Kia ora,

Welcome to Monday’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 the US economy is giving continuing signs of resilience even though more analysts think they can see a slowdown coming soon.

The US labour market just keeps on growing, defying those who thought it would be reversing by now. They added 428,000 jobs in April, the same as in March and above forecasts of 391,000. It marks a 12th straight month of job gains above 400,000 but easing from a February gain of 714,000 amid an increasingly tight labour market. Employment increased across all sectors, but that still leaves their economy down by -1.2 mln jobs from its pre-pandemic level.

Pay levels rose, but more modestly this month to be up +5.5% in a year, and far less than inflation's bite.

New data for American consumer credit demand revealed a surge in March, far above what was expected - double in fact. In fact, it was the biggest monthly gain in more than eleven years, driven across the board by sharp rises both revolving credit (like credit cards), and non-revolving credit (like car and personal loans). It isn't getting much attention, but the jump is quite something. February data was revised higher too. Inflation will be a part of it, but improved sentiment is as well.

Meanwhile, American mortgage rates accelerated their upward climb, reaching 5.27% for their benchmark 30yr mortgage and the highest level since August 2009.

The April jobs report for Canada wasn't positive this time, after a string of strong monthly results. This time, full-time employment fell and part-time employment rose, partly reversing months of the opposite gains. It is unclear whether this is just an aberration, or a turning point.

Chinese foreign exchange reserves slipped for a fourth straight month to $3.120 tln in April, the lowest value in a year even if this latest fall was small. Their gold reserves fell too.

It is hard to see them rising again any time soon. Over the weekend, Chinese Premier Li warned of a “complicated and grave” employment situation in the country. The shock waves from the extended lockdowns in Shanghai and Beijing are now rippling through their economy. The central government has instructed all regions to prioritise measures aimed at helping businesses "retain jobs and weather the current difficulties".

Global food prices eased by -0.8% month-over-month in April, but still remained close to the March record high. Prices of vegetable oil declined significantly and prices of cereals were down slightly. Meanwhile, dairy prices rose for the 8th straight month on sluggish production in Western Europe and New Zealand, and surging demand for butter amid shortages of sunflower oil and margarine in Western Europe. Lastly, prices rose firmly for meat (up +2.2%) on tight supplies in the northern hemisphere and disruptions in Ukraine.

The war in Eastern Europe is suppressing air-cargo trade. In March, international volumes fell -5.4% from the same month a year ago. Asia/Pacific volumes were down only -2.7% on the same basis however.

The cost of shipping cargo containers by sea slipped again, mainly of weaker rates out of China. But interestingly, rates to China are now showing some long-absent firmness. The cost of shipping bulk cargoes rose more sharply, and are now at their highest of the year, in a move up worth watching.

A presidential election in the Philippines is underway, and may return the family of a former dictator to power as amnesia grips the country.

In Australia, they are in the last two weeks of their election campaign and recent polling is showing up an increasing appetite for change. Other recent polls show a similar turn. Even the Murdoch press polling concedes the shift.

The UST 10yr yield starts today up another +2 bps since this time Friday at 3.14%. 

The price of gold starts today back up +US$6 since this time Friday at US$1883/oz.

And oil prices are almost +2% higher today at just over US$109.50/bbl in the US while the international Brent price is now just over US$112.50/bbl. After only minor gains for many months despite high prices, the American rig count is starting to move higher again now and is back over 700 for the first time in two years.

The Kiwi dollar will open today softer again at 64.1 USc and nearly a two-year low. That has been a -7.5% devaluation since the start of April. Against the Australian dollar we are slightly firmer at 90.6 AUc. And against the euro we are unchanged at 60.8 euro cents. That all means our TWI-5 starts today at 71.5 and its lowest since the end of February. On a TWI-5 basis the devaluation since the start of April is -4.4%.

The bitcoin price is down -5.4% from this time Saturday at US$34,057. At the beginning of April it was at US$47,294 so it is down -28% since then. Volatility over the past 24 hours has been high at just over +/- 3.3%.

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.