expand +1.2% in 2025 and +1.1% in 2026, Japan by +1.1% and +0.6%, Australia by +1.8% and +2.1%. Meanwhile, global inflation is expected to continue easing, though trends will vary across countries, above target in the US, with risks tilted to the upside, while staying subdued elsewhere.The UST 10yr yield is now at 4.03% and down -4 bps from this time yesterday. The price of gold will start today at US$4145/oz, up +US$35 from yesterday.American oil prices are -US$1 lower at just over US$58.50/bbl, with the international Brent price now just under US$62.50/bbl. That is changed by lower demand and higher supply expectations.The Kiwi dollar is at just on 57.2 USc, down -20 bps from yesterday. Against the Aussie we are up +20 bps at 88.1 AUc. Against the euro we are dow -30 bps at 49.3 euro cents. That all means our TWI-5 starts today at just under 61.8, do2n -10 bps from yesterday. Also, see this.The bitcoin price starts today at US$112,593 and down -1.8% from this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 2.6%.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.