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 investor fascination with the possibility China may back off its strict lockdown regime doesn't seem to be reciprocated by official announcements yet.

In China, exports fell in October, their first retreat since May 2020, and prior to that their January 2019. The fall wasn't large (-0.3%) but over the past two years it is well lower than the prior low of a +3.5% year-on-year rise.

China's October 2022 trade surplus was lower too at +US$85 bln, and well lower than the +US$96 bln expected. Imports fell faster than exports but these are actually little-changed in the past seven of eight months.

Apple has warned it will ship fewer premium iPhones and customers will face longer waits for products after strict COVID-19 curbs disrupted production at a key factory in Zhengzhou, China, which is operating at "significantly" lower capacity as pandemic-related restrictions affected assembly of the premium iPhone 14 Pro and Pro Max. Key supplier Foxconn has had to run the facility under tighter restrictions, including daily testing and limitations on staff movements.

Analysts had expected China's foreign currency reserves to dip marginally in October by about -US$18 bln. But in fact they rose marginally by +US$23 bln to US$3.05 tln.

Those rumours continue to swirl about a coming easing of pandemic controls. It is 'seducing investors'. But news of a wider spread of infection, especially in the Guangdong region, remains a real public health and economic worry.

In the US, a detail from the strong October jobs report is worth noting. Logistics firms shrank their workforce by -20,000. This is a sign that the supply chain stresses are easing faster than expected and the great employment run-up during it may be over. But it is an industry with a very much larger jobs footprint now.

In Europe, German industrial production rose in September from August and by more than expected and is now +2.6% higher than year-ago levels. But you may recall that we have already reported than new order levels are not rising.

International air travel made a "strong recovery" in September, including in the Asia/Pacific region, but it is still down -50% from equivalent pre-pandemic levels. Only North America is almost back to those benchmark levels. On the air cargo front the situation is closer to normal volumes, but the Asia/Pacific region is dragging. Again, it is strong North American air cargo markets that is driving this recovery.

The UST 10yr yield started today at 4.21% and up +5 bps from this time yesterday. 

The price of gold will open today at US$1678/oz. This is down -US$5 from this time yesterday.

And oil prices start today marginally firmer than this time yesterday at just over US$92/bbl in the US while the international Brent price is just on US$98.50/bbl.

The Kiwi dollar will open today at 59.2 USc and little-changed since this time yesterday. Against the Australian dollar we have stayed firm at 91.6 AUc. Against the euro we are down slightly at 59.3 euro cents. That all means our TWI-5 starts today at 69.5 and -20 bps lower than this time yesterday.

The bitcoin price is now at US$20,718 and down -2.5% since this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.6%.

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 tomorrow.