China tensions only cloud for booming factories

<p>Kia ora,</p><p>Welcome to Tuesday'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 the global factory expansion is getting stronger, but tensions with China are the main risk.</p><p>First in the US, Fed boss Jay Powell <a href="https://www.federalreserve.gov/newsevents/speech/powell20210503a.htm" target="_blank"><strong>said</strong></a> the American economic outlook has brightened overall but is advancing more slowly for low-wage workers, underscoring the need for continued support from policy makers. "These longstanding disparities [matter] because they weigh on the productive capacity of our economy," he said.</p><p>That brightening is clear from two contrasting PMIs out overnight, but both are recording a strong expansion. The <a href="https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/april/" target="_blank"><strong>locally-watched one</strong></a> slipped back from an even stronger expansion recorded for March, with the April result well below expectations. But the internationally-benchmaked <a href="https://www.markiteconomics.com/Public/Home/PressRelease/81917888e2564d4bad0bb3b1c7ae992f" target="_blank"><strong>Markit</strong></a> one held its March levels in April. Both are now recording roughly the same expansion. New orders, including export orders are growing, as is employment. But prices are rising fast, mainly because inputs are in short supply.</p><p>Canada's <a href="https://www.markiteconomics.com/Public/Home/PressRelease/e080556fe3fe4ff29e6a7b6209443235" target="_blank"><strong>factory PMI</strong></a> is expanding too, but at a more restrained pace.</p><p>In the EU, their manufacturing economy registered <a href="https://www.markiteconomics.com/Public/Home/PressRelease/85d0000d867c4c2ab2d4e36ae851847f" target="_blank"><strong>another stellar performance</strong></a> in April, with operating conditio