Kia ora,

Welcome to Thursday's Economy Watch where we follow the economic events and trends that affect New Zealand.

I'm David Chaston and this is the International edition from Interest.co.nz.

Today we lead with news of stronger US economic data contrasting with its main rivals.

This weekend we get the January non-farm payrolls report in the US and a recovery of +50,000 jobs is expected after the unexpected fall in December. Today the pre-cursor ADP Employment report was out and indicated a much stronger rise of +174,000 net new jobs.

Also positive was the widely watched January ISM services PMI which edged higher from an already high level. And that was bolstered by rises in new orders. The equivalent Markit report on services was equally bullish and also finding new orders strong. It also pointed out the sharp rise in business inflation, costs that are being passed on to customers.

Strong gains are also being reported in the American mortgage market. So far, rising long term wholesale benchmark interest rates aren't yet being reflected in mortgage rates.

In China, their private services sector PMI is weakening and is now approaching a stall. Companies had their weakest increase in business activity for nine months. New orders rose at the softest rate in five months. It is quite the turn-around.

In Europe, inflation has replaced deflation suddenly in January. And the continued rise in the oil price promises to make that trend more pronounced in February.

In Australia, there is a dramatic surge in building consents for houses and an equally dramatic collapse in consents for apartments and townhouses. Data out for December shows a +62% rise on a year-ago basis for houses (and a record high), and a -26% fall for apartment building consents on the same basis.

Things are not so great for Australian office landlords. Six months ago they were struggling with office vacancy rates of a pandemic-induced 9.6%. Things have gotten worse since, with their January rate now at 11.7% and a 24 year high. It ranges from 5% in Hobart to 20% in Perth.

Worldwide, international aircargo volumes are recovering with the latest December data showing it only -2.3% below the same month in 2019 which in the circumstances isn't considered too bad. It was slightly less of a recovery in the Asia/Pacific region (-3.9%). It was North American activity that underpinned this December result. Things are nowhere near as sanguine for passenger travel however with December volumes for international travel down -85%.

Wall Street is posting another rise today with the S&P500 up a more modest +0.3% in early afternoon trade. Overnight European markets rose about +0.5% (although London fell). Yesterday, the very large Tokyo market rose another +1.0%, Hong Kong was up +0.2% but Shanghai retreated -0.5%. The ASX200 rose another +0.9% yesterday while the NZX50 Capital Index turned around an won back +0.4%.

The latest global compilation of COVID-19 data is here. The global tally is still rising, now at 104,043,000 and up +470,000 in one day.

The UST 10yr yield is up another +3 bps at just over 1.13%.

The price of gold will start today down -US$2 at US$1836/oz.

Oil prices are up another +US$1.50 at just on US$56/bbl in the US while the international price is now just over US$58.50/bbl and +US$1 higher.

And the Kiwi dollar will open today up the +½c it gained yesterday at 72 USc. Against the Australian dollar we are also firmer at just on 94.5 AUc. Against the euro we are just under at 59.9 euro cents and also almost a +½c gain. That means our TWI-5 is now up at 73.9.

The bitcoin price has risen again overnight and by another +6.5% and is now at US$37,125 which is near the top of its 24 hour range.

You can find links to the articles mentioned today in our show notes.

And get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston. We will do this again tomorrow.