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 facing a new burst in inflation as commodity prices rise, oil and gold both are rising, and benchmark interest rates are stuck high waiting to see where these tea leaves settle.

Locally this week we will get June migration data, and inflation expectation updates. There also will be the July PMI update and probably the July REINZ results as well.

In Australia, look out for their NAB business sentiment update, but the key event will be the RBA's rate review on Tuesday even if no-change is expected or priced in. That is despite their CPI at 3.8% and running way above their target range of 2% to 3%, and showing little sign it will get back within range any time soon.

In the US, they will release their July CPI data too (expect 3.4%), their PPI (expect 5.5%) and another consumer sentiment update.

In China, we are awaiting their new yuan debt data which should come late this week and be another quite weak result (expect just +¥45 bln).

Over the weekend China released their CPI inflation data, revealing an annual inflation rate of just 0.5% in July, down from 1.0% in the previous month. Analysts had expected an 0.8% rate in July so this was their lowest level since January. Food prices dropped 1.5% year-on-year, following a 1.6% decline in the previous month and marking the fourth straight month it fell. But beef prices rose +4.5% and lamb prices by +6.2% in July from a year ago. Dairy product prices were -1.5% lower however.

Meanwhile, China’s producer prices rose +3.5% in July from a year ago, slowing from a 4.1% rise in June, and that is their steepest rise in nearly four years. The retreating pace is due to weaker commodity prices, softer domestic demand, and continued pressure from overcapacity. There is also intense price competition in some industries.

China’s exports surged almost +24% to US$398 bln in July in a better than expected result. The gains were driven by strong demand for AI-related technology products and a rush by manufacturers to ship goods to the US ahead of potential new tariffs. Outbound shipments to the US rose +17%, the EU by +16%, and to ASEAN nations by +38%.

And while China reported relatively stable foreign exchange reserves as at the end of July, they also reported that their official gold holdings rose +640,000 oz, almost +20 tonnes in one month. That is the most in a 21 month streak of gold buying.

Meanwhile Typhoon Dolphin is heading for the China coast after clipping Okinawa, due to strike south of Shanghai. It is a Cat 3 storm and over 1 mln people have been evacuated to safer ground.

Taiwanese exports stayed very high at US$75.3 bln, just off record levels, but as time rolls on with these high or record high levels, the year-on-year gains are fading. Still, they managed to report a +33% rise from a year ago, an unusually strong gain. And their trade surplus remained unusually large at +US$17.2 bln, up from +US$14.3 bln in July 2025.

Across the Pacific in the US economy, and even with Trump loyalists controlling the data agency, US non-farm payrolls were reported contracting in July, down -23,000 at the headline level when a very modest +80,000 was expected. That is their worst July result in at least a decade. And it get much worse if you look at actual data because payrolls shrank almost -1.1 mln in July from June before seasonal adjustment. This is the real number of people who lost employment in the month.

Their participation rate inched down while their jobless rate was little-changed at 4.1%.

US inflation expectations for one year ahead edged down to 3.6% in July from 3.7% in June which was the highest since September 2023. The July level is the new baseline since the US attacked Iran. Prior to that, this survey recorded about 3% for the prior two years. Earnings in the same survey are seen to rise +2.8%, so that continues to record an underwater expectation for household finances.

US consumer debt levels rose +3.3% in June with revolving credit rising +6.0% on the same basis as both credit card debt and car loans rising sharply. Student loans recorded an unusual fall.

A weakening labour market and both stubbornly high inflation and inflation expectations will complicate the discussions in Warsh's Fed meetings. Do they cut, hold or raise. There are probably votes for all three options. Markets currently price in half a chance of a +25 bps hike in September. And Trump is back trying to screw the scrum.

There was quite the contrast in Canada with them reporting their employment rose +75,100 in July from June. It will have been a very long time since they had a gain that exceeded their southern neighbour. Their jobless rate fell to 6.4% and a two year low while their participation rate inched up.

