Uncertainty over data and policy dogs markets

<p>Kia ora,</p><p>Welcome to Thursday'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 that a confusing mix of data and official comments leaves market unsure of their direction. And through it all, the NZD is rising and NZ interest rates are too.</p><p>We get the US non-farm payrolls report for August on Saturday (NZT) and a gain of +880,000 is expected. Today, the pre-cursor <a href="https://adpemploymentreport.com/2021/July/NER/docs/ADP-NATIONAL-EMPLOYMENT-REPORT-July2021-Final-Press-Release.pdf" target="_blank"><strong>ADP Employment Report</strong></a> was released showing a gain of only +330,000 which is less than half the expected +700,000 result. Analysts may be revising their non-farm payroll forecasts now. And the ADP result has taken the wind out of Wall Street today.</p><p>That was a disappointing indicator. But not disappointing was the <a href="https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/services/july/" target="_blank"><strong>ISM Services PMI</strong></a>, which roared higher to an all-time high, driven by expanding activity, tight hiring conditions, and prices rising by almost their fastest on record. (The alternative <a href="https://www.markiteconomics.com/Public/Home/PressRelease/0983895193044c4eaca57c889df79826" target="_blank"><strong>Markit Services PMI</strong></a> remains high too, but not as strong as the ISM report.) However, one aspect that stands out in these services PMIs is that supply shortages are getting worse, not easing.</p><p>In China and in something of a surprise, the private <a href="https://www.markiteconomics.com/Public/Home/PressRelease/d5264c7e59614a3f9851003495b0ff6b" target="_blank"><strong>Caixin Services PMI</strong></a> reported a strong bounce for July, better than the official version.</p><p>But in southern China,<strong> </strong><a href="https://www.yuantalks.com/sev