Economic threats linger

<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 the economic threats to recovery are just not fading as fast as we need.</p><p>American <a href="https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20211377.pdf" target="_blank"><strong>unemployment claims jumped</strong></a> last week to 406,000, an unexpected turn higher. That took the total number of people on these benefits to 3.25 mln and a net rise of +100,000, also unexpected. Until this level gets down to 2 mln, the pandemic impact on their labour market won't be behind them.</p><p><a href="https://www.nar.realtor/newsroom/existing-home-sales-expand-1-4-in-june" target="_blank"><strong>Housing market sales in the US rose</strong></a> to about the expected level in June but it was a modest gain. A slowly improving rise in supply allowed the gains. But things are more spectacular on the pricing front with the median now US$363,300 (NZ$521,200) which is a startling +23% higher than a year ago - although some of this is because single family homes are in higher demand than condos and apartments, so the mix has shifted.</p><p>The Chicago Fed's <a href="http://www.interest.co.nz/sites/default/files/embedded_images/cfnai-july2021-pdf.pdf" target="_blank"><strong>national activity index</strong></a> suggests that economic activity moderated somewhat in June.</p><p>Meanwhile, the Kansas City Fed <a href="https://www.kansascityfed.org/documents/8197/Survey_July2021_ManufSurvey_KCFED.pdf" target="_blank"><strong>factory survey</strong></a> for July is positively glowing. Almost 90% of firms reported supply chain issues and a similar proportion reported labour shortages. Many have increased overtime for current workers and are raising starting wages to attract workers.</p><p>In Canada, the cost of housing will have a larger influence in how Canada’s main gauge of inflat