Episode Details

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Kia ora.

Welcome to Tuesday’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 it is the final day of campaigning in the US mid-term elections and financial markets there are relatively upbeat. Helping is a rather sharp fall in the oil price as the Americans back-track on their tough talk with Iran.

But first in the US, the October factory PMIs were positive, with the widely-watched ISM one rising slightly to a good expansion based on new orders that rose for the first time in four months, and rising output. Inventories expanded, but new export orders didn't although they didn't contract either. Input prices are still rising fast although not as fast as the unusual burst in September.

Meanwhile the internationally-benchmarked S&P Global version revealed rising production and new orders levels albeit at slower rates and broadly matching the ISM levels. However they report price pressures intensified noticeably as supply chain disruption persisted.

Meanwhile, the Canadian PMI expansion fell away noticeably with production and new orders both contracting, their first of 2026. They report a considerable lengthening of delivery times. And price pressures intensified there as well. Factory confidence in their outlook is reported as 'subdued' and job losses are being recorded.

Across the Pacific in China, and unlike the official versions of their factory PMI which recorded a contraction, the private S&P Global (RD) factory PMI in for October held a modest expansion. They reported a rise in new orders and a rise in output. Some went into stock-building however. Encouragingly, these was an easing in cost and price pressures.

We have previously noted the sharp fall in domestic car sales in China, and the rush by manufacturers to sell into export markets. Something similar is happening in their steel industry with sharply lower domestic demand, higher costs (especially for coal), and a focus turn to exports. This shift will undoubtedly raise tensions with the countries they target, especially as Chinese exports benefit from a wide range of national and local subsidies. Even if production output doesn't fall a lot this situation will make Australian iron ore suppliers very nervous about future prospects. In Chinese yuan, these producers are now paying -17.5% less for iron ore than at the start of 2026. In USD, producers are getting -15.5% less on the same basis with prices back to pre-pandemic levels. It is tough being an iron ore miner now. (With copper, the reverse is true with prices up +15% since the start of 2026.)

And there were a number of other factory PMIs out in Asia today. After the weekend one from Japan which revealed a good expansion even if less than in September, Sout