US labour market loses steam, producer prices cool

<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>And today we lead with news the long-anticipated weaknesses in the American labour market may now be starting to show. But the signals are still faint.</p><p>US <a href="https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20230700.pdf" target="_blank"><strong>jobless claims rose</strong></a> last week by +235,000 which a notably higher than we have seen in a while. There are now 1.8 mln people on these benefits, and while that is little-changed, it is the 'shift on' that we should track because these benefits only last a limited amount of time and there are always claimants who max out and are no longer qualified.</p><p>American <a href="https://www.bls.gov/news.release/ppi.nr0.htm" target="_blank"><strong>producer prices rose</strong></a> +2.7% in the year to March, a sharpish drop from the February +4.9% on the same basis. It was also lower than the +3% expected. More interestingly, the annualised rate of change between February and March was a deflationary -6.0%, a twist no-one saw coming. Core PPI didn't shift as sharply, but it did still record a small deflation of about -1%. These were the biggest month-on-month falls since the pandemic. Maybe somewhat surprisingly, it was services that recorded the biggest shift lower, not goods.</p><p>In China, overwhelming debt problems have caught up with one southern province. Things are so tight they have had to <a href="https://www.scmp.com/economy/china-economy/article/3216823/one-chinas-most-debt-ridden-provinces-asks-beijing-help-now-deleted-online-post" target="_blank"><strong>appeal to Beijing for help</strong></a> - in now-deleted online post. Researchers in landlocked <a href="https://en.wikipedia.org/wiki/Guizhou#:~:text=The%20population%20of%20Guizhou%20stands,among%20the%20provinces%20in%20China." target="_blank"><strong>Guiz