OPEC slashes output to bid up prices

<p>Kia ora,</p><p>Welcome to Thursday’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 OPEC has sided with Russia and approved an outsized production cut of 2 mln bbd in a bid to raise oil prices sharply.</p><p>But first, the US services sector continues to expand at a healthy clip, according to the widely-watched <a href="https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/services/september/" target="_blank"><strong>ISM survey</strong></a> for September. New order flows remain strong. This was enough to cause bond yields to rise. However the ISM survey was a much more positive survey than the internationally-benchmarked <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/b1bd53284017462d90382e3810abc450" target="_blank"><strong>Markit one</strong></a> which says the sector is improving but not really expanding.</p><p>We get a US non-farm payrolls report on Saturday and the expectation is that another +250,000 new jobs will have been created in September. Today the <a href="https://adp-ri-nrip-static.adp.com/artifacts/us_ner/20221005/ADP_NATIONAL_EMPLOYMENT_REPORT_Press_Release_2022_9%20FINAL.pdf" target="_blank"><strong>ADP Employment Report</strong></a> said their survey points to +208,000 new private sector jobs. They see the US services sector expanding at a moderate pace, but the manufacturing sector shedding jobs at a minor pace.</p><p>Last week, American <a href="https://www.mba.org/news-and-research/newsroom/news/2022/10/05/mortgage-applications-decrease-in-latest-mba-weekly-survey" target="_blank"><strong>mortgage applications resumed their downward track</strong></a>, mainly because mortgage interest rates continue to push higher. Their benchmark 30 year fixed rate is now up to 6.75% plus points, its highest level in sixteen years.</p><p>The <a target="_blank"><strong>US trade deficit</strong></