Economy Watch

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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 we are heading into a week that will deliver a wide set of consumer and producer inflation reports.
But locally, the data releases will be light. It is a light data week in Australia too, with only migration updates this week. But we will also get an update on the total value of all houses as at June and that may start to show a leveling off from the March record high AU$12.8 tln. We will also get August consumer and business confidence updates from Australia, and September consumer inflation expectations results.
Globally we will be looking for signs of widening cracks in fuel markets as Trump's forever war drags on. In the US they are now on their long Labor Day weekend holiday, ending their summer holiday season. They face petrol prices +40% higher than when Trump started his Persian Gulf war with Iran. Diesel there are almost +80% higher now and that is having broad inflationary impacts in secondary goods costs. That these are rising faster recently is not a sign that Kevin Warsh will be able to ignore, even if he is under renewed pressure from the White House to do so.
So of special interest will be the US August CPI update, brought to you by the good folks at the same agency that delivered the strong headline labour market data on Friday (the agency Trump fired the head of a while ago because he didn't like the results they released). A 3.4% headline rate is anticipated, but markets are taking that sceptically. After all, the PCE inflation measure for July was 3.7%. Even if you take both at face value, and the payrolls data at face value, there seems little justification for them not to weigh against inflation at this time. But Warsh & the Fed probably won't, so American inflation is set to be outsized and rising for some time yet.
They will also release August PPI data this week, expected to remain elevated at 4.7%. The first September University of Michigan sentiment survey will drop this week too, and this has been very low reflecting unease over unconstrained inflation. And American consumer inflation expectations survey commissioned by the NY Fed will also drop this week
Meanwhile, the ECB will decide on interest rates (expect a +25 bps rise to 2.5%), and Germany will unveil August industrial production data.
There will be more trade and inflation data out elsewhere and that includes from China. We expect a larger trade surplus and their low inflation to rise again marginally.
From Japan, a raft of economic reports is due, including revised Q2 GDP, July wages and current account data, as well as August PPI, which is expected to show producer inflation accelerating to 7.4%. Their machine tool order update is due too.
Over the weekend, the Japanese household spending data that was weak in June got weaker for July, a result that wasn't expected. It was a contraction at the sharpest pace since January 2024. Only the furniture and recreation categories were positive.
The US non-farm payrolls was out over the weekend and rose much more than expected in both the headline version and the actual version, up +154,000 in August from July when just a +15,000 rise was expected, up +456,000 from a year ago to 158.9 mln people on payrolls. This result is sharply different to the ADP Employment report which tracks most of this weekly.
The broader employed civilian labour force data however isn't so upbeat, showing a -133,000 fall from July, down -621,000 from August a year ago and to 162.7 mln employed people. Take your pick from these two official results, but it does suggest a widening gap where it is substantially harder to sustain employment unless you are on a company payroll.
Markets seem sceptical of the strong headline jobs report, suspecting it is something that will be corrected in future. Wall Street is lower, benchmark bond yields are higher, both shifts you may not expect if they did believe the headline data was genuine.
Across the border, Canada reported a tougher labour market. Employment there declined by -41,700 in August, missing expectations for a +15,000 increase and following a +75,100 gain in July.
In the overall EU, retail sales volume growth slowed to just +1.0% in July from a year ago, from an upwardly revised +1.7% in June. This was slightly lower than market expectations of a +1.1% gain and was the smallest increase in retail trade since April. But at least they have positive volume growth.
In Germany they reported a sharp rise in factory orders in July, up +2.5% from June to be more than +13% higher than year-ago levels. This was much better than observers were expecting.
In Norway, their gigantic US$2 tln sovereign wealth fund is moving to sharply cut back on its exposure to US Treasury bonds. Yesterday we noted the Dutch move to insulate risks by moving their gold holdings out of the US.
Global food prices rose notably in August to their highest since November 2022. All food groups rose including for meat and dairy, although the biggest rises were for cereals, sugar, and vegetable oils.
Also globally, perhaps we should note that the value of the top 50 mining companies surged on stock exchanges by a monster +US$350 bln in August alone, taking them back to February levels when the value of gold was US$1000 higher than it is now.
The UST 10yr yield is now just on 4.78%, unchanged from Saturday at this time, up +5 bps for the week.
The price of gold is now at US$4433/oz, and up +US$9 from Saturday at this time, down -US$29 from a week ago. Silver is little-changed at just on US$66/oz, down -50 USc for the week.
Oil prices are holding at just on US$91.50/bbl in the US, while the international Brent price is just under US$96.50/bbl and also little-changed. A week ago these prices were US$83.50 and US$88/bbl respectively.
The Kiwi dollar is little-changed from Saturday at just on 58.8 USc but down -30 bps from a week ago. Against the Aussie we are still at 81.6 AUc. Against the euro we are down -10 bps at 50.6 euro cents. That all means our TWI-5 starts today at just over 62.1, unchanged from Saturday, down -50 bps for the week.
The bitcoin price starts today at US$79,745 up +0.2% from Saturday at this time, but up +2.7% from last week at this time. Volatility over the past 24 hours has been very low at just under +/-0.4%.
You can get more news affecting the economy in New Zealand from interest.co.nz.
Kia ora. I'm David Chaston and we’ll do this again tomorrow.
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Monetization ID TFGEPGEI0LHEIJAI

Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Shutterstock Track 1219389
Monetization ID TFGEPGEI0LHEIJAI
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 financial markets are in a holding pattern today.
First we should note that this coming weekend will be a major long weekend holiday in the US, for Monday's Labor Day. The means US markets will likely be quieter than normal until Tuesday their time, Wednesday ours. But they will still release their August non-farm payrolls report tomorrow and that is expected to show a +56,000 jobs gain and continuing the low expansion that has been usual in 2026.
Today, the US initial jobless claims data for last week was released coming in at just over +170,000 and slightly more than seasonal factors would have indicated. There are now 1.74 mln people claiming these benefits, lower than a year ago and two years ago on much tighter eligibility requirements.
The widely watched ISM services PMI came in marginally better than expected and better than for July with gains in activity and new business, but falling employment metrics. Twelve industry sectors indicated growth in August, one fewer than the previous month, while five reported contraction, up one compared to July. Price pressures remain very elevated at its highest level since August 2022. The S&P Global services PMI was also out overnight showing a similar expansion even if the details were different; jobs growth hits highest since January 2025, and input costs and selling prices increases were at a slower rate. Take your pick.
There was an interesting speech from Fed heavyweight Christopher Waller, someone once floated as a possible Trump pick to replace Powell. Perhaps predictably he lined up with Kevin Warsh on pulling back on forward guidance communication, although he has staked out a full need to communicate of most other aspects of Fed thinking. This speech shows he isn't in the camp worried about current inflation risks because he thinks the peak pressure has passed. That tone took some sting out of the US Treasury bond yields today.
The US also released its broader trade result for July, covering both goods and services. This confirmed the trade deficit spike we saw in the earlier merchandise-only data. In this case their services surplus was weak, so had a minimal impact on the large and growing goods deficit. Both exports and imports of services fell, notably for travel and financial services. Overall this deficit is now its largest in sixteen months when the pre-tariff stockpiling was at its peak.
Canada also reported trade data for July, and while they still have a surplus, it was much narrower that expected. Exports fell while imports rose. It was their first export decline in six months.
The Japanese yen has climbed to the ¥155:USD level, its highest since early August as traders priced in the chance of faster Bank of Japan interest rate hikes. The Bank of Japan next meets in two weeks from today.
In China, their private services PMI by S&P Global (RatingDog) came in positive and certainly better than the contracting official version. The rise was soft but better than market forecasts. The increase was from better domestic demand, while foreign sales rose for the fourth straight month, but at a more modest pace than in July.
The EU said producer prices there rose more sharply in July than June, but only by what they had in May - although that was a fast pace, and well above what they were expecting. For the whole EU, they were up +5.6% from a year ago and largely driven by the +12.5% rise in fuel costs. They were expecting only a +4.6% rise in overall PPI increases. Of special worry however will be that these costs rose at a very fast +1.4% in July from June.
In Australia, they advised that their exports fell in July from June by -3.3% and their imports fell by -2.5%, giving them a reduced merchandise trade surplus of AU$1.9 bln. A year ago, that surplus was +AU$6.2 bln.
Global container freight rates were unchanged from last week, and are now +110% higher than year ago levels. Global bulk cargo rates are +8.5% higher than week ago levels, in fact now their highest since May 2022. That puts them up +68% from a year ago.
The UST 10yr yield is now just on 4.77%, down -3 bps from yesterday at this time.
The price of gold is now at US$4486/oz, and up +US$114 from yesterday at this time. Silver has risen +US$2 to just on US$67/oz. Meanwhile the Dutch central bank has confirmed it has moved it gold holdings out of the US "to improve tradability", but likely also to prevent the Trump Administration from using them as a bargaining chip.
Oil prices are -50 USc lower at just on US$91/bbl in the US, while the international Brent price is just over US$95/bbl and down -US$1.
The Kiwi dollar is up +40 bps from yesterday at just on 58.9 USc. Against the Aussie we are up +20 bps at 81.7 AUc. Against the euro we are up +10 bps at 50.6 euro cents. That all means our TWI-5 starts today at just on 62.2, up +30 bps from yesterday.
The bitcoin price starts today at US$81,011 and up +4.7% from yesterday at this time. Volatility over the past 24 hours has been moderate at just on +/-2.8%.
You can get more news affecting the economy in New Zealand from interest.co.nz.
Kia ora. I'm David Chaston and we’ll do this again on Monday.
Track 1219389
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Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

