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 underlying resilience is holding the global economy from any meaningful pullback.

There are no real signs yet of weakness in the American labour market. Their jobless claims were expected to rise last week, but they fell and were below their low year-ago levels. There are now 1.9 mln people on these benefits, 1.3% of their workforce.

The American Q4-2022 GDP growth data was updated today. Recall the advance estimate was a surprise +3.1% rate and this latest update was expected to trim that to +2.9%. But in the event, it has come in even lower at +2.7%. Actually, this second estimate recorded a higher nominal expansion, but also a higher price adjustment, so the 'real' expansion is lower. There will be a third estimate released on March 31 (NZT). The Q4-2022 New Zealand GDP result will not be released until March 16.

The next regional Fed factory survey is out, this one from the Kansas City Fed district. It shows a slight easing of conditions there, but they did record gains for new orders and jobs, which is more positive than many other districts.

In fact, the Chicago Fed's National Activity Index suggests economic growth picked up in January, and probably its best expansion in six months.

Taiwanese industrial production slumped more than -20% in January from a year ago in a worrying dive. But their retail sales rose on the same basis, although at a fast-easing rate.

Singapore's inflation rate was little-changed in January at 6.6% (December 6.5%). But this was less than the expected 7.1% so they will count this as a win.

In South Korea, they had a monetary policy review yesterday and they held their benchmark interest rate at 3.5%, as expected. This is regarded as a hawkish pause as more voting members seem to be open to future hikes. They are still battling inflation above 5%, but their expansion is slowing.

We should note that the case of mad-cow disease in Brazil has been confirmed. Already, exports to China have been suspended. This may rock beef prices in the short-term and the share price of all the major Brazilian exporters have been hit hard.

In Australia, a migration boom is underway. More than 400,000 permanent workers arrived in the country in 2022, and while this pace is expected to ease off, they still expect +350,000 this year and another +275,000 next year. That is +1 mln in just three years, and alone will raise Australia's population by +4% and decrease its average working age. They seem to be up for the inevitable stresses that may bring in the short term. If demographics is destiny, then Australia's looks bright.

The OECD is noting that international trade contracted in value terms in Q4-2022, although some of that is related to the sharp falls in the price of crude oil.

Reflecting that pullback, global container shipping rates fell another -3% last week and are now -30% below ten year averages. Bulk cargo rates actually stopped falling this week and turned a little high, but are still near their pre-pandemic lows.

The UST 10yr yield starts today at 3.91% and up +1 bp from yesterday but still off its recent highs. 

The price of gold will open today at US$1820/oz and down -US$12 from this time yesterday.

And oil prices start today up +50 USc at US$75/bbl in the US. The international Brent price is now at US$81.50/bbl.

The Kiwi dollar is at 62.1 USc, softer than this time yesterday. Against the Aussie we are a little firmer at 91.8 AUc. Against the euro we are unchanged at 58.7 euro cents. That all takes the TWI-5 to 70.3 and a -10 bps easing.

Bitcoin has risen +1.1% since this time yesterday and is now at US$23,865. However, volatility over the past 24 yours has again been moderate at +/-2.1%.

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.