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 start with news global trade is rising and quite impressively, but the US is being shunned (or shunning itself).

But first, US initial jobless claims rose more than +29,000 last week, marginally more than level seasonal factors would have accounted for. But there are now just under 2.2 mln people on these benefits and quite a bit higher than a year ago. Modest hiring and rising firings are driving these trends.

Although the December month layoff data was unusually low, it does cap the full year layoff level at just over 2 mln and the most since the pandemic, and prior to that, the most since the GFC.

Analysts are expecting tomorrow's release of December non-farm payrolls to rise just +60,000, similar to the low November level.

In their December survey, the New York Fed reports it showed US labour market expectations worsened (almost one in seven people expect to lose their jobs in 2026) and short term; inflation expectations tick up to 3.4% but were unchanged over the longer terms.

US exports rose and imports fell in the October data released overnight. The US trade deficit narrowed sharply to -US$29.4 bln in the month, the smallest gap since June 2009. Exports rose 2.6% or +US$7.2 bln to a record $302 bln. Imports declined -3.2% to a 21-month low of $331 bln. But this is really a story about gold flows more than tariff effects. Precious metal exports rose US$10.2 bln in the month and without those, exports would have fallen. Imports of gold fell -US$1.4 bls. Their largest monthly gaps were recorded with Mexico (-US$18 bln), Taiwan (-US$16 bln), Vietnam (-US$15 bln) and China (-US$14 bln). The trade gap with the EU narrowed sharply to -US$6.3 bln.

Canada also reported trade data overnight. In October, Canada's merchandise imports increased +3.4%, while exports were up +2.1%. As a result, Canada's merchandise trade balance went from a small surplus of +C$243 mln in September to a deficit of -C$583 mln in October. Basically they remain in balance on this measure. But the transition away from trade with the US is sharp. Again, these flows have a large gold component too.

In China, private analysts shows that their property market slump deepened in 2025, with new-home sales shrinking -9% to levels not seen before 2010 and falling by roughly half from their 2021 peak. Total sales value fell by nearly -13% according to this respected analysts.

Japanese consumer sentiment, which has been improving since April, hesitated in December at just below the November level. Another improvement was expected, although the difference is small.

It was a very similar story in the EU, with a December hesitation after a nine month string of improvements.

Meanwhile, the survey for the ECB on consumer inflation expectations shows them unchanged in November at 2.8%.

On the industrial front however, producer prices fell -1.7% in November from a year ago, more than the -0.5% in October, but less of a deterioration than the -1.9% expected. They actually rose slightly from the prior month and ny a bit more than anticipated.

German factory orders rose sharply in November and ny much more than expected, up +5.6% from October, up +10.5% from the same month a year ago.

In Australia, the trade surplus narrowed in November, as major commodity exports fell, and capital goods imports signalled a possibility of softer business investment in the December quarter.

Globally, air passenger travel rose +5.7% in November from a year ago. international travel was up +7.7%. But its was all driven by the +7.8% rise from the Asia/Pacific region.

Meanwhile air cargo traffic rose a similar +5.5% in November, also driven by the +11.1% rise in international cargoes in the Asia/Pacific region. North American flows declined.

Global shipping container freight rates rose +16% last week from the prior week to be now -35% lower than year-ago levels. Outbound rates from China, to both the US and EU, rose sharply. Bulk cargo rates fell -6% last week, and are now +25% higher than a year ago.

The UST 10yr yield is now just under 4.18%, up +4 bps from this time yesterday. 

The price of gold will start today at US$4460/oz, and up +US$2 from yesterday. Silver is down -US$2 to US$76/oz.

American oil prices are up +US$1 from yesterday at just over US$57/bbl, while the international Brent price is now at just under US$61.50/bbl.

The Kiwi dollar is down -30 bps from yesterday, now at just under 57.5 USc. Against the Aussie we are unchanged at 85.9 AUc. Against the euro we are down -20 bps at 49.3 euro cents. That all means our TWI-5 starts today just over 61.5, and down -30 bps from yesterday.

The bitcoin price starts today at US$90,887 and down -0.4% from this time yesterday. Volatility over the past 24 hours has again been modest at just on +/- 1.2%.

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 Monday.