Bird flu is spreading in Australia, even if the number of reported cases is still quite minor. There is no way to properly track it, and by the time reports are received, infection is well established....

The UST 10yr yield is now just on 4.66%, up +2 bps from this time Saturday but down -8 bps for the week. 

The price of gold has risen to US$4343/oz, up +US$6 from Saturday, up +US$293 or +7% from a week ago. Silver has held little-changed at just over US$63.50/oz. That is up +US$5.50/oz for the week or a +9.5% gain.

Oil prices are unchanged from yesterday and still just over US$78/bbl in the US, while the international Brent price is still just on US$83.50/bbl, A week ago these prices were US$84.50 and US$88/bbl respectively. Hormuz transits are still very constrained. There have been only three crude tanker and 6 cargo ship exiting over the past 24 hours (3 dark with transponders off) and eight entering for new loads (3 dark), again all Iran-linked. The Red Sea activity is still low with just 20 either way at the Yemen chokepoint.

The Kiwi dollar is unchanged from Saturday at just over 58.9 USc, making it unchanged for the week. Against the Aussie we are little-changed at 83.4 AUc. Against the euro we have held at 51 euro cents. That all means our TWI-5 starts today at 62.6 which is up a bit less than +10 bps from this time Saturday essentially unchanged for the week.

The bitcoin price starts today at US$65,151 and up +0.6% from this time Saturday, up +3.3% from last week. Volatility over the past 24 hours has been very low however at just on +/-0.3%.

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

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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 oil prices are up today as Iran flexes its diplomatic muscle and threats, one of which is an effort to block US ships transiting the Strait of Hormuz. Meanwhile Trump is backing away from more action in the region, potentially leaving US allies in the lurch.

Through all this, crude prices are rising again, and US pump prices never dopped back during the recent fall in crude prices. That has bond markets worried that inflation may be about to turn up again, and yields rose somewhat today.

In the US, July job cut announcements were very low. In fact, US-based employers announced 33,429 job cuts in the month, the fewest in two years. But AI led all reasons for job cuts for a fifth straight month and was responsible for almost 11,000 during the month. The tech sector cut the most jobs, followed by the financial sector. Cut is government , and services were almost non-existent.

This data comes ahead of tomorrow's July non-farm payrolls report which is expected to show jobs growth a very low +80,000.

US jobless claims dipped last week but only by what seasonal factors would have expected. There are now 1.84 mln people on these benefits slightly lower than a year ago, and two years ago. Tough eligibility restrictions are restraining enrollment in conjunction with tougher restrictions on eligibility for SNAP (food stamps). More than 4 mln people have been cleared from these programs and much tougher restrictions are coming. The USDA has restricted access to data recording the numbers of people receiving this assistance.

While still elevated, the NY Fed's Global Supply Chain Pressure Index eased low in July.

In Europe, retail sales sagged slightly in June, dipping -0.1% from May when a +0.1% rise was expected. That leaves them up +1.2% from a year ago on a real/volume basis.

Meanwhile, German factory orders rose +3.1% in June from May to be +6.5% higher than year ago levels, an accelerating pace from May. Apart from a few newsworthy bumps in between, in fact these order levels have been on an upswing since September 2025.

Strong export growth in June delivered Australia an unexpected trade surplus, of +AU$1.9 bln when a deficit of -AU$1.1 was expected after May's -AU$2.4 bln deficit. Their exports rose +8.6% from a year ago, boosted by an unusual rise in gold exports, up more than +25% from the same month a year ago.

Global container freight rates turned up marginally last week from the prior week to be +77% higher than year-ago levels. Outbound rates from China to the US drove the rise, which rates to and from the EU were lower. Those rates have to compete with the very fast & successful overland rail service out of China. Meanwhile, bulk cargo rates jumped more than +12% in the past week to be +60% higher than year-ago levels.

The UST 10yr yield is now just on 4.67%, up +5 bps from this time yesterday. 

