Weaker China weighs on commodity prices

<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 weakish Chinese data is hurting commodity prices.</p><p>But first up today, <a href="https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20230976.pdf" target="_blank"><strong>American initial jobless claims</strong></a> rose last week and by more than expected. They rose +234,000 so there are now 1.67 mln people on these programs. Seasonal factors should have seen these initial claims fall, so the rise is probably the long awaited start of the softening of their tight labour market.</p><p>Meanwhile, American <a href="https://www.bls.gov/news.release/ppi.nr0.htm" target="_blank"><strong>producer prices rose at a reduced rate</strong></a>. There were up only +2.3% from year-ago levels in April which is lower than the +2.7% rise in March. Even the annualised rate from March to April was only +2.4%, so cost pressure is evaporating quite quickly now. Without a slightly higher rise from services, the goods price pressures are even lower. This easing feeds into the expectations the giant American economy is slowing.</p><p>In Los Angeles, shares in another regional bank, PacWest, dropped by more than -20% today, compounding earlier falls. Today's fall came after they <a href="https://www.pacwestbancorp.com/news-market-data/news/news-details/2023/PacWest-Bancorp-Announces-Results-for-the-First-Quarter-2023/default.aspx" target="_blank"><strong>said</strong></a> its deposits declined and that it had posted more collateral to the US Federal Reserve to boost its liquidity.</p><p>Of course, the regional bank woes, annoying as they are, are minor compared to the threat their Federal debt-ceiling standoff poses.</p><p>It is easy to dwell on the negatives. There are plenty to choose from. But there are positives. <a href="https://www.conference-board.org/press/job-satis