Episode Details

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 lead with news the world's services sector seems to be holding its own

Ahead of this weekend's November non-farm payrolls report, the private ADP Employment report out today reveals American private businesses added +146,000 workers to their payrolls in the month, slightly below forecasts of 150,000. This is a reversion to the mean for 2024. Currently analysts are expecting the non-farm payrolls to rise +200,000 when they are reported in Saturday (NZT).

New factory orders inched up in October to be +3.4% higher than year ago levels.

US mortgage applications rose again and for the fourth consecutive week. This was driven by new purchase activity, helped by a fall in benchmark mortgage interest rates (to 6.69%), but undercut by a fall in refi activity.

The giant US service sector expanded at a good solid rate in November, but not as fast as in October, according to the widely-watched ISM survey. The November expansion was also a reversion to the 2024 mean. But the internationally-benchmarked S&PGlobal/Markit version reported a rising expansion in the sector, and to its fastest clip since March 2022. They say it was based on a rise and rise in new orders.

The bullish of those two reports is likely to be the more realistic because American vehicle sales rose to an annualised rate of 16.5 mln in November, its strongest pace since May 2021

There were services sector reports out for a number of economies overnight and they were mixed.

In Canada, their small expansion grew again in the month. In Japan, that sector shifted from contraction to expansion. The Caixin version for China stayed at a modest expansion. But it will be disappointing that all their stimulus efforts so far haven't really moved the needle, and deflationary pressure grow. In India, theri expansion stayed strong, but is being marred by fast-rising inflation. It is inflation fuelled by food and wages and is now running at a twelve year high.

In South Korea, the president's martial law move has backfired spectacularly. The stage is now set for an historic vote to impeach him. Democratic forces have prevailed over authoritarian ambition.

As we publish, it seems that the French government will fall to a no-confidence vote supported by both far-right and far-left political opposition parties. (But a little hist