Lower inflation follows tamer activity

<p>Kia ora,</p><p>Welcome to Friday’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 global inflation is coming down as energy cost pressures recede. And so far it hasn't been at the expense of global economic expansion.</p><p>But first today, US headline <a href="https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20232519.pdf" target="_blank"><strong>jobless claims rose</strong></a> but the increase was minor and less than expected. On an actual basis the fall was rather sharp but recall last week was a retail holiday week. There are now just 1.56 mln people on these benefits, almost the lowest in a year. So still no sign of rising labour market stress in this data. A week from tomorrow their November non-farm payrolls report is released and markets currently expect an expansion of +175,000 - modest but still expanding.</p><p>October <a href="https://www.nar.realtor/newsroom/pending-home-sales-fell-1-5-in-october" target="_blank"><strong>pending home sale levels gave up more ground</strong></a> in the continuing trend. Pending home sales is a forward-looking indicator of home sales based on contract signings and the -1.5% drop in October is the lowest number since this index was originated in 2001. The prospect of low demand because buyers are put off by high mortgage rates is holding back sellers from listing into a falling market.</p><p>October <a href="https://www.bea.gov/news/2023/personal-income-and-outlays-october-2023" target="_blank"><strong>income and spending data</strong></a> growth was modest, each rising just +0.2% from September. That is the lowest for both in seven months of much better gains. Perhaps of more interest was that PCE inflation eased again, now down to +3.0% (3.5% on a core basis) and closer to the US Fed's 2% target range. But even if it is moving in the right direct, there is still some way to go yet.</p><