The price of gold has dipped to US$4245/oz, down -US$8 from yesterday. Silver has dipped -50 USc at just over US$61.50/oz.

Oil prices are up +US$3 from yesterday and now just under US$77.50/bbl in the US, while the international Brent price is now just under US$82.50/bbl and up +US$3.50. Hormuz transits are still very constrained. There has been no crude tanker and 11 cargo ship exiting over the past 24 hours (5 dark with transponders off) and nine entering for new loads (4 dark), again all Iran-linked. The Red Sea activity is still low with just a few more than than 20 either way at the Yemen chokepoint. Alternative routes are now making a significant, if costly, difference.

The Kiwi dollar is down -20 bps from yesterday at just under 58.7 USc. Against the Aussie we are little-changed at 83.4 AUc. Against the euro we have dipped -10 bps to 50.9 euro cents. That all means our TWI-5 starts today at 62.4 which is down -10 bps from this time yesterday.

The bitcoin price starts today at US$64,550 and down -0.2% from this time yesterday. Volatility over the past 24 hours has stayed low at just on +/-0.6%.

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.

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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 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 Iran and Oman say they have a deal on the Hormuz Strait, and the US says it is still hoping for a deal to open it up. But the US no longer has any cards, it seems.

Away from all that in the US, mortgage applications fell again last week with both new loan and refinance activity falling, probably due to the continued rise in home loan interest rates and pushing them up to year-ago levels of 6.81%.

Their ADP jobs report only signaled +44,000 July jobs added to private payrolls, much less than the expected low +70,000 and the low June level of +95,000. This report is the precursor to Saturday's July non-farm payrolls release where analysts expect July payrolls to have expanded +202,000. Those analysts may be in for some disappointment.

The ISM services PMI for July came in little-changed at a modest-to-moderate reading, boosted by good new order levels but held back by faster rising costs. Also, jobs in the sector contracted. Meanwhile the S&P Global version of the US services PMI recovered to a similar level, reporting activity rises at their strongest rate since October 2025, job creation at highest for eight months amid an improved outlook, but much steeper rises in both input costs and selling prices.

US crude oil stocks recovered somewhat last week with a rare rise. But this may have been because they are still drawing down their strategic reserves at a rate that is worrying many and now at almost an all-time low since 1983.

In China, their private S&P Global (RatingDog) services PMI fell back sharply. It is still expanding, but now only just. Total activity and new business both expand more slowly. Employment rose for third month running, the longest sequence since the second half of 2024. And they recorded the weakest rise in average input prices since January. Yes, this survey is better than the contracting official version, but the fall-away was faster in this report.

Singapore's retail sales rose sharply in June to be +4.0% higher than year-ago levels. Meanwhile their PMI rose faster and near its best-ever, but largely because firms there built stocks to retain resilience.

Japan's services PMI expanded at a slower pace in July as cost pressures remain intense there.

And Indonesia said its economic activity was +5.3% higher in June than a year ago with the expected rebound from the Q1 dip coming as expected - but slightly better than anticipated.

The copper price has surged again, now at a new all-time high of US$14,825/tonne (NZ$25,000/tonne, and at $25/kg no doubt a new target for thieves.).

The UST 10yr yield is now just on 4.62%, down -1 bp from this time yesterday. 

The price of gold has risen to US$4253/oz, up +US$165 from yesterday. Silver is up +US$2.50 at just over US$62/oz.

Oil prices are down another -US$1.50 from yesterday and now just on US$74.50/bbl in the US, while the international Brent price is now just under US$79/bbl and down -50 USc. Hormuz transits are still very constrained. There has been only one crude tanker and 6 cargo ship exiting over the past 24 hours (1 dark with transponders off) and eleven entering for new loads (6 dark), again all Iran-linked. The Red Sea activity is still low with much less than 20 either way.

