Optimism seeps back

<p>Kia ora,</p><p>Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the international edition from Interest.co.nz.</p><p>And today we lead with news all eyes will be on the 2pm RBNZ announcement of its Monetary Policy update where it is widely expected that a +50 bps rate increase will be announced.</p><p>But first up today there was another <a href="https://www.globaldairytrade.info/en/product-results/" target="_blank"><strong>dairy auction</strong></a> earlier today and it was a lame affair. Overall prices fell -1.5% in USD terms, but were virtually unchanged in NZD terms (+0.3%) because of a shift lower in our exchange rate. The key WMP price fell -2.0% and SMP was down -2.4%. But there were offsetting gains for butter (-3.8%) and cheddar (+1.5%), indicating returning demand from the Chinese foodservice sector. The recent storms here that will curtail overall milk supply seemed to have very little impact on the attitude of buyers.</p><p>In the US there was a surprising improvement in their <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/1a48b2fdf6114741aade2fd71f25f4a6" target="_blank"><strong>services PMI</strong></a>, shifting from contraction in January to and expansion in February according to the internationally-benchmarked Markit version. Their factory sector is still contracting however, but at a lesser rate this month than last. The growth in new orders is slowing, but just at a slower rate. This is more evidence they may either only have a soft landing, or possibly no recession at all.</p><p>Major retailer Walmart <a href="https://s201.q4cdn.com/262069030/files/doc_financials/2023/q4/Earnings-Release-(FY23-Q4)-(final).pdf" target="_blank"><strong>said</strong></a> it is gaining market share in the grocery sector. And that includes among higher-income households that are spending cautiously.</p><p>However their <a href="https://www.nar.realtor/newsroom/existing-home-sales-descended-0-7