Economy Watch

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 of plenty of gritty data, but none of it really amounting to anything significant.Actual US initial jobless claims rose +32,000 last week to 331,000. But that was a lesser rise than seasonal factors would suggest so they are taking that as a 'win'. There are now 2.31 mln people on these benefits, up from 2.27 mln this time last year and that is a post-pandemic high. (Financial markets prefer the seasonally-adjusted data, even if that doesn't actually reflect the impact on real people.)The New York Fed's Empire State factory survey rose in January on a modest rise in new orders, putting behind it the November dip. It was a very similar story for the Philly Fed factory survey which rose in January for the first time in four months.The January update to the Fed Beige Book saw overall economic activity increasing at a slight to modest pace in eight of the twelve Federal Reserve Districts, with three Districts reporting no change and one reporting a modest decline. This marks an improvement over the last three report cycles where a majority of Districts reported little change. Employment was little-changed. But cost pressures due to tariffs were a consistent theme almost everywhere.In the US rural economy, the rejection of US farm goods internationally is causing exceptionally tough times. Banks are refusing to lend because borrower prospects are so poor. It's an existential crisis for many. Far from the 'great again' promise, it is shaping up to be a rural disaster.Indian exports rose in December, but the gain was marginal. But trade with the US is little affected with exports to the US down just -1% since Trump's swingeing tariffs on India. For the full year, India had a trade deficit of -US$305 bln, a notable rise from 2024. India is no China trade behemoth - yet.Chinese banks extended ¥910 bln in new loans in December, sharply higher than the unusually low ¥390 bln in November. A year ago, the December level was ¥990 bln but at least this year it was above market expectations of ¥800 bln. New bank lending in China has been at unusually low levels for more than six months now. To encourage more, the central bank has lowered interest rates on targeted rural and SME lending. It also unveiled a ¥1 tln (NZ$250 bln) relending facility for private enterprises.The inability of some Australian state governments to repair their balance sheets after the pandemic free-spending is worrying at least one credit rating agency. S&P is warning NSW and Queensland in particular that they are now at greater risk of a downgrade from their AA+ rating. Heavy infrastructure spending and rising entitlement claims are hurting, as well as the political reluctance to raise taxes.And staying in Australia, their consumer inflation expectations came in at 4.6% in January, little changed from the 4.7% in December. Households still see elevated price pressures and has been at this general level for more than eight months. (Official November CPI was 3.4% and the December update comes on January 28, 2026.)Global container freight rates slipped -4% last week, ending a string of five consecutive rises. Most of that was driven by retreats in the China-US trade. This index is now -39% lower than year-ago levels. The bulk cargo rates fell sharply this week, down -13% to be +44% higher than year ago levels.The UST 10yr yield is now just on 4.16%, up +2 bps from this time yesterday.The price of gold will start today at US$4603/oz, and down -US$10 from yesterday. Silver is still at US$91.50/oz, up +US$4.50/oz.American oil prices are sharply lower from yesterday at just under US$59/bbl and down -US$2.50, while the international Brent price is now at US$63.50/bbl.The Kiwi dollar is down a bit less than -10 bps from yesterday, now at just over 57.4 USc. Against the Aussie we are down -40 bps at 85.7 AUc. Against the euro we are up +20 bps at just on 49.5 euro cents. That all means our TWI-5 starts today just over 61.5, and down -10 bps from yesterday.The bitcoin price starts today at US$96,711 and down -0.7% from this time yesterday. 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.

