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 most economic expansions are rolling on, but seem to be less secure as central banks struggle to contain inflation.

The giant American service sector expansion slowed slightly in October, and by slightly more than was expected. But it is still a healthy expansion, just less so. The widely-watched local survey from the ISM pegs the decrease due to slower growth in both business activity and new orders and taking this one to an 18 month low for this expansion. The internationally benchmarked Markit survey is actually recording a small contraction in this sector. This seems unlikely given the jobs and benefit-claims data, but that is what it shows.

The key metric is out tomorrow, the October non-farm payrolls report, and an expansion of jobs of +200,000 is expected.

The October job cuts report edged up to a tiny 34,000 in the month, but still, that is its highest since October 2021. And there are many reports of firms now bracing for tougher times ahead.

The number of American filing for jobless benefits rose marginally to +186,000 which is still a very low level for them. That means 1.24 mln people are on this unemployment support, and still bumping along near its historic low. That is an 'insured jobless rate' of just 0.9% of their workforce. 

US factory orders rose in September from August by the amount expected, and are +11.7% higher than year-ago levels.

The US September trade balance for both goods and services, which had fallen back to early 2021 levels by August 2022, blipped up in September to a deficit of -US$74 bln, as the economic expansion drew in more imports.

The American home ownership rate rose to 66% in September. (For perspective, in New Zealand that rate is 64.5%.)

The number of new Canadian residential building consents dived unexpectedly in September according to data out overnight. No-one saw the -17% month-on-month drop coming. A -6% drop was what was expected.

The internationally benchmarked PMIs for India shows their growth momentum picked up in October in both their factory and services sectors, and to good levels. In some large cities, this comes at considerable cost to public health, however.

Norway raised its key policy rate by +25 bps to 2.50%, and that was less than the +50 bps hike expected.

England raised its key policy rate by +75 bps to 3.0% in a split decision. This is a 30 year high and was as expected. The dissenters would have raised it less. They are fighting CPI inflation of over 10% and have a target of just 2%. They also said they are facing a two-year recession.

Container freight rates fell another -3% last week to now be -20% below their five-year average. Pacific rates are still falling. Atlantic rates are either stable or rising now. Bulk cargo rates are still falling too.

The UST 10yr yield started today at 4.13% and +14 bps higher than yesterday just after the US Fed market reaction. 

The price of gold will open today at US$1628/oz. This is down -US$20 from this time yesterday.

And oil prices start today down -US$1 from this time yesterday at just on US$88/bbl in the US while the international Brent price is just under US$95/bbl.

The Kiwi dollar will open today at 57.7 USc and almost -1c lower than this time yesterday. Against the Australian dollar we are firm at 91.8 AUc and our highest since April. Against the euro we are down slightly at 59.2 euro cents. That all means our TWI-5 starts today at 68.8 and down -70 bps since yesterday.

The bitcoin price is now at US$20,306 and down -1.1% from this time yesterday. Volatility over the past 24 hours has also been modest at just on +/- 1.9%.

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

And 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.