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 global oil prices have risen again with no end to Trump's Hormuz adventure. In something of a gigantic own-goal, the US economy is losing momentum rather quickly now.

But first, the overnight full dairy auction came in better than the futures market had signaled, up +2.3% from the prior full event. This was largely driven by the milk powder gains with WMP up +3.0% and SMP up +7.6%. However, most of the milk fats fell. The overall gains in NZD were slightly better, up +2.6%. But despite this recent turn higher, prices are still almost -9% lower than year-ago levels, even if they are up almost +10% from the start of 2026.

In the US, the latest weekly jobs update from ADP has stayed low with less than a +10,000 gain over the past four week.

In contrast to the positive July factory report in the New York state region we noted yesterday, their services survey in the same region wasn't very good. The business climate index remained deeply negative, with almost half of respondents reporting unfavourable business conditions.

US industrial production data for July was modestly positive from June and that has resulted in a +1.1% gain from a year ago, although lower than the June +1.3% expansion.

US pending home sales were lower in July, both from June, and from a year ago. There is no spark in evidence in this sector, and perhaps not surprisingly when home loan interest rates are high at 6.8% and likely to rise from here. Every region is posting both month-on-month and year-on-year declines now.

US housing starts fell back sharply in July, down -13.5% from year-ago levels. In fact, the last time they had a July this low was in 2019.

And in Canada, they also reported a sharp drop in new housing starts in July, their lowest for that month also since 2019. But July housing market sales actually rose and delivered the highest levels they have had in 2026 (even if this isn't a particularly high bar).

Meanwhile, negotiations between Canada and the US over Trumps 50% tariff threat seem to be going nowhere, and they are due to come into effect tomorrow. Interestingly, included in the stoush is Canada's aluminium exports and if they are tariffed, the hurt to US businesses will be significant.

In China, they have a slowing momentum too. Households are clearly worried because they hare paying down debt faster and prioritising cash reserves i