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 it is now clear that China has been the big winner in Trump's trade war. Geopolitical risks are front of mind in financial markets today.But first in the US, eyes were on a possible decision on the Trump tariff-taxes by the US Supreme Court today. But it did not come. Trump himself has been exerting maximum pressure on the justices, most of who he appointed. His problem is that he appointed strict legal constructionists and they were very unfriendly to his position during the argument stage. However, he expects 'loyalty' over "the law" and with the pressure he may get it. Today's deferral of a decision is a 'win' for him.US mortgage applications leaped +28% last week from the prior week, sharply rebounding from three consecutive periods of declines. The trigger seems to be a fall in benchmark home loan rates, although to be fair they only shifted from 6.25% to 6.18%. But that seems to have been enough to have motivated borrowers.American producer prices were up +3.0% in November from a year ago with core PPI up +3.5%. These changes are very little different to what was recorded for them one year ago.US retail sales were up +1.9% in November from a year ago (from US$723 bln in November 2024 to US$737 bln in this latest data). But for some reason the official stats agency is claiming it is up +3.3%. Hard to fathom - their 'seasonal adjustment' seems to have gone wonky.Meanwhile, American existing home sales recovered in December, and that left them +1.4% higher than year-ago levels. Their high levels of unsold inventory is starting to clear now.Across the Pacific, China’s exports rose by +6.6% in December from a year ago to a record US$358 bln and much better than the expected +3% rise. These were up +5.9% in November and the December gain was the strongest growth since September, driven by a surge in exports to non-US markets. That surge capped their year with a trade surplus of much more than expected, a massive +US$1.19 tln. Clearly US tariffs haven't hurt China, although Americans are paying these taxes.China’s vehicle sales grew +9.4% in 2025 from 2024 to a record high of 34.4 mln units with new energy vehicle (NEV) sales surging 28%. Although this was a faster pace of overall expansion, their December monthly sales actually fell -7.2% from 2024 levels. In fact, this industry is looking at 2026 with trepidation. The 2025 records may be the high water mark.In Japan, machine tool orders rose +10.6% in December their best level since the pandemic, and to levels they had back in the heady pre-pandemic levels. Strong foreign demand is a featureIn South Korea, some surprisingly negative jobs data was released yesterday. Their jobless rate jumped to 4.1% in December from 2.7% in November to its highest level in nearly five years - in fact back to pre-pandemic levels. The number of unemployed people rose to 1.22 mln, up +103,000 or up +9.2% year-on-year. It is such an unusual and unexpected result, it may be a rogue survey.In an updated review, the World Bank says global growth will come in at +2.7% in 2026, up marginally from +2.6% in its June forecast. It predicts US GDP growth will reach +2.2% in 2026, compared with +2.1% in 2025. For China, they see +4.9% and +4.4% for the same two years. For Japan it is +1.3% and 0.8%. For the EU, +1.4% and +0.9%. For India it is +7.2% and +6.5%. Neither Australia nor New Zealand feature in these reviews.The UST 10yr yield is now just on 4.14%, down -3 bps from this time yesterday. The price of gold will start today at US$4613/oz, and up +US$3 from yesterday, essentially holding Tuesday's big run-up on the geopolitical risks. Silver is still rising quickly, now almost US$91.50/oz, up +US$4.50/oz. Copper has hit a new record high.American oil prices are little-changed from yesterday at just over US$61.50/bbl, while the international Brent price is now at US$66/bbl.The Kiwi dollar is up a bit less than +10 bps from yesterday, now at just under 57.5 USc. Against the Aussie we are up +10 bps at 86.1 AUc. Against the euro we are unchanged at just on 49.3 euro cents. That all means our TWI-5 starts today just under 61.6, and little-changed from yesterday.The bitcoin price starts today at US$97,434 and up +4.2% from this time yesterday. Volatility over the past 24 hours has again been moderate, also at just on +/- 2.2%.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.

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 Powell resistance to Trump has garnered unexpectedly wide support, nationally and internationally, reinvigorating "central bank independence" positions. It also has many Trump supporters worried, if the 'right-wing press' is any indication.First up today, the overnight Pulse dairy auction of milk powders extended last week's full auction gains for both SMP and WMP. And they were good gains, with SMP +2.1% higher than a week ago, and WMP +1.2% higher on the same basis.In the US, the December CPI data released overnight recorded no-change from their November levels, at 2.7% or 2.6% on a 'core' basis. Both are still above the US Fed target. Food prices are up +3.1% and rents up +3.2% within this survey.The ADP weekly jobs data shows a similar +11,000 jobs gain last week, a rate that would confirm January's net hiring as slower than the slow December.US new home sales held at the higher 737,000 annual rate in October, a good result in the circumstances, but now quite dated data.This data will get more 'interesting' in 2026 with news that more migrants left the US than entered. While the net outflow wasn't large (for the US) at possibly about -300,000, the expectation is that it will be similar in 2026. This is the first time in 50 years they have shed people. It has certainly lost its 'welcoming' reputation - for both potential migrants, and for travelers.We got more recent sentiment surveys overnight, The RCM/TIPP survey was more downbeat in January than December and more so than expected - although to be fair the shifts weren't large - they just went the 'wrong' way.But the NFIB survey was little-changed - negative yes (below 100 still), but marginally less so.In Japan, their official "economy watchers survey" was also little-changed, although the forward looking section became marginally more optimistic.Meanwhile, bank lending in Japan rose 4.4% in December from a year ago. That growth was well above what was anticipated. If you ignore than pandemic distortion, that was at least a 25 year high, and probably very much longer.And Japan is on watch, with many expecting Prime Minister Takaichi to call a snap election very soon to bolster her conservative clout in the Diet. That saw the yen tumble and equities soar yesterday. Benchmark bond yields rise sharply too.In India, they released their December vehicle sales data overnight, reporting a very strong +20.6% gain from the same month a year ago, capping a year of +5.0% growth. Apparently their GST rate reduction for other products improved the overall affordability situation for many buyers.In Australia, consumer sentiment as measured in the Westpac survey has shifted lower and is more pessimistic in January. While confidence is still well above the extreme lows recorded during the protracted ‘cost of living’ crisis in 2022–2024, consumers are becoming more concerned about what 2026 may bring for family finances and the wider economy. The main catalyst continues to be a sharp turn in interest rate expectations. Nearly two thirds of consumers with a view now expect mortgage rates to move higher over the next 12 months, more than double the level back in September.The UST 10yr yield is now just on 4.17%, down -1 bp from this time yesterday. The key 2-10 yield curve is still at +64 bps.The price of gold will start today at US$4610/oz, and down -US$7 from yesterday, essentially holding yesterday's big run-up on the risks from the unsettled US Fed. Silver is still rising, now almost US$87/oz.American oil prices are up US$2.50 from yesterday at just under US$61.50/bbl, while the international Brent price is still at just under US$65.50/bbl.The Kiwi dollar is down -20 bps from yesterday, now at just over 57.4 USc. Against the Aussie we are up +20 bps at 86 AUc. Against the euro we are down -10 bps at just on 49.3 euro cents. That all means our TWI-5 starts today just under 61.6, and down -20 bps from yesterday.The bitcoin price starts today at US$93,492 and up +1.5% from this time yesterday. Volatility over the past 24 hours has again been modest, also at just on +/- 1.5%.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.

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 start with news of gold and other commodity prices have pushed up into record territories again as geopolitical risks rise. (Crypto's are notable by their impotence in the background, irrelevant in this environment.)Perhaps one reason is in the US, where the President has used his weaponised Justice Department to pressure the Federal Reserve to bow to his will. The clearly bogus criminal charges are being resisted by chairman Powell. The unseemly crisis could aggravate risk premiums worldwide. So far interest rates have remained stable (you can be sure that bond markets will be watching intensely), but the USD is noticeably weaker.It has not been in the limelight recently, but we should note that US grain farmers are facing tough trading, with them being shut out from the China trade for soybean and corn. Trump seem to have thrown them under the bus.In India, consumer price inflation rose to 1.3% in December from 0.7% in November but below the market consensus of 1.5%. Despite the rise, this rate remains well below the Reserve Bank of India's tolerance limit of 2%-6%. Prices fell less for food (down -2.7%), which represent nearly half of the consumer basket.In Australia, household spending rose strongly in November, up +1.0% from October, up +6.3% from November a year ago. This result was much better than expected.And Australia said it will y and stockpile key rare-earth minerals from domestic producers to strengthen defence and technology supply chains and reduce reliance on China. They are initially focusing on antimony and gallium under a new A$1.2 bln program.The UST 10yr yield is now just over 4.18%, up +1 bp from this time yesterday. Wall Street has opened its week with the S&P500 very little-changed, up +0.1%. We should perhaps note that serial underperformer Rakon has received another takeover bid from a previous suitor, this one less than the last, and the frustrated shareholders look like they will finally accept. They will put the mismanagement misery behind them, it seems. They will be selling for $1.55/share. These shares peaked at $5.60 back in the day, $2.08 in 2022. Today they are $1.36, so the market isn't yet pricing in a full chance of the takeover.At the other end of the scale we should also note that Alphabet (Google) briefly hit US$4 ​trln in market valuation earlier today, the second company to do that after Nvidia, as they sharpened their AI gains, both with impressive integrated solutions, and a recent deal with Apple (who was pushed into third place on the valuation table).The price of gold will start today at US$4617/oz, and up +US$108 from yesterday on the risks from the unsettled US Fed. Silver is now up at over US$80.50/oz.American oil prices are unchanged from yesterday at just on US$59/bbl, while the international Brent price is still at just under US$63.50/bbl.The Kiwi dollar is up +40 bps from yesterday, now at just under 57.7 USc. Against the Aussie we are up +10 bps at 85.8 AUc. Against the euro we are up +10 bps as well at just under 49.4 euro cents. That all means our TWI-5 starts today just on 61.7, and up +30 bps from yesterday.In offshore trading the Chinese yuan (CNH) has strengthened well past the 4:USD level, and rising.The bitcoin price starts today at US$92,071 and up +1.2% from this time yesterday. Volatility over the past 24 hours has been modest, also 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.

