All eyes on inflation's clues

<p>Kia ora,</p><p>Welcome to Monday’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>Today we lead with news markets are ending the year mired in uncertainty.</p><p>So markets are looking for signals, especially about inflation's track. Ahead this week, there will be more indications from the November PCE measures in the US, along with sentiment indicators from the Conference Board, and separately from the University of Michigan survey. Both will give updated indications of inflation expectations.</p><p>In the meantime, an economic slowdown is coming. The first of the December PMIs are now available, on a 'flash' basis, and <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/2449edd6ab0a49b9bd0103ecc24a28b3" target="_blank"><strong>the American factory sector</strong></a> is now at its lowest ebb in 31 months, and now contracting. Their giant services sector is actually shrinking at a faster pace. The demand retreat the Fed wants is here.</p><p>And there are signs inflation is easing too.</p><p><a href="https://gasprices.aaa.com/" target="_blank"><strong>American petrol prices</strong></a> are falling noticeably now. From a year ago, this week's national average price is -3.8% lower. More importantly for consumers there it is -15% lower than just a month ago. </p><p>Import activity at some key US west coast ports are <a href="https://signal.portoptimizer.com/" target="_blank"><strong>down sharply</strong></a>. There were steep declines in November and they are extending into December too. The US import engine is stuttering and many economies across the Pacific will feel the impact in an outsized way.</p><p>There were flash PMIs out for other countries too. In <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/2af5b0350569485e8f3cf62ba5eb3ee4" target="_blank"><strong>Japan</strong></a>, the Markit survey shows factory activity is now contracting at a simila