The economic currents get choppier

<p>Kia ora,</p><p>Welcome to Monday's Economy Watch where we follow the economic events and trends that affect 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 it’s tough at the top.</p><p>With many financial and economic market indicators at or near records, investors are sensing that the only way from here is either drifting, or down.</p><p>Iron ore prices are now dropping sharply as China’s intensified drive to lower steel output prompts mills to start cutting production to avoid sanctions. The <a href="http://www.dce.com.cn/DCE/Products/Industrial/Iron%20Ore/index.html" target="_blank"><strong>prices Chinese mills are paying</strong></a> dropped -10% last week although they still remain +28% higher than at the start of 2021. Nickel prices, a key ingredient for stainless steel, are shooting higher and that is both about supply shortage as still-high demand</p><img alt="https://servedbyadbutler.com/error/blank.gif" /><p>The <a href="https://tradingeconomics.com/commodity/baltic" target="_blank"><strong>Baltic Dry Index</strong></a> remains high (up +70% since the start of 2021) but has flat-lined over the past week. It too is down -10% from the start of the month. But for containerised cargoes, there is no let-up yet, with <a href="https://www.drewry.co.uk/supply-chain-advisors/supply-chain-expertise/world-container-index-assessed-by-drewry" target="_blank"><strong>prices now up another +7%</strong></a> in just two weeks averaging NZ$12,800 per 40ft container.</p><p>There were a couple of early PMI indicators released over the weekend for some major economies we follow and they are all quite positive. In the <a href="https://www.markiteconomics.com/Public/Home/PressRelease/5c13aaa0acb3461eb9acd7113cd2bb40" target="_blank"><strong>US</strong></a> their factory sector expanded at a series high (best in at least 14 years) with strong new order levels. But costs and prices are rising faster, and labour shortages show no signs of easing for