China sues Australia at the WTO

<p>Kia ora,</p><p>Welcome to Friday's Economy Watch where we follow the economic events and trends that affect 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 China sues Australia at the WTO.</p><p>But first, US <a href="https://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf" target="_blank"><strong>durable goods order levels</strong></a> for May were slightly disappointing, rising +2.3% from April when a +2.8% bounce back was expected. Still this was the largest month-on-month increase since July 2020. But it is only +0.9% higher than the May 2019 level. Non-defence capital goods orders were actually down -2.3% month-on-month and only up +0.8% from May 2019</p><p>American <a href="https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20211204.pdf" target="_blank"><strong>new jobless claims</strong></a> came in at a relatively high +393,000 last week and more than expected. There are now 3.2 mln people on these benefits and while this is now far below the pandemic peak it is also far above the 2 mln level it needs to reach before they can say they are back to pre-pandemic levels.</p><p>The US <a href="https://www.census.gov/econ/indicators/advance_report.pdf" target="_blank"><strong>merchandise trade deficit</strong></a> rose to -US$86 bln in May with imports up and exports slipping. This result means the annual total has now hit -$1 bln in the prior twelve months or -4.5% of GDP.</p><p>The Kansas City Fed factory <a href="https://www.kansascityfed.org/documents/8156/KCFRB_SurveyManuf_2021June.pdf" target="_blank"><strong>survey</strong></a> is still reporting a strong expansion in that region and expectations for future activity increased to a survey record high. They also report that firms are successfully passing on the much higher input costs they are facing.</p><p>We should also note that the results of the Fed's annual stress tests for US banks is released at about 8:30am this morning (NZT).</p><p>And we should note