Economy Watch

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.Today we lead with news that while the world's politics is getting messier and more partisan, the world's big economies are basically doing ok.First up today, the US Fed released the minutes of its June 13 (NZT) meeting and those show it is in no hurry to cut its policy rate. But they do seem to be on alert for signs of labour-market deterioration.US mortgage applications fell -2.5% last week from the week before to be -12% lower than last year's weak level. The benchmark 30yr fixed mortgage rate blipped up over 7% again which won't have helped. So, no signs the hibernating American housing market is waking up yet.Reports of job layoffs among major companies remained very low in June, and noted strong hiring in the month.But the pre-cursor ADP Employment Report for June said American the private sector added 'only' +150,000 new jobs in the month, less than +160,000 expected. Analysts now expect the June non-farm payrolls to have expanded by +190,000 and we get that data on Saturday (NZT).There was a minor uptick in the weekly initial jobless claims last week taking them to 238,000 and lifting the number of people on these benefits to 1.8 mln but still well below where they started the year.US exports of goods and services dipped slightly in May from April but remain +4.3% higher than for the same month a year ago. The overall trade deficit was about US$9 bln more on that basis, insignificant for an economy as large as theirs.In something of a surprise, the widely-watched local ISM services PMI reported a contraction in June when a similar expansion to May was expected. This was suddenly its worst result since 2020. This garnered headlines. But the internationally benchmarked S&P Global/Markit version did report a rising expansion and at the fastest pace in a year. Again, take your pick depending on your inbuilt bias.Their May report for new factory orders revealed a small retreat from the prior month after a similar rise in April. Year-on-year they remain almost +1% higher however.In India, their service sector is on a real spurt higher. Sharp rises in sales and business activity were the main feature in June. International orders increased at a record pace, and they had their fastest upturn in employment for 22 months.But that is in sharp contrast to China. Although its June factory PMI was stronger than the official NBS version, the Caixin services PMI was weaker, and by quite a bit. But at least it is still expanding, although the rate is at its slowest pace since October 2023.And it wasn't too different in Japan. Their service sector stalled in June, according to the latest PMI data. The volume of new business was broadly unchanged from May.In Europe, perhaps we should note that Greece is introducing a six day/48 hour working week for some industries. But it only applies to businesses which operate on a 24-hour basis and is optional for workers.Meanwhile, Australian retail sales in May rose far less than inflation, a situation they have had for a long time now - since the beginning of 2023. What improvements there are coming from 'chasing bargains'.There was a small rise in May for dwelling building permits in Australia, and a helicopter view of these trends suggests they may have passed their tough.There were two PMIs out for Australia yesterday. The internationally-benchmarked Markit version shows their service sector growth was sustained in June. New business and activity both continued to rise, albeit at slower rates. But the AiG version for their factory sector isn't flash at all, even if it 'improved' from May.The UST 10yr yield is now at 4.36% and down -7 bps. The price of gold will start today up +US$32 from yesterday at US$2356/oz, up +1.4% in a day.Oil prices are little-changed from this time yesterday at just under US$83/bbl in the US while the international Brent price is still at US$86.50/bbl. And perhaps we should note that ahead of the American summer 'driving season' petrol prices there are marginally less than a year ago at this time.The Kiwi dollar starts today +¼c firmer from yesterday and back up at 61 USc. Against the Aussie we are -20 bps softer at 91 AUc. Against the euro we are also holding at 56.6 euro cents. That all means our TWI-5 starts today at 70.4 with a +10 bps gain.The bitcoin price starts today at US$60,198 and down -2.8% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.2%.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.

Dairy prices nosedive. US data quite positive. China housing woes deepen. Inflation low in South Korea & EU. RBA minutes leave rate hike on table.

