Kia ora
and welcome to Thursday's Economy Watch where we follow the economic events and trends that affect New Zealand.
I'm Rebecca Caroe and this is the International edition from Interest.co.nz.
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Today this podcast leads with news the northern summer season is now starting and markets might get a little thinner.
First on Wall Street, equities are lower today after railroad profit warnings that the trade war is undermining rail traffic volumes.
Also, US housing start data came in weaker, and weaker than expected, even if they are 6 per cent higher than the same month a year ago. But new residential building permits were almost 7 per cent lower than the year-ago level, so the outlook looks a little grim.
And mortgage applications slipped last week, while US mortgage rates turned a little higher.
All of this is consistent with the latest US Fed Beige Book report that says their economy is now just running at a "modest" level, which is a downgrade from the "modest-to-moderate" wording used in the past.
In Canada, their CPI inflation rates slipped from 2.4% in May to 2.0% in June, but this was as expected on lower petrol prices. Without petrol, it rose to +2.6%.
But Canadian industrial output growth came in below expectations with a 1.6% gain.
In China, steelmakers reported that first-half profits dropped sharply due to surging iron ore prices, sliding steel prices and tighter production restrictions on factories.
Office buildings in China's top cities now have vacancy rates that are surging as demand is unable to keep up with much higher supply, due to the economic downturn, US-China trade tensions and the deleveraging campaign in the financial sector. The vacancy rate for Grade A office space in Beijing climbed to more than 11% in the first half of the year, the highest level in eight years. And it might rise to 16% by the end of 2019. That is some glut.
China's leaders are off to a summer retreat to ponder their next moves on their economy and the trade war.
The IMF is now pointing out that China is no longer a net lender to the world, with its trade and investment levels basically in balance. The only distortion is that the US can't seem to stop sourcing from China. The IMF's core point is that this improvement has reduced global financial risk.
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In Australia, Fitch has downgraded the ratings outlook for both ANZ and Westpac, shifting its 'stable' outlook on their AA minus rating to 'negative'.
The UST 10yr yield is now just under 2.06% and -6 bps lower than this time yesterday.
Gold has jumped $14 overnight to 1,421 US dollars an ounce.
US oil prices are falling today on trade and growth fears. They are now down more than $1 to $56.50 US dollars a barrel. And the Brent benchmark is down a similar amount at $63.50.
The Kiwi dollar is stronger yet again today, now up to 67.4 US cents. On the cross rates we are also up, now just over 96 Australian cents. Against the euro we are up at 60.1 euro cents. That puts the Trade Weighted Index up at just on 72.3.
You can find links to the articles mentioned today on our website.
https://www.interest.co.nz/news/100753/us-housing-start-weaken-feds-beige-book-downgrades-canada-inflation-dips-china-ponders
Get more news affecting the economy in New Zealand from interest.co.nz and subscribe to receive this podcast in your favourite podcast app - we're on Apple Podcasts, Google Podcasts, Spotify or subscribe on our website.
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I'm Rebecca Caroe. We'll do this again tomorrow.
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