Markets ignore weak Chinese data

<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>Today we lead with news that markets are ignoring weak Chinese data and focusing on the positives.</p><p>But first, there was another <a href="https://www.globaldairytrade.info/en/product-results/"><strong>dairy auction</strong></a> earlier today. However this one isn't about the auction prices - which rose +2.4% in USD terms. It is really all about the exchange rate, because in NZD, the auction prices fell -3.1%, and in local currency that means prices have now fallen for four consecutive auctions and wiping out all the good September rises. Year-on-year prices are down -7% on that basis and down -18% in USD terms. Analysts may give up on some of their 2022/23 season pay-out forecasts now. The NZD has risen +5.6% since the prior auction. Prices in USD rose +3.1 for both SMP and WMP, but to have just broken even they needed to rise about +10% and back to those September levels.</p><p>In the US, <a href="https://www.redbookresearch.com/" target="_blank"><strong>retail sales</strong></a> last week rose only about the CPI inflation rate from year-ago levels, so that is a noticeable slowing of sales volumes heading into their holiday shopping seasons.</p><p>Gradually, some of the heat is going out of <a href="https://www.bls.gov/news.release/ppi.nr0.htm" target="_blank"><strong>American producer price inflation</strong></a> too. It was up +8.0% in October from a year ago, but only up at an annualised rate of +2.5% on October from September. "Core' rates rose even less on that same basis. Perhaps 'transitory' is arriving, finally.</p><p>Perhaps the heat is going out of American factory stresses, but not everywhere. The New York "<a href="https://www.newyorkfed.org/medialibrary/media/survey/empire/empire2022/esms_2022_11.pdf?la=en" target="_blank"><strong>Empire State factory survey</strong></a>" r