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 great power rivalry continues in the wake of some blindingly stupid choices made in Washington five years ago.First today, we should note that China has formally applied to join the Trans Pacific Partnership (now the CPTPP). There is grand irony in this, because the TPP was originally an American idea to contain China. But Trump thought he knew better and pulled out unilaterally. That had little impact other than to sideline the Americans. The deal went ahead to be the world's largest multilateral trade pact that had high labour and environmental standards. China's push to join will take a long time, but it sort of isolates the Americans in this essentially Asian trade area.Its an application that comes just one day after US, the UK and Australia announced new defense partnership aimed at containing China.And China is also the center of a storm at the IMF and the World Bank. The current IMF boss has been accused of trying to manipulate scores in the World Bank "ease of doing business" assessment to improve the results for China and other countries when she worked there. That report has ranked New Zealand as top for a while. Now the World Bank has dumped it due to the dodgy ethics behind its construction.Back in China, cement prices are surging and now at an all-time high as production cutbacks bite resulting from tougher environmental standards being enforced.In a small positive data surprise, US retail sales rose in August when a fall was expected after the July fall. And it was an August rise that came despite a continuing weakness in car sales, undermined by low production amid the shortage of computer chips. The overall result is actually quite impressive.Meanwhile, the level of new jobless claims continued to fall on an actual basis (up marginally on a seasonally adjusted basis). This is encouraging also. However the total number of people on these types of support benefits has fallen to just over 2.3 mln, it lowest level since the onset of the pandemic. But the fall is now a combination of a lower number of people claiming, and a rise in the expiry of qualifications.Also positive in the US is the September edition of the Philly Fed factory survey. This turned back higher in its close-watched "current conditions" indicator, and is still reporting very high price increases. Firms in that region remain optimistic about future growth, although less so that the previous very high readings.In Canada, data for housing starts, and employment growth stayed at good levels although both are starting to drift.The OECD is looking at the widely disparate carbon trading systems, from the EU, NZ, Australia, the US and China, and is worried that they will be the spark for a new trade war. It is trying to corral countries into finding a more global system that can't be gamed, arbitraged, or abused, one that will avoid the EU's inclination to slap tariffs on anyone who doesn't pay the prices of their system.Meanwhile on the commodities front, the cost of container shipping rose another +2.9% over the past week with no sign these rampant increases are slowing yet. The Baltic Dry index is staying at its recent highs.In Australia, their new lockdowns are skewing their labour market noticeably now. They lost -146,000 jobs in August, -78,000 were part time, -68,000 were full-time jobs. But participation fell as an unexpectedly large number of people dropped out of their workforce, and that left their official jobless rate at 4.5%. The number of hours worked fell by -3.7% in August from July.At the same time, inflation expectations rose sharply in Australia from 3.3% in June to 4.4% in September.The UST 10yr yield opens today at just over 1.34%, so recovering another +4 bps from this time yesterday. The price of gold has fallen another -US$35 today and now at US$1757/oz which takes it back to about where it dipped briefly to in mid-August. It hasn't beed a good day for the yellow metal. Silver has fallen harder.But oil prices have held unchanged overnight so in the US they are now still just on US$72.50/bbl, while the international Brent price is now under US$75.50/bbl.The Kiwi dollar opens today at just on 70.7 USc and losing -¼c since this time yesterday. Against the Australian dollar we are up to just over 97 AUc. Against the euro we are little-changed at 60.1 euro cents. That means our TWI-5 starts today still at just under 74 and still right at the top of the 72-74 range of the past ten months.The bitcoin price has slipped today, now at US$47,622 and -0.9% softer than this time yesterday. Volatility in the past 24 hours has been modest at just over +/- 1.3%.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 on Monday.