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 have a quick news wrap-up so you can get back to your 'time-off'.

First, American retail is still rising at an increasing rate, up +5.9% last week on a bricks & mortar same-store basis. The gains above inflation are mounting, with Q4-2023 putting in an impressive performance and this latest data for the first full week of January continuing that trend.

It looks like the American economy will post another solid expansion in Q4-2023.

Meanwhile the consumer debt data we were awaiting yesterday has been released, and it expanded far more than we were expecting, driven in large part by "a big jump" in the use of credit cards. To be fair the "big jump" is only the seasonally adjusted change from October; year on year it is +9.5% higher and that is its slowest gain in 22 months. The dollar rise actually isn't anything special either with single month rises in 2022 and 2021 outshining November 2023. There is actually a slowing in credit card debt rises, not the quickening that some 'analysts' jumped to when they saw the s.a. result.

The US logistics managers index (LMI) rose into expansion in December, led by better warehousing utilisation and prices and rising transport utilisation.

But both US exports and imports fell in November (goods and services), with imports falling a bit more so narrowing their trade deficit situation and an improvement that has been evident all year.

Canadian goods exports slipped -0.6% in December from November to be +3% higher than a year ago, ending a strong run of monthly rises starting mid-2023. Their exports to the US and China held up, but to other countries - mostly the EU - were for almost -5% lower in the month.

Taiwanese goods exports soared almost +12% in December from the same month a year ago, driven by good demand for its electronics of course. That was a shar0p gain from November’s 3.8% rise and well above market expectations of a 5% increase. It is the largest growth since July 2022.

Australia posted good retail sales data for November yesterday. Retail sales in Australia rose by +2.2% from the same month a year ago and although this exceed market estimates it is still undershooting inflation. Despite that, it was the strongest pace in retail trade since November 2021, boosted by Black Friday events.

Overall Australian building consent levels came in at modest levels in November but were still better than expected. But house building is a real drag; it is the multi-unit projects that are still being consented quickly. Year on year, overall consents were down -4.6% from the same month in 2022. Houses were down -6.2% on that same basis, but multi-units were up +0.8%. Month on month, multi units were up +6.7%. It is not a happy time for Aussie housebuilders, but ok for the big apartment builders.

Elsewhere in Australia, their resources industry it taking some lumps. Plant closures at both aluminium and nickel refineries have been announced and it just seems a matter of time before lithium miners will retrench too. But at least the iron ore price is holding.

On their domestic front, their peak financial complaints system said they feel overwhelmed by the current levels, with more than 100,000 complaints received in 2023, up +23% from 2022. Compensation they awarded exceeded AU$300 mln, up +38%.

Globally, food prices eased substantially in 2023, and ended with dairy prices rising and meat prices falling. Global food security wasn't as stressed in 2023 as many were expecting.

And staying global, the World Bank says the global economy is set to grow at its slowest pace since the pandemic, up just +2.4% in 2024. They said higher interest rates were a major factor in stunting expansion and that trade and investment would continue to be stifled by wars. At +2.4% it would be the weakest since the GFC (pandemic excepted). The also said that the good expansion in the US meant that 2023 expanded +2.6% globally.

The UST 10yr yield starts today at 4.01% and up +3 bps from this time yesterday. 

The price of gold will start today down -US$3/oz at just on US$2030/oz.

Oil prices have recovered from yesterday's drop, up +US$2.50 at just over US$72.50/bbl in the US. The international Brent price is now just under US$77.50/bbl.

The Kiwi dollar starts today at 62.4 USc and marginally softer from yesterday. Against the Aussie we are up at 93.3 AUc. Against the euro we are firmer too at 57.1 euro cents. That all means our TWI-5 starts today just under 70.9 and marginally firmer from this time yesterday.

The bitcoin price starts today much higher, rising to US$46,831 and a jump of +4.1% from this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 2.6%

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.