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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 hostilities in the Persian Gulf are still ongoing and still clouding the global economy

First in the US, the latest Fed Beige Book survey reveals an American economy where activity increased modestly since early July. Ten of the twelve Federal Reserve Districts reported modest growth; two reported no change. Consumer spending grew slightly on balance; reports reflecting both heightened price sensitivity on the one hand and solid high-end purchases on the other. Car sales were mostly subdued, dampened by downbeat consumer confidence, high fuel prices, and rising financing costs.

And that was reinforced by mortgage applications levels that were little-changed and mortgage interest rates that have stayed high and back at early 2025 levels, now 6.79%.

Further, the ADP monthly employment report for private payrolls delivered a +38,000 jobs gain in August, lower than for July and lower than the +47,000 expected. It was a seven month low. Saturday will bring the US non-farm payrolls report update for August which is expected to show a gain of +58,000 - which now may be on the high side. US payroll growth has essentially evaporated since early 2025 and the start of the Trump 2 presidency.

New factory orders however were reported to have risen +10.4% in July from a year ago. This is an impressive result, but you would have thought that activity and employment data would show that surge. However some of the largest gains are in defense aircraft and computer equipment (data centers) which don't have a lot of jobs attached to them.

US crude oil stocks fell again last week and by about double what was expected. And their Strategic Reserves fell too, and by a similar amount. These are dangerously low now.

In Canada their central bank reviewed their policy interest rate by kept it at 2.25% as expected. They seemed somewhat surprised at the resilience of the Canadian economy given the economic attacks from the US, but they also now see that resilience continuing despite the substantial adjustments they have to make. Canadian benchmark bond yields are rising, today at a two year high. But this isn't especially high given the threats. The somewhat hawkish tone wasn't expected and the chances of rate hike there have probably increased.

In Australia, it is coming to light that their central bank has downgraded the US dollar for its foreign currency holdings. (The RBA is somewhat unusual in that they have revealed that pullback. It is likely happening in many other central banks too, as IMF consolidated data suggests.)

And staying in Australia, they released their Q2-2026 economic activity data today, showing a +0.4% expansion for the quarter, to be up +2.1% (real) from a year ago. That was much better than the expected +1.8% expansion. Their per capita growth was only up +0.7% however. The widely expected slowing in 2026 has been much less than observers had expected. And that has significantly boosted the AUD and Australian Government bond yields.

The UST 10yr yield is now just on 4.79%, down -1 bp from yesterday at this time.

The price of gold is now at US$4372/oz, and upUS$37 from yesterday at this time. Silver has risen +50 USc to just under US$65/oz.

Oil prices are up +US$1.50 at just over US$91.50/bbl in the US, while the international Brent price is just under US$96/bbl

The Kiwi dollar is down -40 bps from yesterday at just on 58.5 USc. Against the Aussie we are down -90 bps at 881.5 AUc. Against the euro we are also down -30 bps at 50.5 euro cents. That all means our TWI-5 starts today at just on 61.9, down -50 bps from yesterday.

The bitcoin price starts today at US$77,353 and essentially unchanged from yesterday at this time. Volatility over the past 24 hours has been low at just on +/-0.9%.

