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 American households are struggling as inflation pressures consume their reserves.

In the US there were 181,000 new initial jobless claims last week, about what seasonal factors would have indicated. There are now 1.735 mln people on these benefits, lower than at this time last year, but still above two year-ago levels.

And there were 83,000 reported job cuts in April, a bit above the average over the past year. For a second month in a row, AI is the key reason for shedding jobs now.

Median one-year-ahead inflation expectations in the US rose in April and for a second month to 3.6% in April which is their highest since October 2023. Inflation uncertainty also increased at the one-year-ahead horizon. Income expectations are up less than 3%, so on average most people there expect inflation will set them back from where they are.

US consumer debt jumped in March by much more than expected, driven by a +9.1% surge in credit card debt. The big end of town is noticing. Executives across retail, restaurants and packaged goods are increasingly worried about American shoppers with tighter budgets amid surging fuel prices caused by Trump's Gulf War. “They’re literally running out of money at the end of the month,” one said.

Across the Pacific, China's FX reserves jumped in April to just over US$3.4 tin after the unexpected March dip, and back up in its rising trend. This is their largest gain in 28 months. But it is still off its US$4 tln level in mid 2014. Gold holdings increased again by another +8 tonnes.

The central bank of Malaysia reviewed its monetary policy late yesterday and kept its official rate unchanged at 2.75%.

And Malaysian discount airline AirAsia said it has ordered 150 Airbus aircraft worth US$19 bln, and said it has an option to order another 150 from Airbus. Orders like this are being driven by the need for fuel efficiency.

The central bank of Norway unexpectedly raised its policy rate by +25 bps to 4.25% at its overnight meeting, defying market expectations for no change. They said inflation remains too high at 3.6% and is likely to stay elevated and action is needed now to keep it closer to its 2% target.

In the EU, the volume of retail sales fell in March from February to be up just 1.9% from year ago levels. The lower volume of fuel sales was the key reason driving the recent reversal. Non-food, non-fuel activity was actually up an impressive +3.0% for the year.

In Germany they posted an impressive factory order intake for March, up +6.3% from the same month a year ago and resuming the upward trend they have had since August 2025.

Australia said its exports fell -2.7% in March from February as rural exports plunged -11.6%. Also, non-monetary gold exports dropped -6.1%. That makes its March merchandise exports -2.2% lower than year-ago levels. Meanwhile, imports rose +14%. That means they recorded a -AU$1.8 bln trade deficit for the month, far larger than the expected +$4.2 bln surplus and the first monthly deficit since 2017. The import surge of "ADP equipment" totaling $4.8 bln in March (likely for data centers), is a key reason.

Meanwhile, the Aussie government has imposed punitive tariffs of up to 82% on Chinese coil steel exports in a major effort to shield local manufacturers from low-cost competition from China that receive 'unfair' Chinese government subsidies.

Global container freight rates rose +3% last week to be +10% higher than year-ago levels. Outbound China rates are rising again. Bulk cargo rates were up +11.5% over the past week to be +112% higher than year-ago levels.

The UST 10yr yield is now just on 4.40%, up +5 bps from this time yesterday.

The price of gold will start today up +US$17 at US$4697/oz. Silver is up +US$2.50 at just over US$79.50/oz.

American oil prices are up +50 USc at just on US$96/bbl, while the international Brent price is little-changed at US$101.50/bbl.

Oil company Shell announced quarterly earnings overnight, more than doubling them to US$6.9 bln in the three months to March, from Q4-2025's US$3.2 bln. Clearly more than 'cost increases' are being passed on at the pump.

The Kiwi dollar is unchanged from yesterday at this time at 59.5 USc. Against the Aussie we are also unchanged at 82.3 AUc. Against the euro we are holding at just on 50.7 euro cents. That all means our TWI-5 starts today at just under 62.8 which is unchanged from yesterday.

The bitcoin price starts today at US$79,843 and down -1.9% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 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 on Monday.

Kia ora.

Welcome to Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from Interest.co.nz.

Today we lead with news oil prices have tumbled as the US seems to give up on most of its stated objectives, including the promise of safe-passage for shipping, in a u-turn to extract itself from a losing hand. Crude oil prices are down more than -10% on the news, although it needs to be noted that the Strait of Hormuz remains closed. It is just market euphoria. We now need to start worrying about a permanent Iranian transit tax after the US walks away. The Gulf States who supported the US are about to be thrown under the bus. Financial markets don't care of course and like the end of the adventure.