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.Today we lead with news the final round of Australian tax cuts have come into effect.But first, the updated factory PMIs for the giant US economy have brought another diverging set. The S&P Global/Markit one, the internationally-benchmarked version, reported a rise based on a new order expansion to describe a moderately expanding sector. But the widely-watched local version from the ISM reported the opposite - easing new order levels and a small contraction in the sector. Take your pick. The recent trends in both are opposite too. It is hard to know what to make of these competing views, and markets seem to have ignored them.In China, the private PMI survey by Caixin was much more upbeat than the official government version. This internationally-benchmarked Caixin factory PMI reported that in June business conditions improved the most in over three years. But it turns out that is not saying a lot - the improvement from May was marginal. But at least it is positive, and underpinned by rising new orders.Staying in China, regular readers will know that we have been watching the Chinese Government bond yields falling into record-low territory as investors continued to snap up these bonds amid pessimism about the domestic economy. Now their central bank has moved to halt the slide.In Japan, consumer sentiment, which has been quite low for years, improved in June but not by much and not a meaningful or trend-changing amount.The German consumer inflation rate eased in June to just 2.2%, down from 2.4% in May. On an EU harmonised basis it fell to 2.5% from 2.8%. Their core inflation rate is a bit higher at 2.9% because the rise in food prices is now very low, and energy prices continue to retreat. They will be pleased with this progress and will be hoping it will be maintained.The full EU CPI rate will be released tomorrow and that is expected to come in at 2.5% and a slight reduction from May.In Australia, CoreLogic is reporting that dwelling values rose +0.7% nationally in June from May to be up +8.0% for the year. This rise is being led by a booming Perth market (+24% annually), although Brisbane (+16%) and Adelaide (+15%) are also strong contributors. Sydney's rises are about the average, but it is Melbourne's falls that offset the big gainers.And staying in Australia, their 'Stage Three' tax cuts have come in to operation. They will benefit about 11 mln earners. The plan that has gone into effect was originally proposed by the Morrison Government, but the Albanese Government modified it so that those earning under AU$147,000 per year got more, those earning for than that level had their gains trimmed by half.The UST 10yr yield is now at 4.48% and up +9 bps to start the Wall Street week. The price of gold will start today up +US$3 from yesterday at US$2329/oz.Oil prices are up +US$2 from this time yesterday at just on US$83/bbl in the US while the international Brent price is now US$86.50/bbl.The Kiwi dollar starts today slightly softer from yesterday at just on 60.8 USc. Against the Aussie we are slightly softer too at 91.2 AUc. Against the euro we are down -30 bps at 56.6 euro cents. That all means our TWI-5 starts today -20 bps lower at 70.3.The bitcoin price starts today at US$63,241 and up +2.6% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.7%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.

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.Today we lead with news July starts on shaky ground everywhere although the ground is firmer in the US than China.As this is the first week of July, it will be heavy with PMI survey results everywhere (except New Zealand). But the most important release this week will be the American labour market report (their non-farms payrolls) for June on Saturday. Analysts currently expect another +180,000 gain. And before that we get their JOLTs report.In Europe, election results in France and England will shape the week. But so will CPI inflation rates. Not only do we get them for the EU and the other big EU economies, they also come for South Korea, Turkey, Indonesia, and the Philippines too.Over the weekend, Japanese industrial production data was released showing it rose +2.8% in May from April, beating market forecasts. It also recorded an unusual year-on-year gain too. This was the second increase so far this year, mainly due to strong motor vehicles output. They think June will slip back but July will be another gainer.But it was all backwards in China.The official factory PMI was steady for the second straight month as expected. The latest result marked the fourth contraction in factory activity so far this year, as Beijing was struggles to spur an economic revival amid weak demand, deflation risks, and a protracted property weakness. New orders, foreign sales, and buying levels all declined for the second month in a rowAnd their official services PMI slipped as well, now barely expanding. While it was the 18th consecutive month of expansion in June, the latest result was the softest since last December, as new orders and new export orders continues to contract.On Wednesday we may get the Caixin versions of these two PMIs. Recently they have delivered better results, although not significantly different.In the US, the inflation measure the Fed prefers, the personal consumption expenditure price index (PCE) was unchanged in May from