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.

And today we lead with news a global soft landing seems much more likely now, despite China's travails.

The actual number of Americans on jobless benefits was just 1.58 mln and an eight month low, and the number of new filings were 173,000 last week and close to a seven month low. None of this very current data suggests labour market stress is about to hit them.

And the September Challenger job cut report was low too, and the recent trend shows the earlier rises seem to have run out of steam.

So perhaps estimates for tomorrow's non-farm payrolls report of jobs growth of +170,000 has upside risks attached.

Meanwhile, the US trade deficit narrowed to -US$58 bln in August, its lowest since September 2020. Both goods and services exports rose from July, goods imports fell from the prior month.

Canada also reported an improved trade balance, a rare August surplus. Their exports also rose.and by +5.7%.

And Canada's closely-watched local Ivey PMI slipped slightly but far less than expected, and remains in a good expansion phase.

Today is the last day of the extended Mid-Autumn Festival in China and Beijing has set rules for an unusual end. To ensure the break does not hurt their fragile economy, they have decreed that Saturday & Sunday will be workdays, so workers there are facing a seven day back-to-work week through to Friday a week away.

Singapore reported an unexpectedly strong retail sales surge in August, its best in six months driven by strong food sales.

South Korea is starting to see inflation rise again. It got down to just 2.3% in June but since it has risen steadily, now at 3.7% in August from a year ago. But the anualised rate between July and August was much faster than that.

In Australia, exports rose while imports fell, allowing them to record a larger trade surplus in August than expected. They reported a +AU$9.6 bln surplus in the month when a +AU$8.7 bln surplus was expected. (This is a goods and services result.) Almost all the extra surplus was exports from their gold mining industry.

Staying in Australia, it is getting tough and ugly being a renter. Data from housing portal Domain reveals their national residential rental vacancy rate was only 0.8% in Q3-2023. In Perth it was only 0.3%, in Sydney 0.9% and hardly better (for renters) in Melbourne, Adelaide or Darwin. But it was easier in both Canberra and Hobart.

We mentioned yesterday that the coal price is falling. It is, and did so more today taking it back near two year lows. The copper price is shifting lower too, near one-year lows. Nickel and tin prices are soft as well. None of this shows traders are expecting rising demand from China.

Container freight rates fell less this week than last, but they did fall again, taking the sequence to seven straight weeks of declines and costs are now lower than pre-pandemic levels (by -2%). Every major trade route reported slippage this past week. But bulk cargo rates were up marginally again last week and building on an impressive spurt over the past month.

The UST 10yr yield starts today down -2 bps from yesterday at 4.72% as the correction embeds. 

The price of gold will start today at just on US$1817/oz and down another -US$3 from yesterday.

Oil prices have fallen another -US$2 to be just over US$82/bbl in the US. The international Brent price is just under US$84.50/bbl. These are five-week lows.

The Kiwi dollar starts today at 59.6 USc and up more than +¼c from yesterday. Against the Aussie we are also firmer, now at 93.7 AUc and down -20 bps. Against the euro we have also firmed marginally to 56.5 euro cents. That all means our TWI-5 starts today at just over 69.7 and up +30 bps.

The bitcoin price has moved very little on a net basis from yesterday, and it is now at US$27,483 and up a minor -US$41 from then. Volatility over the past 24 hours has been modest at just on +/-1.3%.

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 will do this again on Monday.