US mortgage applications fell again last week as interest rates rise, both for refinance activity and new home purchases. This takes this activity back to September 2024 levels.

The US ADP employment report said their private labour market added +109,000 jobs in April, marginally more than the +99,000 expected. This sets the official non-farm payrolls report up for an expected +60,000 rise, with upside. Most of the new jobs are coming from aggressive hiring in their healthcare sector.

After the prior week's outsized fall, this week the EIA reports another notable fall in US crude oil stocks. In fact, every metric fell other than US crude oil imports. There is certainly no relief at US petrol pumps yet, with prices now up more than +50% from their pre-Trump Gulf War levels.

We have earlier noted the politicalisation of US official data, especially of the Bureau of Labor Statistics who produce CPI, PPI and labour market data. We weren't the only ones. A new analytical report has been looking at how this has affected the quality of their data and concluded there is a worrying impact from this trend. So we need to be sceptical, and the next of their big set piece reports is the April non-farm payrolls. This means we will need to rely more on other non-Trump Administration high frequency market data.

In Canada, their widely-watched Ivey PMI surged into a strong expansion in April and by more than expected.

In China, new analysis shows Chinese companies are reporting lackluster earnings, with overall net profit declining in 2025 for the third consecutive year as the property slump dragged on and more retailers posted losses, hurting employment and the economy as a whole.

Meanwhile, China's Golden Week holiday has just ended, and reports are that there was less air travel this year - but very much more high-speed rail travel. Overall domestic holiday activity was up +3.5% with air travel falling -5.7% year-on-year to 10.5 million passengers between May 1 and May 5, railway journeys up +4.6% to 1.06 billion.

And staying in China, their non-official S&P Global services PMI reports that their services sector expanded faster as new business picked up in April and the year-ahead outlook improved. Cost pressures remained modest from this giant sector.

In India, their services sector saw new orders and output expand at a quicker pace supporting hiring activity. They also reported a mild reduction in inflationary pressures.

(Things aren't so good in the Russian services sector.)

In the EU, they report rising cost pressure for producers, all related to higher fuel prices. Overall they are up +2.0% in April from a year ago, but up +3.2% from March. There is quite a wide range of impacts depending on the country.

Internationally, a new report tallying global debt found it at US$353 tln, and a strong shift away from US treasuries and toward big new demand for Japanese and European government bonds. They also found the overall debt:GDP ratio remained stable.

The UST 10yr yield is now just on 4.35%, down -7 bps from this time yesterday.

The price of gold will start today up +US$121 at US$4680/oz. Silver is up +US$4 at just over US$77/oz.

American oil prices are down -US$6.50 at just on US$95.50/bbl, while the international Brent price is down -US$8.50 and now at US$101.50/bbl.

The Kiwi dollar is up +60 bps from yesterday at this time at 59.5 USc. Against the Aussie we are up +30 bps at 82.3 AUc. Against the euro we are up +30 bps at just on 50.7 euro cents. That all means our TWI-5 starts today at just under 62.8 which is up +50 bps from yesterday.

The bitcoin price starts today at US$81,399 and up +0.1% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.3%.

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

Kia ora. I'm David Chaston and we’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 that although the US claims the ceasefire with Iran is holding and "ships are lining up to transit", in fact, very little is moving in the area between Iran's red lines. And the most high profile transit in the past 24 hours was an Iranian tanker. Still, the US claims resonated on Wall Street, and stocks rose, benchmark rates fell.

But first today, there was another full dairy auction earlier today, a small one where volumes offered and sold were the least in fifteen years, since mid 2011. But prices were up +1.5% in USD, up +1.6% in NZD. Butter prices continued to slide, but there were good gains for SMP, WMP and mozzarella. These gains end two consecutive full events where prices fell.

US job openings fell, although to be fair, but less than expected. But even then, they are back at levels they had in April 2018, which is less than it seems because their labour force is so much larger now.

There were two services PMI reports out for the US overnight (ISM and S&P Global) and both showed that new business intakes fell for first time in two years as war in the Middle East and inflation hit demand. But both were positive even if less so that in the prior two months

The reason for the retreat cam be found in the latest April logistics managers report, where freight costs leapt, taking this index back to pandemic-stress levels.

The US RCM/TIPP economic optimism index fell yet again, down to levels last seen in early 2024. It has retreated steadily since December 2024. It's sponsor's report called it 'steady' but that is gilding it somewhat.