You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston and we’ll do this again tomorrow.

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Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

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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 bond yields worldwide climbing as rising oil prices are raising inflation concerns. Financial markets have raised the chance of widespread interest-rate hikes. US Treasury 10 year yields hit 2025 highs at 4.8%, while Japan’s equivalent rate hit 3% for the first time since 1996. German bund yields climbed to 15-year highs and UK gilt yields to 18-year highs.

Not helping are a new round of attacks by a trigger-happy US on Iran.

But first, there was a full dairy auction overnight and the overall results were modestly positive. Prices in USD were up +0.9% and up +0.6% in NZD. The big mover down was cheddar cheese suffering a -6.6% fall. The big mover up was SMP with a +5.3% gain. WMP was very little-changed. In fact, SMP prices are now higher that WMP prices, the first time like this since July 2022. In between, the WMP premium actually got as high as +US$1550/tonne.

In the US, there were two factory PMIs out for August, both essentially holding a moderate expansion there. The widely-watched ISM one came in fractionally lower than for August, with new orders growing at a slightly slower rate and price pressure little-changed. The internationally benchmarked S&P Global one was little changed, noting output and orders both rising at slower rates, with stock building efforts continuing amid supply issues and higher prices.

The US Logistics Managers’ Index fell for a second consecutive month due to a slowdown in inventory expansion, while logistics costs continued to rise at a high pace.

July JOLTS data shows job openings rising while quits fell, but these changes were actually quite minor.

The US RCM/TIPP optimism index is still in an easing trend that started in early 2025, but it has held at a modest level in August, similar to the June and July levels. There were offsetting shifts with greater confidence among investors and higher-income households, but a deterioration in sentiment for non-investors and lower-income households.

Meanwhile the Dallas Fed services sector activity moderated in August, but is still expanding.

The Canadian factory PMI was little changed where their expansion was maintained at solid rate with output, new orders and employment all rising in August.

Japanese consumer sentiment rose again in August, something it has been doing consistently since April.

As we suspected, the private China factory PMI by S&PGlobal (Rating Dog) came in much more positively that the official version, and expanded at a rate that beat estimates, even if it is modest. How sustainable that improvement is will be interesting to see because input price inflation rose but output prices fell for first time in 2026 so far.

And we should probably note that China's government debt is now at ¥100 tln for the first time (NZ$25.3 tln),107% of their GDP. And that is just their central government. (But to be fair, a notable part of that rise involves a shift from old opaque local government debt to a more transparent national treatment.) While that may seem high (and it is), the equivalent US federal debt level is 124% of their GDP. For New Zealand it is 49%, for Australia 34%.

EU CPI inflation came in at 3.3% in August, the expected level, but up from 2.9% in July. All this rise was fuel cost related. Their core CPI rate actually dipped slightly to 2.4%.

Meanwhile, German retail sales actually fell, and quite hard, down -2.5% in real terms in July from a year ago with the current month drop an outsized -3.4%, so the recent bite has been aggressive. In nominal terms there year-on-year levels are just level-pegging.

Australian building consents were expected to fall in July and they did, and by about the expected amount, down -3.6% from June to remain up +9.0% from a year ago. House consents fell -4.2% but multiunit consents held little-changed (-0.4%). Still, that leaves the multiunit sector up almost +20% from a year ago. (Some of those are likely to have been Bathla developments in Western Sydney, so are unlikely to proceed now.)

The UST 10yr yield is now just on 4.80%, up another +4 bps from yesterday at this time.

The price of gold is now at US$4335/oz, and down -US$97 from yesterday at this time. Silver has fallen -US$1.50 to just under US$64.50/oz.

Oil prices are up +US$4.50 at just over US$90/bbl in the US, while the international Brent price is just under US$94.50/bbl.

The Kiwi dollar is down -30 bps from yesterday at just on 58.9 USc. Against the Aussie we are down -20 bps at 82.4 AUc. Against the euro we are also down -20 bps at 50.8 euro cents. That all means our TWI-5 starts today at just over 62.4, down -30 bps from yesterday.

The bitcoin price starts today at US$77,297 and down -2.0% from yesterday at this time. Volatility over the past 24 hours has remained modest at just on +/-1.2%.

You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston and we’ll do this again tomorrow.

