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.

And today we lead with news the world's economies are being bolstered by expanding service sector activity.

In the US, there were two services PMIs out overnight, both signaling a modest expansion. The ISM services version fell in March from the prior month and to well below forecasts. They now have their slowest growth in the services sector in three months. Demand and employment cooled while capacity and logistics improved, and price pressures eased to their lowest since September 2020. The internationally benchmarked Markit version actually rose in March, but to the same level as the ISM one. It didn't show the strong expansion in February.

US mortgage applications fell rather sharply last week, down -4.1% from the prior week and are now running -35% lower than a year ago. Spring may have arrived in the US, but the housing market is missing the customary burst in listings and purchase activity. There was virtually no change in the average mortgage interest rate last week to affect these results

The precursorADP employment report ahead of Saturday's official non-farm payrolls report shows private businesses created +145,000 additional jobs in March, below an upwardly revised +261,000 in February and analysts forecasts of +200,000. Analysts' forecasts for the non-farm payrolls gain are currently sitting at +240,000.

The American trade deficit for both goods and services was little-changed in February and still well below year-ago levels, in fact back to two-year-ago levels. US exports contracted -2.7% while imports were lower too.

Following strong increases in January, Canadian goods exports and imports decreased in February. Exports were down -2.4%, while imports decreased -1.3%. As a result, Canada's merchandise trade surplus narrowed.

In Japan, their services PMI was revised higher in March from February. This was the seventh successive month of rise in services activity and the strongest pace since October 2013.

For India, their services sector is still expanding at a healthy rate.

In Germany, factory orders grew much more than expected in February from January with their best rise in 20 months. But that still leaves them -5.7% lower than year-ago levels.

The UST 10yr yield starts today at 3.29%, and down another -5 bps from yesterday. 

Following yesterday's surprise +50 bps OCR rate hike by the Reserve Bank of New Zealand, markets are unsure there will be one at the next MPS meeting on May 24. But by July 12 they seem certain there will be at least another +25 bps on the way with the OCR topping out then at 5.50%.

The price of gold will open today at US$2020 and holding yesterday's level.

And oil prices also unchanged at just on US$80.50/bbl in the US. The international Brent price is now just under US$85/bbl.

The Kiwi dollar is a little firmer against the USD and now at 63.1 USc. Against the Aussie we are +½c higher at 94 AUc. Against the euro we are also almost +½c higher at 57.9 euro cents. That means the TWI-5 is now at 70.9 and +30 bps higher than this time yesterday.

The bitcoin price is little-changed again today, now at US$28,052 and down a minor -0.4% from yesterday. Volatility over the past 24 hours has been modest at +/-1.7%.

Please note that New Zealand is on holiday this weekend (Easter), and that includes Friday and Monday.

You can find links to the articles mentioned today in our show notes.

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

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