The US appears to back-track on Iran and oil falls. US PMIs expanding but not so in Canada. China contracts. ASEAN PMIs very upbeat. Eyes on the RBA and multi-unit construction.
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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, South Korea posted much softer but still positive expansion, Taiwan maintained it very good expansion (the best of the region), as did Malaysia. Vietnam's expansion was a bit more modest, but Indonesia found some wind for its sails delivering an expansion that matched Malaysia and Taiwan.
The Indian factory PMI is probably worth a separate mention. Although their level is similar to the US versions, their are seeing good increases in new orders. And this is coming with very modest price changes. That augers well for their export competitiveness.
Eurozone PMI expansions remained solid but modest despite new order growth.
In Australia, the respected Melbourne Institute inflation gauge for September pegged it at 4.8% and a third consecutive monthly rise. This will lock in the +25 bps RBA rate rise later today, taking it to 4.85%.
In Australia there has been a surge in multi-unit residential building consents in September, more than making up for a sharpish fall in consents to build new houses, and allowing the overall level to rise +5.3% from August. That means, September building consents were -0.8% below year-ago levels.
The UST 10yr yield is down another -6 bps from yesterday at 4.87%.
The price of gold is up +US$92 at US$3968/oz. Silver is now just under US$51/oz and up +US$2 from yesterday.
Oil prices have fallen sharply today, down -US$7.50 from yesterday to just over US$96.50/bbl in the US, while the international Brent price is down -US$9 at just over US$104.50/bbl.
The Kiwi dollar is unchanged from yesterday at just on 56.3 USc. Against the Aussie we are up +10 bps at 80.2 AUc. Against the euro we are holding at 50.4 euro cents. That all means our TWI-5 starts today at just on 60 and little-changed from yesterday.
The bitcoin price starts today at US$77,369 and down -1.0% from this time yesterday. Volatility over the past 24 hours has been low at +/-0.9%.
You can get more news affecting the economy in New Zealand from interest.co.nz.
Kia ora. I'm David Chaston and we’ll do this again tomorrow.
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