China picks up the pace

<p>Kia ora,</p><p>Welcome to Thursday’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 China seems to be shaking off its pandemic handbrake faster than many expected.</p><p>China <a href="http://www.stats.gov.cn/tjsj/zxfb/202303/t20230301_1919034.html" target="_blank"><strong>said</strong></a> both its factory sector, and its services sector, each expanded at a moderate rate in February, a key set of improvements. Both were outcomes better than expected. The services sector result was a two year high; the factory result was a ten year high. And backing that up was the private Caixin PMI survey which <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/75f242c70d6649199d0fd527ae1361c5" target="_blank"><strong>reported</strong></a> similar good improvements.</p><p>Meanwhile, there are some indications that local incentives are in fact luring more buyers back into their housing markets.</p><p>Those much better China PMI results mean that globally, <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/cd93b7b0f36c4fd096045b4b93dd0fbc" target="_blank"><strong>the factory sector returned to an expansion mode</strong></a>. Output rose for the first time in seven months amid improving supply chains and China's re-opening. Business optimism also revived, rising to its highest level in a year. This expansion and mood is being led by India, China and South East Asia. Now Europe, Japan and the US are the laggards.</p><p>The hoped-for turnaround in the American mortgage market has been a mirage. After a brief revival in application activity in January when mortgage rates dropped to 6.2%, there has now been three straight weeks of declines in applications as mortgage rates have jumped 50 basis points over the past month. Those <a href="https://www.mba.org/news-and-research/newsroom/news/2023/03/01/mortgage-applications-decrease-in-latest-mba-week