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 the American rich get insulated from legal scrutiny, while the US economic data loses its shine.

First in the US, their services sector expanded slower in January than expected, according to the widely-watch ISM survey. It is still a good expansion, just with lower new order flows and business activity than they have had over the past five months. And the internationally benchmarked S&P/Markit version essentially told the same story, although that one had a faster retreat.

We get the US labour market report for January on Saturday. The precursor ADP Employment Report showed a rise of +183,000 private jobs in January, better than the +150,000 expected. The good momentum was based on customer-facing payrolls; the business services and production sectors shrank in the month. Tomorrow’s non-farm payrolls are expected to rise by +170,000 in January.

Announced job cuts were modest in January.

We should perhaps note that as part of the revenge purges of US government agencies, the FBI white-collar crime division has been virtually closed down. Not only are ethics out the door, corporate and financial activities that are illegal won't be investigated by them. Even national security cases are on the back burner. It open slather.

But US initial jobless claims rose slightly more than expected with 240,000 more claims added last week. Seasonal factors had suggested this level should have fallen slightly. There are now 2.25 mln people on these benefits, well above the 2.1 mln at this time last year.

US mortgage interest rates were little-changed last week, although now just shy of 7%. And mortgage applications moved little, still bumping along the low levels that have existed for the past five years.

As is usual in the US, vehicle sales fell sharply in January from December, but this year the retreat was it bit more pronounced than last year. Prior to that, sales 'usually' rose. Having noted that, they were up +4.9% from January 2024, although the 2025 level is still -4.9% lower than in January 2020 and just before the pandemic.

Later today, the Reserve Bank of India will release the results of its monetary policy review and is widely expected to cut rates by either -25 bps or -50 bps, maybe to 6%. They have a new governor who is de-emphasising inflation control and re-emphasising growth. He was appointed by PM Modi for that shift. Currently inflation is running at 5.2% a