Commodity prices resume upward push

<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 there is new energy emerging in commodity price rises, driven by the good US and EU economic recoveries.</p><p>But first, overnight data shows that American <a href="https://www.census.gov/manufacturing/m3/prel/pdf/s-i-o.pdf" target="_blank"><strong>factory orders rose</strong></a> at a slightly faster pace than expected in August, confirming the recent strength in their manufacturing sector reported by other measures like the PMIs.</p><p>This is all the more impressive because their <a href="https://tradingeconomics.com/united-states/total-vehicle-sales" target="_blank"><strong>vehicle manufacturing sector is stuck in the slow lane</strong></a>, stifled like everyone else by the shortage of computer chips. Sales in September ran at only 9.7 mln vehicles/year, another sharp drop from August, itself a reduction from the 18.5 mln annual rate they were running at in April.</p><p>The key problem is that cars use old-style basic chips, the really cheap versions. And chip-makers have moved on and don't want to invest billions in old tech to sort this problem out. And vehicle makers don't want to pay for the new-style chips. It is hard to see when this standoff ends, but almost certainly carmakers will have to reengineer their products to accept updated technologies. It won't be a short process.</p><p>Meanwhile in Canada, <a href="https://www150.statcan.gc.ca/n1/daily-quotidien/211004/dq211004a-eng.htm?HPA=1" target="_blank"><strong>building permit levels really disappointed</strong></a> in August data released overnight. They have been on a downward slide since March. A pickup of +3% was anticipated in August, but another decline eventuated, down -2.1%.</p><p>In China, they are using their holiday week to ensure the Evergrande collapse doesn't have economy-wide consequences. Almost 30%