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Kia ora.

Welcome to Tuesday’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 many countries are awaiting news of a new barrage of US tariffs, although the fear level is nowhere near as high this time as this weapon has proven relatively limp in the past, and mainly hurts US consumers.

First today, the overnight dairy auction surprised somewhat with an end to the recent weakness, rising +1.5% in USD terms although down almost -1.0% in NZD terms on the firmer NZD. Perhaps surprisingly, milk fats did quite well, other than cheddar (-6.5%). Powders were all up. Some say that northern hemisphere heatwaves have buyers nervous that this will soon weigh on production levels there, so stocks are being built in case.

In the US, the slower hiring trend that started in early May continued last week with the ADP weekly tracking reporting its lowest level since March, just after this weekly tracking series started.

US timber prices are rising and quite sharply recently. That is because of forest fires in the US Pacific Northwest states, and in British Columbia, the main exporting Canadian province to the US. Trump's new tariffs on Canada are making things worse for US housebuilders.

The early outcomes for the Q2-2026 earnings reporting season (with 10% of S&P 500 companies reporting actual results), 88% of these companies have reported a positive EPS surprise and 85% have reported a positive revenue surprise.

The US summer holiday season is starting to peak now and will stay like this until early August. The season overall ends on their Labor Day on September 7. We note this because commercial activity is different during this period and financial market activity is lighter than usual.

The same is true for Canada of course. But US border states are doing it tough because Canadians are choosing to avoid the US for their holidays as the insults and tariff actions from Trump's Washington swamp stay aggressive.

In China, new stimulus is being rolled out. Its gigantic "Six Networks" buildout is getting a major boost as part of more infrastructure spending. Those six are: water networks (canals), power grids, data centers, 6G development, undergrounding pipelines, and supply-chain efficiency upgrades. But they are also trying to get their service sector re-energised as well with targeted 'investments'.

Meanwhile, China is re-thinking its tax rebates that are driving its export competitiveness. It needs those funds for its domestic projects, and it doesn't need the international alarm their mercantalist export policies are creating.

In Europe, the

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