April following a +0.3% rise in April. This was what markets were expecting. That means the annual PCE rate slipped to 2.6%, its lowest since March 2021. (The May CPI was 3.3% and we get the June CPI on June 13 (NZT).Personal spending was up +2.4% from May a year ago, personal income a bit less.US durable goods orders were unchanged in May from April but were -1.2% lower than the same month a year ago. Of more concern however will be that capital goods orders fell -10% on the same basis.Eventually that may weigh on employment, but so far it hasn't. Last week initial claims for jobless benefits fell from the prior week. Compared to the same week a year ago the number of people on these benefits was higher, but in relation to their workforce, that gain was insignificant.US pending home sales for May fell when a bounce-back was expected, reinforcing the funk the American housing market is in. In fact local sawmills have been closing on low new home demand and even that hasn't stopped wood prices from falling to post-pandemic lows. Their residential construction and home-improvement markets are buckling.The widely-watched University of Michigan consumer sentiment survey was little-changed in June, but it is up more than +6% from a year ago.The ECB said that its survey of consumer inflation expectations over the year ahead are now back to 2.8%, the same level they were at when they started this survey in early 2020. They peaked at 5.8% in October 2022. Those survey said they felt inflation ran at 5.8% over the prior 12 months. (It actually ran at 2.7% in the year to May but averaged 3.9% over the past twelve months. The June results comes later this week and is expected to be 2.5%.)In France, exit polls show that far-right candidates probably made gains in their weekend first-round elections, garnering about a third of the votes. Turnout was a 'high' 60%. But the final outcome is still uncertain. The second round will take place on July 7, 2024.The rise and rise of container freight rates continued last week, up +4% from the prior week to now be a massive 256% higher than the same week a year ago. Again the main culprit was outbound rates from China to Europe, hostage to the Yemeni Houthis and their piracy. Bulk cargo rates were up +2% for the week and are again in an uptrend. They are up +72% for the year.The UST 10yr yield is now at 4.39% and unchanged from Saturday. The price of gold will start today up +US$6 from Saturday at US$2326/oz.Oil prices are little-changed from Saturday at just on US$81/bbl in the US while the international Brent price is still under US$85/bbl.The Kiwi dollar starts today slightly softer from Saturday at just on 60.9 USc. Against the Aussie we are little-changed at 91.3 AUc. Against the euro we are also unchanged at 56.9 euro cents. That all means our TWI-5 starts today still lower at 70.5.The bitcoin price starts today at US$61,628 back up +1.6% from this time Saturday. Volatility over the past 24 hours has been low at just on +/- 0.9%.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.

The first New Zealand and international wave of electric vehicle (EV) uptake is probably over, with cheaper cars and better public charging infrastructure required for further major growth in the uptake of these "batteries on wheels," says James Foster. In a new episode of interest.co.nz's Of Interest podcast, Foster, who runs the EVDB website, says EVs reaching price parity with internal combustion engine (petrol) vehicles, will be a very significant development. The rise of Chinese EVs should help with this."At the beginning of 2022 we didn't really have any Chinese brand vehicles [in NZ] and now 20% of those on the road are [Chinese]. It's happened in two years. And that kind of shows you, I guess, why maybe the US have freaked out and implemented protectionist policies to try and protect their own car market. The amount of momentum coming out of China is extraordinary. And the build quality, I wouldn't say is taking people by surprise. But I know historically in New Zealand when we have new brands come to market...way back with the Japanese brands or Korean brands, at first you're kind of like, 'I don't know about this.' And then eventually they become normalised. They just become another brand that's part of the story," Foster says."I keep a running tally all the time of the 10 cheapest EVs in New Zealand, and then I get an average from that and that gives me an indication of where we're at. Those are all Chinese vehicles."From a personal perspective Foster enjoys his EV being a part of energy self sufficiency, or sovereignty."That's something that I find quite profound. Since I got the solar panels on the roof I feel like I'm in science fiction...I've actually got the sun's rays going into my house's power and then into a battery in my car and I drive it. Compared to drilling oil, refining it, putting it on a ship, sending it over, driving it down..."In the podcast Foster also talks about the reasons for the dramatic drop in EV uptake in NZ this year, the popular models and brands, prices including in the secondhand market, battery range, home and public charging, insurance and repairs, other EVs beyond cars such as utes, vans and heavy transport, hybrids and hydrogen vehicles, his expectations for NZ's future vehicle fleet and how electricity supply will cope.*You can find all episodes of the Of Interest podcast here.