The Kiwi dollar is little-changed from yesterday at just over 58.9 USc. Against the Aussie we are down -30 bps at 83.4 AUc. Against the euro we have dipped -10 bps to 51 euro cents. That all means our TWI-5 starts today at 62.5 which is down -10 bps from this time yesterday.

The bitcoin price starts today at US$64,698 and up +1.2% from this time yesterday. Volatility over the past 24 hours has stayed low at just on +/-0.7%.

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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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 the oil price has taken another large retreat today even though the Red Sea and Strait of Hormuz remain essentially closed. Alternative ways to shift crude oil out of the region are gathering pace and effectiveness. But this big price drop is directly related to Scott Bessent saying a deal with Iran to reopen the Streat is imminent, comments that have moved markets.

But first up today, there was another full dairy auction earlier this morning and prices in USD were virtually unchanged overall (+0.1%), but they did dip in NZD by -0.9% on the higher currency. Of note is the new season volumes offered, very similar to the same event a year ago. But prices are now a full -10% lower this year than then.

In the US, job openings fell in June, coming in slightly less than expected. The number of job openings fell in almost all industries except in the logistics sector and in federal government. Regionally, openings fell in the Northeast (-62,000), the South (-50,000), and the Midwest (-97,000), but rose in the West (+32,000).

Also falling were US factory orders. They dipped -0.3% from the previous month in June, extending the revised -1.1% decline in May. This was disappointing because analysts had expected a +0.2% increase. It was the first month of back-to-back declines in nearly one year. Still, they are up more than +10% from June a year ago, reflecting the earlier stockpiling urgency.

Meanwhile US exports of both goods and services fell -0.9% in June while their imports of both fell -1.8% on the same basis. That narrowed their trade deficit although not be as much as expected.

The US Logistics Managers Index is still very high, but is now slowing as the stockpiling urgency seems 'full' now. July demand for warehouse capacity and transportation both actually retreated in the month.

The RealClearMarkets/TIPP Economic Optimism Index edged down in August from July, missing market expectations of an improvement and remaining below the neutral level. The Six-Month Economic Outlook index fell on weaker expectations for the US economy.

In Canada's June exports rose as did their imports, both much more than expected and delivering a larger trade surplus than expected, to a four year high. Canada's transition away from dependence on its now-unreliable southern neighbour has been impressive, you have to say.

In China, they have set a new target to reach 50% of electricity produced from non-fossil fuels by 2030, up fron 42% now. It is a heady and fast goal.

In Australia, household spending rose +0.8% in June from may to be +6.0% higher than year-ago levels. This is a very consistent rising trend from September 2024 when it was at under +1% from the prior year. This high gain was largely due to increased spending on cars, especially EVs, and for travel.

And we must note that the H5 bird flu is killing more birds in Australia now. It is getting closer, even in Eastern states.

As we noted yesterday, the copper price has risen again and is now over US$14,000/tonne and back at record highs.

The UST 10yr yield is now just on 4.63%, down another -6 bps from this time yesterday.

The price of gold has risen to US$4088/oz, up +US$55 from yesterday. Silver is up +US$2 at just over US$59.50/oz.

Oil prices are down another -US$4 from yesterday and now just under US$76/bbl in the US, while the international Brent price is now just under US$79.50/bbl. Hormuz transits are still very constrained. There have been only three crude tanker and 9 cargo ship exiting over the past 24 hours (7 dark with transponders off) and ten entering for new loads (4 dark), again all Iran-linked. The Red Sea activity is still low with much less than 20 either way.

The Kiwi dollar is back up +30 bps from yesterday at just over 58.9 USc. Against the Aussie we are down -10 bps at 83.7 AUc. Against the euro we have firmed +10 bps to 51.1 euro cents. That all means our TWI-5 starts today at 62.6 which is back up +20 bps from this time yesterday.

The bitcoin price starts today at US$63,915 and up +0.1% from this time yesterday. Volatility over the past 24 hours has been low at just on +/-0.7%.

Join us later this morning for the June update of the New Zealand labour market.

