Supply chain inflation dampens growth

<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>Today we lead with news inflation from the global supply chain woes are taking the wind out of the global economic expansion.</p><p>The American economy grew at an annualised <a href="https://www.bea.gov/news/2021/gross-domestic-product-3rd-quarter-2021-advance-estimate" target="_blank"><strong>+2.0% in Q3-2021</strong></a> according to initial estimates, well below market forecasts of +2.7% and slowing sharply from +6.7% in Q2. It is the weakest growth of the pandemic recovery. The levels of government stimulus continues to fade and a surge in COVID-19 cases, plus global supply constraints have weighted on both consumption and production. Still, economic activity was +4.9% larger than in Q3-2020 and +1.9% larger than Q3, 2019.</p><p>US <a href="https://tradingeconomics.com/united-states/continuing-jobless-claims" target="_blank"><strong>jobless claims</strong></a> came in at 245,000 last week, lower than the prior week and lower than expected. There are now just under 2 mln people on these programs, and now almost back to pre-pandemic levels.</p><p>US <a href="https://www.nar.realtor/newsroom/pending-home-sales-dip-2-3-in-september" target="_blank"><strong>pending home sales</strong></a> were down -2.3% in September, partially reversing from an +8.1% surge in August and much worse than market forecasts of a flat reading. It is being called a 'dip' by the industry, but that overlooks that this activity has 'dipped' in seven of the past twelve months and is now lower than a year ago. A retreating trend in sales activity is well set in this market.</p><p>Meanwhile the <a href="https://www.kansascityfed.org/documents/8475/10_2021_KC_Survey_Manuf.pdf" target="_blank"><strong>Kansas City Fed manufacturing survey</strong></a> is quite upbeat. All the key indicators were more positive in October than S