Kia ora,

Welcome to Thursday’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 consumers may be anxious about their political future, but they are spending like they are in healthy financial shape.

In the US, their economy expanded an annualised +2.8% in Q3-2024, below the 3% in the previous quarter and forecasts of 3%. Holding it back was essentially no growth of inventories and slow expansion of capital investment. But personal spending rose at its fastest pace in more than a year. The US economy is running at a nominal pace of US$29.35 tln of annual economic activity. That is +US$1.4 tln more in a year, or +4.9% more, in nominal terms. (Their increase is about five times New Zealand's total activity, three-quarters of Australia's total annual pace.)

The ADP employment report for October delivered a very positive signal, adding +233,000 paid private-sector jobs, when only +115,000 were expected. This will have analysts raising their forecasts for US non-farm payrolls.

US pending home sales - a forward-looking indicator of home sales based on contract signings - rose an outsized +7.4% in September and the rise was broad-based, across the nation. But last week's mortgage applications were little-changed, but that level is +10% higher than year-ago levels (which to be fair were weak). Higher benchmark mortgage rates inhibited recent activity.

In China, eyes are on the level of interest payments that local government is paying, as they borrow much more, replacing the 'revenue' that has dried up from land sales.

Pushed by an unexpectedly positive German result, the EU Q3-2024 GDP rose much faster than expected (even if it is still low).

EU sentiment is broadly stable, although there was a small rise in inflation expectations in these surveys.

In Australia, their Q3-2024 CPI rate was expected to come in at 2.9%, and their September monthly inflation indicator was expected at 2.4%. They actually came in at 2.8% and 2.1% respectively (a 3 year low), so that eases the pressure on the RBA, although only slightly. Next week, the RBA will be reviewing its 4.35% policy rate, and these results are likely to be seen as an unexpected faster cooling, but largely resulting from the impact of the Canberra's government's Energy Bill Relief Fund rebate. It seems unlikely this distortion will prove enough for the RBA to cut rates.

The UST 10yr yield is now at just on 4.25% and down -4 bps from this time yesterday. 

The price of gold will start today at US$2786/oz and up +US$21 from yesterday and a new high.

Oil prices are up +US$1 US$68.50/bbl in the US while the international Brent price is up to US$78.50/bbl.

The Kiwi dollar starts today at 59.8 USc and back up +20 bps from this time yesterday. Against the Aussie we are up +10 bps at 91 AUc. Against the euro we are down -10 bps at 55.1 euro cents. That all means our TWI-5 starts today at just on 68.8, and up +0 bps from yesterday at this time.

The bitcoin price starts today at US$72,121 and down -0.7% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.5%.

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.