US exports and imports were little-changed in April, but both are in rising trends even if imports rose slightly more than exports (which rose largely on petroleum exports). Their trade deficit was widened.

Canada also reported export data and that came in at a one year high, and unexpectedly good result, largely on the back of high exports of petroleum and gold. Imports fell back in April but from an unusually high March level. The result was a good trade surplus, their first since September 2025.

Singapore reported March retail sales late yesterday and they were better than expected with a good +4.8% rise from a year ago. That represents a real gain because their CPI inflation was 1.8% in March.

As widely anticipated, the RBA raised its cash rate target by +25 bps to 4.35% late yesterday. It was a split decision with one voting member wanting to hold the rate unchanged. But they face sharply higher inflation threats that seem to be growing and prior rate hikes have done little to quell those. However they have restrained their housing market enthusiasm and this latest hike is expected to put the brakes on that further. Traders still believe there is at least one more rate increase this year despite the RBA saying their policy was still only mildly restrictive.

This comes after the March CPI rose +4.6%, and yesterday they reported that household spending remained high over the year in nominal terms, up +6.3% compared to March 2025 (and the highest since January 2023). Most of this is 'price' and much of it relates to a +32.8% increase in monthly fuel prices. But in volume terms, they say fuel purchases are lower, down -1.3% in March from February.

The UST 10yr yield is now just on 4.42%, down -2 bps from this time yesterday. 

The price of gold will start today up +US$37 at US$4559/oz. Silver is unchanged at just over US$73/oz.

American oil prices are down -US$3 at just on US$102/bbl, while the international Brent price is down -US$3.50 and now at US$110/bbl. It is hard to see these prices easing further given the sharp fall in global oil reserves recently. Even the future process of building them back will add to demand and prices.

The Kiwi dollar is up +20 bps from yesterday at this time at 58.9 USc. Against the Aussie we are up +10 bps at 82 AUc. Against the euro we are up +20 bps at just on 50.4 euro cents. That all means our TWI-5 starts today at just under 62.3 which is up +20 bps from yesterday.

The bitcoin price starts today at US$81,300 and up +0.9% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.3%.

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

Kia ora. I'm David Chaston and we’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 lead with news conflict in the Persian Gulf has erupted again with attacks on US naval forces trying to open the waterway for US flagged vessels. Iran also hit the UAE. Iran also warned that it will tighten its control over the Strait. So far there have been 28 attacks and 6 near-misses.

The oil price has risen, equities have fallen, and benchmark interest rates rose.

How China reacts will be important now. So far they are bolstering their support of Tehran via trade and payments support, and banning their companies from respecting the US sanctions threats.

In the US, factory orders rose in March and by more than expected as the stockpiling trend got started. They are now almost +3.7% higher on a nominal basis than a year ago. This data matches the recent factory PMI data we have reported earlier.

US April vehicle sales came it at an annualised 15.9 mln rate, slightly less than for March and less than expected. This was down -7.2% from April 2025, but holding at about the post-pandemic average which in turn is about -10% lower than pre-pandemic levels.

The US Fed loan officers survey may have disappointed some observers. Earlier in the year, indications were for rising demand. But the results of the April survey found little-change. At least it didn't find softer demand.

In Canada, they have announced a $C1 bln support program for manufacturers hit by the swinging Trump tariffs on their steel products, a sector hit particularly hard. Another C$500 mln in regional support was announced at the same time.

In South Korea, we got another very good factory PMI for April. The S&P Global version rose to 53.6 in April from 52.6 in March, the strongest expansion since February 2022. But the scramble for more orders, and production is to get ahead of incoming inflation pressure. In fact, input costs and output price inflation surged to its highest in the 22-year history of this monitoring.

In Taiwan, the same scramble is underway, with production and sales rising sharply as firms look to stockpile. That drove their factory PMI to new momentum and a five year high.

In Europe, the ECB also released a survey of bank forecasters. They found there were expectations for higher inflation in the near term, but unchanged further out. These analysts have downgraded their 2026 and 2027 growth expectations, but left longer forecasts unchanged.

In Australia, the Melbourne Institute's Inflation Gauge tracking reported a +0.6% rise from March to be 4.3% higher than a year ago. The April result was lower than the record high monthly increase at +1.3% in March, and compares with the official March monthly annual rise of 4.6%. Despite the easing, this rate remains very high and likely well above what the RBA will be comfortable with. The RBA is widely expected to raise its policy rate +25 bps to 4.35% later today, although in the past 24 hours, the market conviction has wavered.