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 start with news of plenty of trade and economic action, some good, some not so.But first, some official data will start to be released locally this week, with November building permits and employment indicators, both for November, and the monthly December "selected price increases" covering mainly food and rent. We get the latest update to the NZIER business confidence survey this week too.In Australia, they will also release November building permit data, job vacancy data and household spending data, all for November too. The Westpac consumer sentiment survey will come as well, along with inflation expectation survey results.China's trade data for December will come out this week, and we expect the 2025 surplus to exceed US$1 tln. They will also release December new yuan lending data, expected to be better than November.From Japan we will get machine tool order data. In India, it will be about inflation data.In the US, the early Q4-2025 earnings reports will come from their big banks. Retail sales data is also due. But most eyes will be on the US December CPI result which is expected to be unchanged at 2.7%, although it is from an agency where the President inserted a lackey to keep an eye on their data.That same agency released their December US non-farm payrolls report over the weekend and it was something of a damp squib, but markets seemed to like it. The US economy added just +50,000 payroll jobs in December, less than a downwardly revised +56,000 in November and below forecasts of +60,000. These are the seasonally adjusted numbers. The raw data shows payrolls falling -192,000 and quite different to the equivalent small rise in December 2024. The broader population survey has overall employment falling -335,000 in December (double the 2024 change).The US unemployment rate ended the year at 4.4%, a tick less than November's 4.5% but well above December 2024's 4.1% (and December 2023's 3.8%). Average weekly earnings rose +3.8% from a year ago, keeping pace with inflation.Most analysts now see almost no chance of a rate cut at the Fed's January 29, 2026 meeting. Trump's inserted Miran remains an almost lone voice.US consumer debt trends are showing similar signs of stress and are looking topped-out. Total debt rose by only +US$4.2 bln in November and well below market expectations of a modest +$10 bln rise. It is equivalent to a +1% annual rise. Revolving debt (credit cards, etc.) fell at an annual rate of -1.9% while non-revolving debt, which includes car and student loans, went up +2.0%.So the latest update of a key consumer sentiment survey (this one from the University of Michigan) remained very low but little-changed in January from December and -25% lower than year-ago levels, -17% lower than two years ago.And we should note that markets are now expecting the US Supreme Court to rule on its tariff case possibly on Thursday.In Canada, employment was little-changed in December, up a minor +8200. But full-time employment grew +50,100 while part-time jobs shrank -42,000. It will be a rebalancing they will welcome. Their employed workforce is 21.1 mln, up +1.1% from a year ago. Analysts see much less of a chance of interest rate hikes in 2026 after this labour market result.In Japan, household spending was expected to bounce back in November after the weak October result. It did, but by very much more than expected. That was enough to take it up +2.9% from a year ago and very much better than the market expectations for a -0.9% decline. It was the steepest rise since May, supported by higher winter-related purchases and easing inflation pressures on some essential goods.Chinese CPI inflation is staying very low even if it did rise slightly in December. It came in +0.8% higher than year ago levels, marginally higher than in November. Beef prices were up +6.9% however from a year ago, sheep meat prices up +4.4% on the same basis. Milk prices (now bundled into "dairy products") were down -1.8% on that annual basis. All these food price rises were a key reason for the overall CPI rise.Taiwanese exports were up +43% in December from a year ago, rising to the second-highest monthly level on record. The pace slowed from an unusual +56% burst in November. It says a lot about expectations in Taiwan that analysts were expecting a +46% rise.Indian bank lending rose +14.5% in December from a year ago, the most in two years.In Europe, retail sales rose at a + 2.3% year-on-year volume rate in November, up from a revised +1.9% in October and well above market expectations of just +1.6%. The return of rising consumer spending will be welcomed in the bloc. This impulse is broadly back to what they had in the 2017-2019 period.We should note as well that the EU, after overcoming deep dissension among its members (especially by France), gave the green light to a sweeping free trade deal with four South American countries (Brazil, Argentina, Paraguay and Uruguay) to create one of the largest free-trade zones in the world, connecting markets with more than 700 million people. The deal probably got over the line because of reaction to Trump's isolationist policies. It is interesting that this deal includes Argentina, which the US is propping up financially.The UST 10yr yield is now just over 4.17%, down -1 bp from this time Saturday, down -2 bps from a week ago. The price of gold will start today at US$4508/oz, and up +US$8 from Saturday, up +US$195/oz from a week ago. Silver is now up at US$80/oz. Aluminium is on the move up as well at US$3148/tonne and apart from the pandemic distortion, that is a new record high.American oil prices are down -50 USc from Saturday at just over US$59/bbl, while the international Brent price is still at just under US$63.50/bbl.The Kiwi dollar is unchanged from Saturday, now at just under 57.3 USc.  Against the Aussie we are also unchanged at 85.7 AUc. Against the euro we are little-changed as well at just under 49.3 euro cents. That all means our TWI-5 starts today just on 61.4, and unchanged from Saturday, down -30 bps from a week ago.The bitcoin price starts today at US$90,953 and down -0.5% from this time Saturday. Volatility over the past 24 hours has been very low at just on +/- 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.