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Kia ora.

Welcome to Monday’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 cost of crude oil is stuck at US$100/bbl still despite G7 promises to release reserves, principally because of Trump's renewed threats at Iran. Resolution of a key driver of inflation and policy uncertainty seems far off.

This week will be quiet from an economic data point of view in New Zealand befitting school holidays, but we will get some interesting updates of Auckland real estate activity from Barfoots, and lending by purpose from the RBNZ. And the NZIER's closely-watched quarterly survey of business opinion will drop as well, along with a full dairy auction.

In Australia, the focus will be on updated consumer sentiment surveys, and a key inflation expectations survey. And don't overlook that some key Australian eastern states have adopted summer time (except in Queensland).

Next week, the focus will remain on the US-Iran standoff and efforts to reopen the Strait of Hormuz and bring an end to the conflict in the Middle East. The bond market will also remain in the spotlight following the recent surge in government bond yields both in the US, and in France. 

In the US, services PMIs and preliminary University of Michigan Consumer Sentiment data will drop this week. Elsewhere, the Reserve Bank of India will announce its monetary policy decision. The OPEC meeting, and developments surrounding Brazil’s presidential election round one this weekend will also remain key events for global markets.

In China, markets will remain closed for the Golden Week holiday through October 7, with no major economic releases scheduled for next week. But we will be watching holiday economic activity.

In Japan, we will be watching machine tool orders, and the Reuters Tankan index for October. Taiwan will release export and trade figures. 

Over the weekend the G7 has agreed to a major release of strategic fuel reserves to keep a lid on energy prices. But so far the news hasn't really moved the cost of crude. And there was disappointing data out in the world's largest economy.

US non-farm payrolls were expected to rise +90,000 in September following the August +162,000 gain - a level that lacked confirmation from just about every other labour market metric. The actual September data was out on Saturday and that involved some embarrassing reversals. Not only was the August level revised sharply lower (-19%), the September headline gain was reported at just +29,000. Regular gains in this headline number above +200,000 ended when Trump took office in early 2024.

But we also look at the actual data behind these seasonally adjusted headline numbers and that reveals a much more stable situation with a gain of +333,000 from August, about the same gain in each of the prior two years from July to August although these gains were very much larger in the years 2019 to 2023. That is the payroll data. But the wider situation that includes all people working, there was an even better improvement in September from August, but the seasonal patterns here have gotten very random recently. That throws the veracity of this data into question, especially as it coincides with the change in leadership of this agency, from proper statisticians to political appointees. We should all regard BLS data with caution these days - even the poor results.

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