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.

Today we lead with news Trump cancelled his latest planned military strikes claiming negotiating progress. That has been enough to settle financial markets today.

But first in the US, producer prices jumped +1.1% in May from April to be +6.5% higher than a year ago and to their highest since November 2022. And before the pandemic, their highest since this series began in 2009. Core PPI was up +5.1% and a similar high. These rises were more than expected.

US initial jobless claims also rose more than expected last week.to 228,400 and more than seasonal factors would have indicated. There are now 1.69 mln people on these benefits, less than a year ago and marginally less than two years ago.

In Canada, building consents were expected to fall back in April after the spurt in March, but they fell more than expected. Residential consents fell -5.5% and commercial consents fell an outsized -10.5%, both from the prior month. From a year ago, these consent levels were +2.5% high, but that is on a value basis and construction PPI rose +2.8% in that same time.

In Europe, the ECB raised its policy interest rate by +25 bps to 2.4% as widely expected, it first increase since 2023. It also raised its inflation expectation to 3% in 2026 and cut its growth forecast slightly to +0.8% this year and to 1.2% in 2027.

In Indonesia, their financial crisis is intensifying with their currency in freefall and their stock market too. The worry is it may drive a social crisis at our backdoor.

In Australia, the Melbourne Institutes survey of inflation expectations dipped in June to 5.5% following a dip in May after they peaked at 5.9% in April. The June result was well below the 6.5% jump some expected. But remember, their fuel tax concession (50%) is expected to end at the end of this month. If it does, it could put upward pressure on consumer inflation. (April actual CPI came in at 4.2% and the May result will be released on June 24.) In contrast wage expectations have remained unchanged for the past seven months.

The World Bank said overnight that global growth is leaking away due solely to