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.Today we lead with news food price signals belie talk of impending trouble.But first, US mortgage applications were virtually unchanged last week (+0.8%) from the week before, taking them to -13% lower than the same week a year ago. But at least it was a third week of rises, even if small. Mortgage interest rates edged lower last week.But new home sales in the US sank -11.3% in May from April, to be -16% lower than the same month a year ago as high prices and those still-high mortgage rates continued to weigh on buyers' decisions. It is the lowest reading in six months and well below what was expected. Still the April data was revised sharply higher.Slightly elevated bidding (+2.5%) for the US Treasury 5 year Note pushed the median yield down to 4.27%, compared to the 4.48% at the equivalent event a month ago.In Japan, the current focus is on the yen's falling exchange rate, especially to the USD. But while policymakers there say they are watching with concern, interventions so far have been modest and ineffective.In India, their currency is unusually stable and not something we have seen for more than 15 years.In China, the Beijing officials controlling the yuan have allowed it to sink a bit faster recently and it is almost back to its modern 'most weakest' levels of mid-2023.In Australia, their monthly inflation indicator for May edged up to 4% from 3.6% in April, boosting the chance of another RBA rate rise as underlying price pressures clearly remain entrenched. Australian government bond yields leapt almost +20 bps on the news, and to their highest in 2024. The AUD rose +50 bps. The ASX200 tumbled sharply. Markets may have reacted sharply and pulled back somewhat later but economists had a much more measured view preferring to see the relatively small month-on-month change as 'not much'. Meanwhile, an RBA boss said their policy positions are on the right track and will get inflation under control.We should perhaps note that prices for some of the world's key agricultural commodities are struggling, mainly because good growing conditions are delivering strong supply. The corn price is down to where it first was in 1996 and the bubble that started in 2020 is now all erased. Similarly for oats which are now below 1988 levels. The rice price is still highish, but below 2008 levels still. And canola is also a major-traded food export that has extinguished its recent bubble. Wheat is in the same boat, back to price levels it first hit in 1996. The world's food supply and price is currently no threat of availability or affordability issues. However, despite all this some still see "food wars" as a future risk, but that may just be a Singaporean trader talking his own book.The UST 10yr yield is now at 4.32% and up +9 bps from this time yesterday. The price of gold will start today down -US$18 from yesterday at US$2301/oz.Oil prices are little-changed from yesterday at just over US$81/bbl in the US while the international Brent price is now just under US$85/bbl.The Kiwi dollar starts today down nearly -½c from yesterday at just under 60.8 USc. Against the Aussie we are down even more at 91.4 AUc. Against the euro we are down -¼c at 56.9 euro cents. That all means our TWI-5 starts today down -30 bps at 70.5.The bitcoin price starts today at US$60,974 and down -1.0% from this time yesterday. Volatility over the past 24 hours has modest at just on +/- 1.3%.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.Tomorrow is a public holiday in New Zealand (Matariki). We will be publishing on our normal weekend schedule on Saturday and Sunday.Kia ora. I'm David Chaston. And we will do this again on Monday.