The UST 10yr yield is now just on 4.44%, up +6 bps from this time yesterday. 

The price of gold will start today down -US$92 at US$4522/oz. Silver is down -US$2 at just under US$73/oz..

American oil prices are up +US$3 at just on US$105/bbl, while the international Brent price is up +US$5.50 and now at US$113.50/bbl.

The Kiwi dollar is down -30 bps from yesterday at this time at 58.7 USc. Against the Aussie we are holding at 81.9 AUc. Against the euro we are down -10 bps at just on 50.2 euro cents. That all means our TWI-5 starts today at just under 62.1 which is down -20 bps from yesterday.

The bitcoin price starts today at US$80,587 and up +2.4% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.6%.

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 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 it has now been 66 days since the Strait of Hormuz has been largely shut and the two combatants seem to have descended into stalemate (although the Iranian's seem to have attacked one cargo ship overnight, let others through). The result has been much higher fuel prices, fertiliser prices, and a settling in of inflationary pressure everywhere. These pressures are intense.

This week will start out locally with the Barfoot results for April (today), followed by the March quarter jobs report (on Wednesday). The RBNZ will be reviewing financial stability on Wednesday as well.

In Australia, it will be all about the Tuesday afternoon decisions by the Reserve Bank of Australia, where a +25 bps hike seems likely (but is not certain). But inflation risks tied to the Iran conflict are building and they risk getting embedded. Also due out this week is data for building consents, job ads, household spending, and trade data.

Trade data is also due from Taiwan and PMIs will come for many countries. Sweden and Norway will be reviewing their monetary policy settings this week too.

American financial markets will be eyeing their labour market data, with their non-farm, payrolls report coming at the end of the week. There will also be important updates for their services sector, plus the preliminary May sentiment survey from the University of Michigan, also at the end of the week.

At the end of last week, there were two factory PMI surveys out for the US and both were positive. The ISM reported a modest expansion, unchanged from a month ago. But they also reported a rise in new orders even though export orders fell. And employment fell, and rather sharply. Prices rose sharply and at their fastest pace since the pandemic.

The S&P Global US Manufacturing PMI was even more positive, but they said it was driven by stockpiling amid rising prices and supply disruptions. New orders increased at the fastest pace in four years, despite an eleventh consecutive monthly decline in exports. On the price front, input cost inflation reached a ten-month high.

If stockpiling and inventory builds are behind this American rise, while they lose global market share, this is not very sustainable.

Stock building seems to be behind a sharp rise in Canadian factory activity too. Their PMI showed production, employment and purchasing all increased in April. But theirs also featured new export orders which rose solidly and at the fastest rate since the start of 2022.

Across the Pacific, Japanese factories are reporting their fastest expansion in twelve years. It is no doubt welcome, but they are now having capacity problems affecting supply-chain performance. This April production data supports earlier official industrial production reports for March.

And the Japanese yen strengthened suddenly and sharply on Friday, ending a long period of devaluation against the USD. The shift is likely due to Bank of Japan intervention which seems to have cost the US$35 bln to pull off.

In China, China Southern Airlines has ordered 137 aircraft from Airbus said to be worth US$28 bln. This comes after China Eastern Airlines ordered 101 Airbus aircraft worth US$16 bln a month ago. It appears that China won't be offering Trump aircraft orders when Xi and he meets on May 14 in Beijing.

The UST 10yr yield is now just on 4.38%, unchanged from this time Friday but up +7 bps for the week. 

The price of gold will start today down -US$7 at US$4613/oz and down -US$103/oz for the week. Silver is down -US$1 at just on US$75/oz.

American oil prices are down -50 USc at just on US$102/bbl, while the international Brent price is also down -50 USc, and now at US$108/bbl. A week ago these prices were US$94/bbl and US$105/bbl so the really big move up was in the US.

The Kiwi dollar is unchanged from Saturday at this time at 59 USc, up +20 bps for the week. Against the Aussie we are holding at 81.9 AUc. Against the euro we are down -10 bps at just on 50.3 euro cents. That all means our TWI-5 starts today at just under 62.3 which is essentially unchanged from Saturday and up +10 bps from this time last week.

The bitcoin price starts today at US$78,723 and up +0.3% from this time Saturday. It is up only +1.1% from a week ago however. Volatility over the past 24 hours has been 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.