Kia ora,

Welcome to Wednesday’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 American economic data continues to impress.

But first up today there was a full dairy auction, one that brought slightly lower prices overall in USD terms (-1.4%), and slightly higher results in NZD terms (+0.6%). The milk powders slipped -2.2% while the milk fats (cheese and butter) were firmer. Demand was lighter despite lower production reports in both the US and China. Although analysts will have noted these softer results, it seems unlikely the high farmgate payout forecasts will be altered by this result alone. But prices today are on the downside from recent highs.

In the US, their Redbook monitoring of retail sales continued its very elevated rise from a year ago, up +6.8% and off a positive base. So this metric is still quite impressive.

US exports continued their rise, up +5.2% in November from a year ago for goods, up +9.3% for services. Imports were up too, but probably distorted by a pre-tariff surge, a surge that will continue into December.

US ISM services PMI was very expansionary, and more so that the internationally benchmarked S&P/Markit one. New order growth was strong, but it was current business activity levels that drove this rise.

And that is reflected in the November JOLTS report. Analysts had expected a slip back, but in fact a surge in job openings was found in this survey, and quits were lower than expected. We are just three days away from getting the December non-farm payrolls report and today's release suggests there may be upside coming to the +154,000 gain expected.

So it will be no surprise to know that their logistics sector is expanded fast in December. But an effort by firms to keep inventories under control meant that the latest fast expansion was less than in November.

Today's UST 10yr bond auction brought a median yield of 4.62% at the well supported event, although less so than last time. But that was much higher than the 4.19% at the prior equivalent event a month ago.

The Canadian Ivey PMI came in strong too with a solid expansion reported and its best in six months, although not quite up to the expansion analysts had expected.

Canadian exports rose too in November.

In China, an update by major developer Country Garden shows just how damaged the property sector is. In December it sold only 50% of the level it sold in the same month a year ago, itself a very weak benchmark. Beijing's stimulus efforts haven't helped this developer yet.

And lower Chinese activity is seeing quite sharpish dips for both coal and rebar steel prices now.

And staying in China, their foreign exchange reserves fell in December but their gold reserves rose for a second straight month. However, year on year those reserves are only -0.2% lower, and unchanged for the gold holdings.

In Europe, their CPI inflation rate has been rising since October, and is now up to 2.4%, largely driven by the German inflation rise we reported yesterday. Europe-wide it is the rise in the cost of services that are the driver here; energy costs are the restrainer.

Australian building consents came in less than expected in November. Year-on-year consents for new housebuilding rose +3.8% but multi-unit dwellings fell -6.4%. Month-on-month both fell more than expected. They may still be in an overall recent rising trend, but it that trend is weakening faster now.

The UST 10yr yield is now at just on 4.69%, and up +6 bps from yesterday.

The price of gold will start today at US$2651/oz and up +US$12 from this time yesterday.

Oil prices are also little-changed from this time yesterday at just on US$74/bbl in the US while the international Brent price is up +50 USc at just under US$77.

The Kiwi dollar starts today still at 56.5 USc and unchanged from this time yesterday. Against the Aussie we are up +10 bps to 90.4 AUc. Against the euro we are down -10 bps at 54.2 euro cents. That all means our TWI-5 starts today at just on 67.1 and up +10 bps from this time yesterday.

The bitcoin price starts today at US$97,785 and down -4.2% from this time on yesterday. Volatility over the past 24 hours has been moderate at +/- 2.8%.

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 tomorrow.