Kia ora,

Welcome to Friday'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.

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Today we lead with news that some of the bounceback data in June coming through is better than expected.

But not all. The latest weekly update shows that American workers filed 1.5 mln new unemployment benefit claims and 20.5 mln people received jobless benefits. Both levels are higher than expected and only marginally lower than the previous week, so the pace of layoffs remains high but does seem to be stabilising.

Another survey shows that the richest quarter of Americans have cut their consumer spending more than any other income group during the pandemic and much of that cut was at the expense of low-income wage earners. Small businesses in wealthier regions laid off 65% of their low-wage earners, while in the lowest-rent areas, fewer than 30% lost their jobs.

Very much more positive however is the latest factory survey from the Philadelphia Fed (+27). It is an impressive result, quite unexpected (-23). Just about every sub-category in this survey improved, and especially new orders (+17). The only laggard was the employment aspect (-4).

Another very positive set of data comes from north of the border. The Canadian ADP employment survey also surprised with expanding jobs data in May (+208,000) when another decline was expected (-280,000). It is actually the largest monthly gain since this survey began in 2012. But is only making back less than 10% of the jobs lost in April.

Foreign direct investment into China rose +4.2% from a year earlier in May, marking the second straight monthly increase, although the growth pace slowed significantly from +8.6% in April. In the first five months of this year, foreign direct investment into China was down -6.2% year-on-year.

The Indonesian central bank cut is policy rate again, the third such cut this year taking it down to 4.25%. It also lowered its growth forecast to less than 2%.

The English central bank reviewed rates as well but didn't cut them. Instead it threw an additional NZ$385 bln of QE at their economic problems.

Australia shed -227,000 jobs in May, with the unemployment rate reaching 7.1% and its highest in twenty years. Part-timers have been especially hard hit. When the losses in April are added, it means the country has now lost more than -824,000 jobs over the past two months. Worse, their participation rate is falling sharply, meaning another -420,000 left the labour market since March.

Overnight European equity markets fell a bit more than -0.5%. They followed Shanghai and Hong Kong yesterday which were both virtually unchanged. Tokyo however came in -0.5% lower. This morning the S&P500 is down -0.4%, unable to find any positive direction in late trade. Both the ASX200 and the NZX50 lost almost -1% in trade yesterday.

Shares in German payments company Wirecard have fallen more than -60% after the firm said its auditor had raised questions over cash balances worth NZ$3.3 bln or a quarter of what it is supposed to have. Wirecard is no minnow - it is a component of the German DAX30.

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The latest compilation of Covid-19 data is here. The global tally is now 8,400,300 which is up +139,000 in a day and still a fast rising pace. Global deaths now exceed 450,000.

A quarter of all cases globally are in the US, which is up +25,400 since this time yesterday to 2,173,800. That is the highest daily rise since mid-April. The spread into 'Red' states is quickening. But 'Blue' state California is also a hotspot. US deaths now exceed 118,000.

In Australia, there have been 7391 cases (+21 since yesterday), 102 deaths (unchanged) and a recovery rate of just over 93% (unchanged). 14 people are in hospital there (-2) with 2 in ICU (-1). There are now 412 active cases in Australia (+14).

The UST 10yr yield is down -5 bps today at 0.69%.

The gold price is marginally lower, down -US$3 to US$1,724/oz.

Oil prices are marginally firmer today, now just under US$39/bbl in the US. The Brent price is just under US$41.50/bbl.

The Kiwi dollar is a little softer this morning, down -½c at 64.3 USc. On the cross rates we are a little firmer at 93.9 AUc. Against the euro we are marginally softer at 57.4 euro cents. That means our TWI-5 has slipped to 69.3.

The bitcoin price is still in its quiet phase, unchanged at US$9,420 today.

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

If you are one of the many new listeners who have joined us recently, welcome – we appreciate your company.

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

Kia ora. I'm David Chaston. We will do this again, on Monday.