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 we are now in the peak vacation season in the northern hemisphere with policy activity relatively low. But US petrol costs are high in this summer driving season.

Trump continues to claim he is negotiating with Iran. Iran continues to deny any talks are taking place. Still, this stalemate is a relatively peaceful one, but one that leaves Iran and Oman holding all the cards in the Hormuz Strait.

In the US, their widely-watched ISM factory PMI came in slightly better than expected with a good expansion, one marginally stronger than the S&P Global PMI result we noted yesterday. This ISM version recorded stronger new order flows and prices increasing at a slower pace.

In China, their top leadership is 'vacationing' as usual at the beach resort of Beidaihe. Oddly, Xi doesn't appear to be there.

Over the weekend we noted that China's official factory PMIs all turned down, and into contraction territory. The private S&P Global version has been less gloomy in the past, but yesterday's release also shows a sector slipping in July from June. But at least this alternate version is not yet contracting. And they feature rising new order levels, which is promising.

India's July factory PMI is still expanding at a solid pace, but that paces has now slipped to its lowest in five years. New order intakes are rising but slower, and input cost pressures are easing there.

And while we are at it, we should note that the factory PMIs for Japan, South Korea, Taiwan and Malaysia all remained quite positive and expansionary. All of these noted that cost pressures are also easing now. The Australian version is rising too, but cost pressures there are still elevated.

In Australia, the Cotality Home Value Index dropped -0.7% in July from June, the sharpest monthly decline since December 2022 and accelerating from a -0.4% fall in the prior month. The drop was after higher mortgage rates, affordability pressures, and soft consumer sentiment that all hurt housing demand. Sydney and Melbourne lead the downturn, with home values falling -1.4% and -1.2%, respectively in a month.

Staying in Australia, the Melbourne Institute Monthly Inflation Gauge increased materially in July, after falling in the previous two months. The increase was broad-based, with annual headline inflation of 4.0%. The monthly cost of living also increased across a range of household types. Later this week we will jet the June household spending data from the ABS and also their cost of living indicators. This MI data suggests whatever those ABS results in June, things will get worse in July.

We should note that the copper price is rising again, making another tilt at the record highs it reached in May and June this year. It is now back up at US$14.330/tonne, just -2% below that record peak. At the rate it moves, it could breach that very soon. AI build-out demand, as supply constraints deepen, are driving this latest rush. Some of it is stockpiling in the expectation Trump will queer the pitch with a tariff move. In any event, the world's big mining firms are shifting away from iron ore to copper mining, chasing these riches.

We could probably also note that SpaceX 'listed' at US$135/share but opened at US$160. It is now struggling to hold US$110/share today. Not helping are that 'lockup' investors and staff are now net sellers. Shorting SpaceX seems to be a growth game.

We should probably also keep an eye on accounting firm KPMG. The consequences of its horror story in Australia are about to be played out, with maybe global implications.

The UST 10yr yield is now just on 4.69%, down -6 bps from this time yesterday. 

The price of gold has slipped to US$4033/oz, down -US$9 from yesterday. Silver is little-changed at just over US$57.50/oz.

Oil prices are down -US$4.50 from yesterday and now just under US$80/bbl in the US, while the international Brent price is now just on US$83.50/bbl. Hormuz transits are still very constrained. There has been only one crude tanker and 6 cargo ship exiting over the past 24 hours (4 dark with transponders off) and five entering for new loads (2 dark), all Iran-linked. The Red Sea activity is still low at about 20 either way. That is kept low because only Chinese-bound vessels are getting Houthi exemptions.

The Kiwi dollar is down -30 bps from yesterday at just over 58.6 USc. Against the Aussie we are little-changed at 83.8 AUc. Against the euro we have dipped -10 bps to 51 euro cents. That all means our TWI-5 starts today at 62.4 which is down -20 bps from this time yesterday.

The bitcoin price starts today at US$63,851 and up +0.9% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/-1.4%.

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