Episode Details

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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 the US-Iran conflict seems to be intensifying. Market responses don't reflect that yet however.

In the US, initial jobless claims rose last week to 245,000 but this was less of a rise than seasonal factors can account for. There are now 1.85 mln people on these benefits, less than year-ago levels.

US retail sales were up a healthy +8.4% in June from a year ago but virtually unchanged from May. If you take out cars and petrol, then the rise is +5.7% from a year ago, and a fall from May. Still good, but boosted by their claimed +3.5% inflation. Online sales of electronics goods were particularly strong, suggesting buyers were looking to get ahead of tariff and trade impacts.

Meanwhile, new order levels reported in the Philly Fed's July factory survey were impressive. But this came with a fall-away in sentiment about the future, and with unusually high input cost inflation. More signs of stockpiling behaviour.

And US petrol prices are rising again.

US homebuilder sentiment fell in July in the NAHB survey. Not by a lot, but keeping it in the depressed state this sector has been in since the pandemic. They have an input cost problem too.

The other side of this industry is in lackluster conditions too. Pending home sales fell in June from May, and came in slightly lower than year-ago levels. That was their biggest retreat in six months. The weakness was broad based across the whole country.

In Canada, their June housing starts were -13% lower than year-ago levels. These were weak in Vancouver with a big fall-off in multiunit construction, but quite strong in Toronto.

In Korea, their central bank raised its policy rate yesterday, raising it from 2.5% to 2.75%. This was as expected however. It was their first rise in more than three years as it grapples with inflationary pressure at least partially stemming from a faster economic expansion. Their previous change was a cut of -25 bps in May 2025.

In Australia, the respected Melbourne Institute survey of inflation expectations