Chinese economy still on the sidelines

<p>Kia ora,</p><p>Welcome to Wednesday’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 there is still no sign yet that the Chinese economy is back driving international trade.</p><p>There was another <a href="https://www.globaldairytrade.info/en/product-results/" target="_blank"><strong>dairy auction</strong></a> this morning and it was a dull affair. Volumes sold were lowish, and the key WMP price was little-changed. <a href="https://www.interest.co.nz/charts/commodities/dairy-prices"><strong>Overall prices slipped</strong></a> -0.9% in USD terms and -1.3% in NZD terms. Butter rose -2.2%, but cheese fell -3.4% and SMP fell -1.6%. Perhaps the only implication that can be drawn from this late-season event is that there seems resurgence Chinese demand based on their foodservice sector is still quite absent.</p><p>American <a href="https://www.census.gov/retail/marts/www/marts_current.pdf" target="_blank"><strong>retail sales</strong></a> disappointed for April. A good rebound from the weak March -0.7% slip was expected, and while they did advance, it was by only half the anticipated level. Still the annualised rate of increase from March to April was solid and better than it has been. But for year on year, there has been virtually no increase, so this sector is failing to keep pace with inflation over the longer run at an increasingly worrying rate. And this weakness is confirmed by the <a href="https://www.redbookresearch.com/" target="_blank"><strong>weekly same-story monitoring</strong></a>. Last week was only +1.6% ahead of the same week a year ago, again nowhere near enough to account for inflation.</p><p>If there is a bright spot, it is car sales, and these are expected to stay healthy for a while yet.</p><p>And that will help American <a href="https://www.federalreserve.gov/releases/g17/current/default.htm" target="_blank"><strong>industrial pro