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.Today we lead with news questions remain about whether inflation's fall can be maintained.Today is another shadow day with mostly second-tier data released, but some of it is interesting all the same.First in the US, retail sales at physical stores were up +5.3% last week from the same week a year earlier, a good 'real' rise above inflation. But it was a slowing from earlier weeks and is the least rise since mid April.But things don't seem to be expanding anymore in their factory sector. More Fed district surveys are being released, the latest one from the mid-Atlantic states and that brought a slowing in June largely based on retreating new order levels.However the Chicago Fed's National Activity Index for May was less negative, turning up after two prior down months. This was on the back of expanding production levels and new order levels held their own.The Dallas Fed's services PMI for June retreated again in June, but by far less than the sharpish May level. This is a key 'red state' that is struggling.Nationally, the widely-watched Conference Board survey of consumer sentiment dipped in June from May, but not as much as expected. The 'present conditions' aspect remains buoyant, but it is the 'future expectations' component that eased a bit.Separately there was a US Treasury 2 year bond auction earlier today and it was strongly supported, delivering a median yield of 4.66%. A month ago at the equivalent event the median yield was 4.85%, so a -19 bps easing since then. More than US$192 bln was offered for the US$71 bln available.Is inflation under control in the US? A key Fed official doesn't think so yet, and said she is prepared to vote to raise rates again if the disinflation trend doesn't continue.In Canada, they got a small surprise from their May CPI data. It rose to 2.9% from its three-year low of 2.7% in April. Analysts had expected it to retreat to 2.6%. While this move is still in the Bank of Canada's expectation range of "about 3%", the halt to the disinflation trend challenged earlier bets that the central bank would continue loosening monetary policy. Bond yields fell there.In Japan, researchers have found more than 200 million tonnes of manganese nodules, rich in battery metals, in the Pacific Ocean and inside the country’s exclusive economic zone. They say that is the deposit contains 610,000 tonnes of cobalt (equivalent to 75 years of Japan’s consumption) and 740,000 tonnes of nickel (11 years).The latest South Korean consumer sentiment survey rose in June to its highest level since March. Sentiment regarding current living standards increased, while future outlook improved by the same margin. Expectations for future household income also rose.Australian consumer sentiment is mired in low territory, according the the June update of the Westpac-Melbourne Institute survey. Despite the improvement, consumer sentiment remains below its March level and still firmly in deeply pessimistic territory. The survey detail suggests positives from fiscal support measures are being negated by increased concerns about inflation and the outlook for interest rates.In Europe, Denmark is set to become the first nation to impose climate taxes on their agriculture sector. They say they are doing it in part to encourage other countries to follow. Less than 2% of Denmark's GDP comes from their rural sector, but it delivers 22% of their exports.In the UK, the sheer size of their housing crisis has been explained in a dramatic way. Since 1977, they have fallen behind other northern EU countries in building new homes, driving a severe shortage that has sent housing prices soaring and kept young Britons out of the market. A Bloomberg analysis found that the failure to keep housing production on pace has led to a massive 4.3 million missing homes - greater than the number of existing dwellings in all of London!The UST 10yr yield is now at 4.23% and down -2 bps from this time yesterday. The price of gold will start today down -US$13 from yesterday at US$2319/oz.Oil prices are down -50 USc from yesterday at US$81/bbl in the US while the international Brent price is down -US$1 at just under US$84.50/bbl.The Kiwi dollar starts today little-changed from yesterday at just under 61.2 USc. Against the Aussie we are still at 92 AUc. Against the euro we are also still at 57.1 euro cents. That all means our TWI-5 starts today little-changed at 70.8.The bitcoin price starts today at US$61,577and bouncing back a partial +2.5% from this time yesterday. Volatility over the past 24 hours has high at just on +/- 3.0%.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.

