Episode Details

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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 the oil price has taken another large retreat today even though the Red Sea and Strait of Hormuz remain essentially closed. Alternative ways to shift crude oil out of the region are gathering pace and effectiveness. But this big price drop is directly related to Scott Bessent saying a deal with Iran to reopen the Streat is imminent, comments that have moved markets.

But first up today, there was another full dairy auction earlier this morning and prices in USD were virtually unchanged overall (+0.1%), but they did dip in NZD by -0.9% on the higher currency. Of note is the new season volumes offered, very similar to the same event a year ago. But prices are now a full -10% lower this year than then.

In the US, job openings fell in June, coming in slightly less than expected. The number of job openings fell in almost all industries except in the logistics sector and in federal government. Regionally, openings fell in the Northeast (-62,000), the South (-50,000), and the Midwest (-97,000), but rose in the West (+32,000).

Also falling were US factory orders. They dipped -0.3% from the previous month in June, extending the revised -1.1% decline in May. This was disappointing because analysts had expected a +0.2% increase. It was the first month of back-to-back declines in nearly one year. Still, they are up more than +10% from June a year ago, reflecting the earlier stockpiling urgency.

Meanwhile US exports of both goods and services fell -0.9% in June while their imports of both fell -1.8% on the same basis. That narrowed their trade deficit although not be as much as expected.

The US Logistics Managers Index is still very high, but is now slowing as the stockpiling urgency seems 'full' now. July demand for warehouse capacity and transportation both actually retreated in the month.

The RealClearMarkets/TIPP Economic Optimism Index edged down in August from July, missing market expectations of an improvement and remaining below the neutral level. The Six-Month Economic Outlook index fell on weaker expectations for the US economy.

In Canada's June exports rose as did their imports, both much more than expected and delivering a larger trade surplus than expected, to a four year high. Canada's transition away from dependence on its now-unreliable southern neighbour has been impressive, you have to say.

In China, they have set a new target to reach 50% of electricity produced from non-fossil fuels by 2030, up fron 42% now. It is a heady an