Episode Details

Kia ora.

Welcome to Monday’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 the coming week will be largely about the Strait of Hormuz and whether the US-Iran agreements will hold and traffic resumes at scale. But we start the week with a pessimistic outlook. Iran says it has closed the Strait (again) and it will remain closed until the US honours its commitment to get Israel to stop invading Lebanon. The US seems unable to do that and responded with threats. Talks in Geneva sputter along and it is hard to know if they are meaningful. And that likely means ship traffic in the Strait will be tolled by Iran when things settle, as they eventually will.

Away from all that, the local data will focus on May's mortgage and credit card lending.

In Australia we will get important updates for CPI inflation (4.3%), jobs growth (+30,000), and household spending (+4.1%).

In China, their central bank is widely expected to keep its one-year and five-year loan prime rates unchanged in its June review. They will also release FDI data (likely at least -10% lower from a year ago).

Taiwan will update its eye-catching export order data, expected to rise to +50% in May from a year ago.

There will be many early June PMI indicators coming out this week including from the US (expect stable or easing). But the big US data will be their PCE inflation report where analysts expect them to report a May level close to 4%.

Canada will report its CPI and that is expected to come in at 2.9% but with core readings a bit lower.

Over the weekend they reported retail sales rose in April to be +3.7% higher than year-ago levels but unchanged in volume terms. Their May retail sales indicator rose a bit more, but this too may be all about fuel prices more than volume gains.

Staying in Canada, their banking prudential regulator lowered its capital buffers over the weekend with the express intent of allowing their banks to lend more to businesses "in support of Canada's economic adaptation to new opportunities":

Across the Pacific, Malaysia said it's exports rose a startling +45% in May and far better than the outsized +35% expected - and easily an all-time record high. This is all driven by electronic goods (+71%) although LNG exports were very strong too (+112%). Their traditional rural exports (palm oil, natural rubber) took a hammering however.

Meanwhile Malaysia reported May CPI as up just +2.0% in May from a year ago with food prices up just +1.2%.

Germany said its May producer prices rose +2.2% from a year ago, the most since June 2023 when most of that intervening prior saw declines.

And in Europe generally, they are suffering

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