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.Today we lead with news a quiet data week is bringing more focus to larger systemic issues.Today, in the absence of key data releases, we should note that after the GFC, regulators moved aggressively to get banks out of holding riskier assets. But that space has been filled by non-bank financial institutions. In fact more than half the world's financial assets are held in these non-bank institutions. The risks from that sector are enormous. And the irony is that these non-banks are funded in large part by ... banks. It is a systemic risk catching the attention of bank regulators. If you want to scare yourself, read the analysis from the NY Fed.That is not the only risk the Fed is watching. Now that they can see inflation returning to its policy range, a softer labour market could bring its own risks. Their labour market is not at that risk point yet they say, but they are watching.Meanwhile, the US Dallas Fed factory survey in America's oil patch was little-changed and uninspiring in their June results. But if there is a change worth noting it is that expectations regarding future manufacturing activity pushed up notably this month. The future production index jumped 10 points, and the future general business activity index surged 16 points to its highest reading since early 2022.Across the Pacific, the Chinese government plans to set up a rescue fund for struggling financial institutions, aiming to prevent a financial crisis triggered by the real estate market slump. Unlike similar funds that were created to protect customers, the purpose of the new fund is to prevent financial institutions from collapsing suddenly, given that bankruptcies of these huge enterprises could cause turmoil in their financial markets.Taiwan said its retail sales rose a modest (but better) +2.4% in May, but their industrial production was up an impressive +16% from the same month in 2023.In Europe, the Ifo Business Climate indicator for Germany unexpectedly declined in June from May, but remains higher than what it has been for most of the past year.Perhaps we should also note that the price of lithium carbonate has fallen back to levels first reached in 2018.The UST 10yr yield is now at 4.26% and unchanged from this time yesterday. The price of gold will start today up +US$12 from yesterday at US$2332/oz.Oil prices are up +$1 from yesterday at US$81.50/bbl in the US while the international Brent price is still just under US$85.50/bbl.The Kiwi dollar starts today unchanged from yesterday at 61.2 USc. Against the Aussie we are down -20 bps at 92 AUc. Against the euro we are also -20 bps lower at 57.1 euro cents. That all means our TWI-5 starts today down -10 bps at 70.8.The bitcoin price starts today at US$60,160 and down a very sharp -6.1% from this time yesterday. Volatility over the past 24 hours has high at just under +/- 3.6%.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.

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.Today we lead with news the pressure is on China to revive its fast-slowing momentum.First however, this week will bring some key American data covering durable goods orders and PCE inflation data on Friday (NZT), new and pending house sales, and the Conference Board's consumer sentiment survey result on Wednesday (NZT). The US Fed will also release its annual stress test results on Thursday (NZT). We will also get key inflation data from the EU, Canada and importantly from Australia on Wednesday. The Westpac MI consumer confidence survey will also come this week, tomorrow in fact. Finally, look out for some key Japanese data on Thursday especially on retail sales and industrial production.Over the weekend China said attracted virtually no more foreign direct investment in May than in April in an outcome that will probably alarm Beijing privately. It is still flowing in at the rate of about US$50 bln per month, but that is now holding at that level. That puts the May FDI level -28% lower than the year-ago level in a trajectory that is as tough for them as in the depths of the GFC. And it is probably going to get tougher for them, especially for important tech.And it isn't much better at home for investment. During the first six months of this year, the total value of mainland China's IPOs has plummeted -84% on the year to just 33 bln yuan (NZ$7 bln), while only 44 companies went public, down -75%. In any other market, this would called a crash.It is no surprise then that the Chinese yuan is weakening, especially against the USD.The early versions of the Japanese PMIs reported gains in their factory sector to a modest expansion, but a fall back in their services sector to a surprise (although tiny) contraction.Meanwhile, Japanese CPI inflation rose in May to 2.8%, up from 2.5% in April. Food was up +4.1%,In India, their early PMIs rose to faster expanding levels in both sectors.And the monsoon has arrived in India, taking some pressure off its heat and water stress - although not yet in parched northern India.In the US, the first of their June PMIs are in, the internationally benchmarked versions. Their factory sector PMI rose but still a modest expansion and a 3 month high. And their services PMI rose to a good expansion to a 2 year high. Both were on the back of rising new orders. Making this a bit more impressive is that cost inflation was much lower in both sectors, and business confidence in the immediate future (1 year) rose. And they report that for the first time in 3 months, companies planned to expand their workforce.In what might seem like a bit of irony, the Conference Board leading