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.

Today we lead with news it seems Iran is going to come out of the current 'peace deal' with a very large reconstruction commitment. To end the standoff, the US is offering Iran substantial funding even if via convoluted means so that Trump can claim the US isn't involved.

The overnight dairy auction brought lower prices that at the prior full event, but not as low as at the the prior Pulse event, nor what the derivatives market was expecting. Still, it was a -2.8% retreat in USD terms, down -1.4% in NZD terms and to the lowest overall level since early February. Generally the powders were softer than expected, the milk fats note as soft as expected.

In the US, their weekly ADP employment update signaled a slightly slower pace of hiring, the softest since early March. But this signal is still expanding, just slower.

The New York Fed's regional services sector survey found softer conditions in June than at the prior survey with declining activity and firms not very optimistic.

Meanwhile the US national housing start data for May revealed sharply lower activity, down -8.7% from the same month a year ago. In fact, apart from the pandemic period, this is the lowest level in 17 years and the GFC..

All eves now turn to the US Fed and their meeting tomorrow. Many economists are betting on higher rates as Kevin Warsh takes the reins at the Fed. But it is no certainty as financial markets see no-change in their rates tomorrow, despite the high US inflation measures.

In Canada, their real estate market seems to be recovering led by Toronto and Ontario markets, with national sales rising at a rate in May not seen since 2024.

In China, new home prices were -3.5% lower in May from a year ago, matching April’s pace and that extends their consecutive decline to almost 3 years. Second hand home prices fell at a faster rate in the 70 major cities that their official data tracks. But there are new pockets where increases are starting to show up, even for pre-owned homes.

China said its industrial production expanded +4.5% in May from a year ago, better than the +4.1% in April and better than the expected +4.3%. And their electricity production rose +4.2% in the same period, giving some cred to the industrial production claims (which has been occasionally absent in previous months).

But China's

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