Track 1219389

Monetization ID TFGEPGEI0LHEIJAI

Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Shutterstock Track 1219389

Monetization ID TFGEPGEI0LHEIJAI

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 renewed fighting in the Persian Gulf from Trump's 'forever wars' is pushing oil prices up again and sentiment lower on the impending new shot inflation will get.

So, the yield on the US 10-yr Treasuries rose again now to 4.76%, its highest since January 2025. with market bets rising for a US Fed rate hike later this month.

But all the US news isn't downbeat. A surge in new orders has accelerated the Dallas Fed factory survey up sharply to its most positive level since January 2025 which was its best since the pandemic recovery, even it that was an isolated event. Price pressures were stable but markedly elevated, rising further for prices paid but easing slightly for prices received.

Across the Pacific, and after the unexpected fall in June, Japanese retail sales surged back in July to be +4.4% higher than year-ago levels and restoring the strong gains they have been posting since March.

In China, their factory PMIs for August improved marginally as expected but not by quite enough to avoid another contraction. Meanwhile their service sector PMIs were also expected to improve, but they didn't, staying with the same contraction they recorded officially in July. We need to note that these official surveys have been running more conservative than the private S&P Global alternatives recently. The S&P Global version is due out tomorrow for the factory sector, and on Thursday for the services sector.

India said its Q2-2026 economic activity expanded +7.8% from a year ago, the same as in Q1-2026 and much better than was expected (+7.1%).

Germany said it’s consumer price inflation rate edged up to 2.9% in August, its highest since April, but below market expectations of 3.0%. In August fuel costs rose more than +10% but food was up only +0.1% from a year ago.

In Australia, the Melbourne Institute's survey shows inflation expectations rose by 0.2 percentage points in August to 4.9%. This follows from a three-month period of moderating inflation expectations. Wage expectations also rose in August, after remaining static for a prolonged period.

And staying in Australia, Cotality reported that house prices fell -0.9% in August from July, following a -1.2% decline in July. Overall, house prices are now -3.6% below their peak, although still +2.7% higher than a year earlier. The housing downturn has now spread across more capital cities and regional centers, and further policy tightening by the RBA points to tougher conditions ahead. Sydney and Melbourne again led the declines, falling -4.6% and -4.7%, respectively from this time last year, the only capital cities to now be lower on an annual basis.

And of course, this comes at the same time NSW Bathla has essentially collapsed, waiting to see it it can get some lifeline loans to finish some in-progress developments. But essentially it is kaput. There is a pre-insolvency scramble underway over the dying carcass.

And staying in NSW, they have had their warmest winter in more than 150 year of records. Now the whole east coast is getting ready for a sizzling summer, as strong as Europe is having. Essentially there was no ski season at Threadbo this year, for the first time ever. New Zealand should prepare for an influx of climate refugees.

More generally, international air cargo volumes were up +4.7% in July from a year ago, up +5.2% in the Asia Pacific region. Interestingly, air cargo volumes into the giant US market were up more than +7%, but they shrank around their domestic market.

Meanwhile international passenger travel actually fell in July, not by a lot to be sure, but a fall is unusual. Both Middle East and US travel shrank. International travel in the Asia Pacific region declined too even if not so pronounced. Australian domestic travel shrank in a similar manner.

The UST 10yr yield is now just on 4.76%, up +4 bps from yesterday at this time, down -2 bps for the week. The 30 year yield is at 5.25%, also up +4 bps and almost back to its October 2023 levels again.

The price of gold is now at US$4432/oz, and down -US$22 from yesterday at this time. Silver has held at just over US$66/oz.

Oil prices are up +US$2 at just over US$85.50/bbl in the US, while the international Brent price is just on US$90.50/bbl.

The Kiwi dollar is up +10 bps from yesterday at just on 59.2 USc. Against the Aussie we are holding at 82.6 AUc. Against the euro we are down -10 bps at 51 euro cents. That all means our TWI-5 starts today at just over 62.7, up less than +10 bps from yesterday.

The bitcoin price starts today at US$78,879 and down a very minor -0.2% from yesterday at this time. Volatility over the past 24 hours has been modest at just on +/-1.2%.

You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston and we’ll do this again tomorrow.

Track 1219389

Monetization ID TFGEPGEI0LHEIJAI

Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI