China & EU make dovish moves, US data positive

<p>Kia ora,</p><p>Welcome to Friday’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 central banks in both China in the EU have been active overnight, both dovishly.</p><p>But first up, initial American US <a href="https://www.dol.gov/" target="_blank"><strong>jobless claims</strong></a> last week came in little-changed at +220,000 so there are now 1.69 mln people on these benefits, also very little-changed. Their long-awaited labour market stress still hasn't arrived. It surely will, but has defied the gloomsters for nearly two years now. They may have a long time to wait yet before their stopped-clock position is achieved.</p><p><a href="https://www.census.gov/retail/marts/www/marts_current.pdf" target="_blank"><strong>American retail sales</strong></a> rose +0.6% in August from July and easily beating forecasts of a +0.2% rise. Year-on-year these sales are up only +2.9% however which is less than inflation. But the recent rises point to good consumer spending despite high prices and borrowing costs. But part of the recent increase is due to higher fuel costs. Excluding those fuel costs, retail sales only rose +0.2% in August from July, but they were +4.3% higher than year-ago levels which bests inflation by +1.0%.</p><p>On the factory floor, <a href="https://www.bls.gov/news.release/ppi.nr0.htm" target="_blank"><strong>producer prices rose</strong></a> by +0.7% in August from July, the highest level since June 2022, and higher that analysts expected of a +0.4% rise. On an annual basis however, producer price inflation reached a four-month high of +1.6%, while the core rate actually eased and to +2.2%, which interestingly was its lowest level since January 2021.</p><p>Meanwhile, neither wholesale nor retail inventories are rising, so there is <a href="https://www.census.gov/mtis/www/data/pdf/mtis_current.pdf" target="_blank"><strong>no inventory str