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Kia ora.

Welcome to Thursday’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 Iran and Oman say they have a deal on the Hormuz Strait, and the US says it is still hoping for a deal to open it up. But the US no longer has any cards, it seems.

Away from all that in the US, mortgage applications fell again last week with both new loan and refinance activity falling, probably due to the continued rise in home loan interest rates and pushing them up to year-ago levels of 6.81%.

Their ADP jobs report only signaled +44,000 July jobs added to private payrolls, much less than the expected low +70,000 and the low June level of +95,000. This report is the precursor to Saturday's July non-farm payrolls release where analysts expect July payrolls to have expanded +202,000. Those analysts may be in for some disappointment.

The ISM services PMI for July came in little-changed at a modest-to-moderate reading, boosted by good new order levels but held back by faster rising costs. Also, jobs in the sector contracted. Meanwhile the S&P Global version of the US services PMI recovered to a similar level, reporting activity rises at their strongest rate since October 2025, job creation at highest for eight months amid an improved outlook, but much steeper rises in both input costs and selling prices.

US crude oil stocks recovered somewhat last week with a rare rise. But this may have been because they are still drawing down their strategic reserves at a rate that is worrying many and now at almost an all-time low since 1983.

In China, their private S&P Global (RatingDog) services PMI fell back sharply. It is still expanding, but now only just. Total activity and new business both expand more slowly. Employment rose for third month running, the longest sequence since the second half of 2024. And they recorded the weakest rise in average input prices since January. Yes, this survey is better than the contracting official version, but the fall-away was faster in this report.

Singapore's retail sales rose sharply in June to be +4.0% higher than year-ago levels. Meanwhile their PMI rose faster and near its best-ever, but largely because firms there built stocks to retain resilience.

Japan's services PMI expanded at a slower pace