China re-emerges as the global growth engine

<p>Kia ora,</p><p>Welcome to Tuesday’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 emerging from its doldrums.</p><p>But first up today, and to the surprise of many, the local Fed's factory survey for New York State <a href="https://www.newyorkfed.org/survey/empire/empiresurvey_overview" target="_blank"><strong>reported</strong></a> a sharp improvement - and it was across the board. New order inflows were at a one year high, and activity perked right up. But cost pressures remain unchanged. However, firms expect business conditions to improve over the next six months, with measures of capital expenditures and employment also rising. This survey hasn't been very positive for a few months now, so this is a 'welcome' improvement locally.</p><p>Also improving is American <a href="https://www.nahb.org/news-and-economics/press-releases/2023/04/lack-of-existing-inventory-continues-to-support-builder-sentiment" target="_blank"><strong>home builder sentiment</strong></a>. It rose for a fourth month in April, a fresh high since September and came in better than expected.</p><p>And the Wall Street earnings reports for Q1 are off to surprisingly good start. Of the 30 S&P 500 companies comprising 10% of the index that have reported results so far, 90% have easily earnings-per-share estimates while three quarters of them have topped sales forecasts.</p><p>For some regional banks reporting, it is exposing the size of deposit flight. Regulators will be nervous.</p><p>Despite all this, the US Congress's debt ceiling game of chicken is nearing a flash point with Republicans pushing to gut most social programs - except Medicare, Medicaid and Obamacare. It is a brinkmanship game that is raising US bond yields, mainly because the negotiators are taking extreme positions.</p><p>Also potentially inflationary, there is a rising threat of strike action at