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 global factories are mostly in expansion mode, driven by a new order surge and despite the rising cost pressures.

But first, monitored US job cuts stayed quite low in September at about 44,000, similar to August, and similar to the level in September a year ago.

US initial jobless claims dipped last week to 157,000, a shift that is explained by seasonal factors. There are now 1.5 mln people on these benefits, a substantial fall, as qualification restrictions keep many from extending this support.

The September ISM factory PMI was little-changed from its good August level. Price pressures persist but new orders are staying at good levels. The alternate S&P Global factory PMI showed a better result and to its best levels since the pandemic. The same new order drivers were picked up here too, and the cost pressures as well.

Little in these two reports will restrain the Fed from targeting inflation and with less worry about hurting jobs. But the tame PCE inflation report yesterday is shifting the tone among overnight Fed speakers away from an October rate hike. The Treasury market eased on the comments.

In New York, the US Court of International Trade has held hearings on whether Trump's revised tariff policies are legal. This three judge panel struck down his first approach. The next decision is expected before Christmas although it could be earlier if no new or novel arguments are presented.

In Canada, their factory PMI is still expanding but at a slower pace and now at a six month low. Output rose despite a decline in new orders affected by tariffs challenges Cost inflation surged to its highest since July 2022. Confidence in their outlook dropped as firms grapple with supply-side disruptions.

Across the Pacific, China is on its Golden Week holiday which will last until October 7.

Very strong new order growth has powered the September Taiwan factory PMI to a fast expansion. Apart from the pandemic recover, this puts their expansion back on par with the very good 2018 level. This is the sort of expansion you might see in an emerging economy (say like India) but unusual for a developed economy - and far faster than in its jealous, giant neighbour to its west.

South Korean exports came in very much higher than expected in August. Recall they it US$100 bln in June for the first time and