Strong job creation but Fitch spoils the party

<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>And today we lead with news the Fitch downgrade has cast a pall over financial markets today, trumping any data. Equity markets are grumpy, bond yields are rising and the US dollar is rising.</p><p>But first in the US, we get their July labour market details on Saturday NZT and today the precursor <a href="https://adp-ri-nrip-static.adp.com/artifacts/us_ner/20230802/ADP_NATIONAL_EMPLOYMENT_REPORT_Press_Release_2023_07%20FINAL.pdf?_ga=2.233518039.81392624.1691000282-1138161365.1688667509" target="_blank"><strong>ADP Employment Report</strong></a> is out. That says private businesses hired +324,000 extra workers in July, following a downwardly revised +455,000 increase in June and surpassing market expectations of a +189,000 rise. Consensus analyst forecasts are for the US non-farm payrolls to rise +200,000 in July, so there seems to be upside there.</p><p>Also rising were American <a href="https://www.nada.org/" target="_blank"><strong>total vehicle sales</strong></a> in July, up to an annualised rate of 15.7 mln. That is up from a 14 mln annual rate in July 2022. Of course, the American vehicle markets is far smaller than the Chinese one that ran at a 26.1 mln annual rate in June.</p><p>But falling, and for a second successive week, were <a href="https://www.mba.org/news-and-research/newsroom/news/2023/08/02/mortgage-applications-decrease-in-latest-mba-weekly-survey" target="_blank"><strong>American mortgage applications</strong></a>, and it was a moderate -3% fall. The benchmark mortgage interest rate rose and back near its highest since November 2022. Rates near 7% really hurt the perception of house-buying affordability. The US <a href="https://www.census.gov/housing/hvs/files/currenthvspress.pdf" target="_blank"><strong>home ownership rate</strong></a> was little-changed in Q2-2023 at abou