index was released over the weekend and it retreated - but it was more May and isn't reporting on the same period as the June PMIs. It's a 'leading index' that trails current data!Also for May, American existing home sales fell -0.7% in May from April to a seasonally adjusted annualised rate of 4.1 mln units, the lowest in four months. The decline comes as the median sales price climbed to a record high of US$419,300 (NZ$685,000). Meanwhile, unsold inventory sits at a 3.7 months supply at the current sales pace. Interestingly, it you match the housing sales level between the US and New Zealand on a population basis, they will sell about 64,200 houses in a year on a NZ equivalent basis. Over the past year to May we have sold 67,400. Both markets are in the doldrums.Retail sales in Canada are projected to have dropped by -0.6% in May 2024 compared to the previous month, according to a flash estimate. This would represent the steepest decline since March 2023. Such a decrease would offset the +0.7% surge in April, the largest in a year.Canadian producer prices rose +1.8% in May, their fastest increase since January 2023.In the EU, their PMIs show their recovery is slowing in June as new orders fall for first time in four months. Their huge service sector is still expanding, but their factory sector is contracting at a slightly faster rate.The UST 10yr yield is now at 4.26% and unchanged from this time Saturday. The price of gold will start today unchanged from Saturday at US$2320/oz.Oil prices are unchanged from Saturday at US$80.50/bbl in the US while the international Brent price is still just on US$84.50/bbl.The Kiwi dollar starts today unchanged from Saturday at 61.2 USc. Against the Aussie we are marginally firmer at 92.2 AUc. Against the euro we are also marginally firmer at 57.3 euro cents. That all means our TWI-5 starts today little-changed at 70.9.The bitcoin price starts today at US$64070 and up a mere +0.1% from this time Saturday. Volatility over the past 24 hours has very low at just under +/- 0.5%.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.

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.Today we lead with news that the start of Summer in the northern hemisphere brings excessive heat and ominous food security and immigration implications.But first, initial US jobless claims slipped slightly last week after the prior week's rise. They remain low at +227,000 even if the level is its highest since February. There are now 1.734 mln people on these claims, little-changed from the prior week. No real sign of building labour market stress here yet.Meanwhile, housing starts in the US fell -5.5% to an annualised rate of under 1.3 mln in May, the lowest since July 2020. April was downwardly revised.. This unexpected decline shows that high interest rates are still weighing on their housing market. New building consents fell slightly too. This result came before the slight easing of mortgage interest rates in June.The Philly Fed's Business Outlook June survey showed general activity edged lower but remained positive, while shipments and new orders remained mildly negative. These results were slightly less than expected.We noted the extreme heat in northern India and the Middle East in yesterday's report. Well, it has extended into the eastern US as well with a major heat dome there too. It too is life threatening for some.And we have noted before that severe drought and heat waves are gripping much of China's key agricultural areas. It is not getting any better there either.China's loan prime rates remained unchanged at record lows after yesterday's China central bank review.Across the Formosa Strait, Taiwanese export orders rose +7% year-on-year in May, more than expected but slowing from the +11% growth in April. The tech powerhouse country continues to benefit from a surge in AI applications, but demand also rose for chemical products.The steady improvement in consumer sentiment in the EU was evident again in their June survey, although the improvement was slightly less than anticipated.Staying in the region, the Swiss central bank cut its key policy rate by -25 bps to 1.25% at their June meeting overnight, following a similar move in the previous meeting. This was as expected. Underlying inflationary pressure is easing and the Swiss franc is strengthening, so it is an easy decision for them.Meanwhile the English central bank also held a review and kept policy settings pat (and at a 16 year high), as expected. But they did indicate that rate cuts are coming there soon, mainly because of progress in getting inflation down.Last week, the rise in container shipping freight costs accelerated again, up +7% from the prior week to be +233% higher that year-ago levels. China to Europe rates were especially hard hit last week. Bulk freight rates were up +6% last week to be up +80% from this time last year (but that was an unusual low point, to be fair).The UST 10yr yield is now at 4.26% and up +3 bps from this time yesterday. The price of gold will start today up +US$26 at US$2355/oz.Oil prices are up +50 USc at US$81/bbl in the US while the international Brent price is now just on US$85/bbl.The Kiwi dollar starts today a little softer at just under 61.2 USc. Against the Aussie we are marginally firmer at 92 AUc. Against the euro we are unchanged at 57.1 euro cents. That all means our TWI-5 starts today unchanged at 70.7.The bitcoin price starts today at US$64,672 and down -0.6% from this time yesterday. Volatility over the past 24 hours has again been modest at just on +/- 1.5%.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 on Monday.