Business
Kia ora, Welcome to Friday's Economy Watch where we follow the economic events and trends that affect New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.Today we lead with news costs seem to be rising steeply everywhere now, far from any 'transitory' indications.The rise, rise and rise of shipping container freight hit a new milestone this week, with the global average exceeding US$10,000 for the first time for a 40ft unit per journey. That is three times higher than a year ago. All this cost is outbound from China's ports. Going the other way into China it is surprisingly cheap.For some key commodities the overnight movements were very mixed. Aluminium and coal rose again, natural gas prices hit a seven year high overnight, but iron ore and wheat fell again. In the case of iron ore, that is down to a 13 month low.In the US, the initial jobless claims reported for last week fell to 284,000, and lower than the week before. There are now 2.6 mln people on these claims, the lowest level since the start of the pandemic. But some of this recent decrease is because of expiring qualifications rather than them moving off to work. That may have involved about 50,000 people last week. Only ten states now have benefit extensions in place.There were Fed officials out speaking or being interviewed overnight (Williams, Bowman, Bostic, Bullard, Kaplan) and their message seemed to be that they are still likely to taper their bond buying program in 2021.In China, and consistent with a slowing domestic economy, consumer inflation fell to under +1% in August. But factory cost pressures rose. On the household front, the cost of milk and beef is holding, but the price of lamb is slipping. All of these had large run-ups over the past few years. On the factory front, the rises were more than was expected, in fact hitting their highest growth since 2008.And Beijing has told key steelmaking provinces to cut production during their upcoming winter to curb pollution that is now spreading to the capital. It's a move likely to cause the iron ore price to fall further. But China can't get enough coal - not for steelmaking, just for thermal electricity production.The overnight ECB meeting and review left all its settings unchanged and only slightly scaled back its PEPP bond buying program, a more dovish stance than markets were expecting.The UST 10yr yield opens today at just over 1.30%, so down -3 bps for a second day in a row.The price of gold has recovered +US$3 today and now at US$1796/oz.Oil prices have fallen by -US$1/bbl, so in the US they are now just under US$68/bbl, while the international Brent price has fallen to just over US$71/bbl.The Kiwi dollar opens today at 71.1 USc and little-changed since this time yesterday. Against the Australian dollar we very slightly firmer at just on 96.5 AUc. Against the euro we are little-changed at 60.1 euro cents. That means our TWI-5 starts today at just on 74.1, unchanged and still right at the top of the 72-74 range of the past ten months.The bitcoin price has stayed down, but rising slightly from yesterday's recent low, up +1.5% to US$46,929. Volatility in the past 24 hours has been moderate at just under +/- 2.0%.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 on Monday.