Episode Details

Kia ora,

Welcome to Friday’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 cost cutting and raising prices are key themes in US business at present - sure to challenge the Fed's policy path.

First in the US, there was an outsized jump in the number of people making initial jobless claims, +310,000 for the week. That pushed up the number of people on these benefits to 1.94 mln. Employers now seem emboldened to cut staff before the holiday season with the incoming Administration likely to be very permissive on employment policies.

US producer prices also came in higher than expected, rising in November from October, and from year-ago levels, but more than expected, up from +2.6% year-on-year in October (which was also the November expectation) to +3.0%. Inflation isn't beat.

Canadian building consents were expected to fall back in October from the big September jump - and they did, although not by as much as expected.

Key data from India came in pretty much as expected. Their November consumer inflation rate was 5.5% and a small reduction, and their October industrial production rose +3.5%, also a slowing. Food prices are rising much more than the overall level, but they are responsible for the most of the decline in the November rate.

China's vehicle sales jumped by almost +12% to 3.3 million units in November from a year ago, accelerating sharply from a +7% rise in October. Beijing incentives seem to be working as intended, although they might be at the cost of spending in other sectors.

China intends to ramp up economic support next year including measures to boost domestic consumption, as it braces for a fresh trade war with the U.S., a closely watched leadership meeting signaled on Thursday.

At their annual Central Economic Work Conference, which sets the tone for the coming year's agenda, China's leaders pledged to "implement more proactive macro policies" and "expand domestic demand". Their statement listed supporting consumption and investment as top priorities for the economy next year. It is bracing for a fresh trade war with the US, and starting the adjustment now.

As expected, the ECB cut its policy rates by -25 bps overnight, the fourth time this year, on a more favourable inflation outlook - their disinflation "is well on track".

Meanwhile the Swiss central bank cut their policy rate by double that - by 50 bps - in an unexpectedly large cut. This marks the fourth straight rate reduction and the steepest since January 2015, bringing borrowing costs to their lowest since November 2022, returning them to just 0.5%.

In Australia, their