China slowdown contrasts with US expansion

<p>Kia ora,</p><p>Welcome to Thursday’s holiday edition of 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 the slowdown in the Chinese economy is embedding and they don't seem to be able to do much about it, other than 'build more infrastructure'.</p><p>But first, the <a href="https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20211215.pdf" target="_blank"><strong>US Fed minutes</strong></a> for their December meeting were released this morning. Eyes were on clues about how fast they would reduce QE, and how soon rates would rise. Unfortunately there aren't many new or previously unreleased clues in these minutes on either. But they do show growing unease about the higher-than-expected inflationary tracks. The chances of a faster taper and an earlier rate hike both seem stronger in these minutes.</p><p>The UST 10 year yield jumped to 1.70% after their release and to its highest since before that start of the pandemic. The US dollar rose sharpish. Wall Street dived.</p><p>At the weekend we will get the US non-farm payrolls report, and at this stage analysts are expecting a +400,000 jobs gain. Today we got the pre-cursor ADP employment report and it was sharply positive, <a href="https://adpemploymentreport.com/2021/December/NER/docs/ADP-NATIONAL-EMPLOYMENT-REPORT-December2021-Final-Press-Release.pdf" target="_blank"><strong>reporting an +807,000 gain</strong></a> in December. Every sector contributed to this result and it is the second best ADP result since the pandemic bounce-back in 2020. Continuing gains are needed because the US labour market is still -4 mln jobs short of the pre-pandemic levels.</p><p><a href="https://www150.statcan.gc.ca/n1/daily-quotidien/220105/dq220105a-eng.htm?HPA=1" target="_blank"><strong>Canadian building permit levels</strong></a> in November were very much stronger than expected and driven by residential consents