Weaker PMIs cloud markets after oil supply cut

<p>Kia ora,</p><p>Welcome to Tuesday’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 central bank interest rates decisions, which are upon us this week, have a new challenge.</p><p>OPEC's unexpected <a href="https://www.opec.org/opec_web/en/press_room/7120.htm" target="_blank"><strong>decision to cut supply</strong></a> has changed the calculus on how to deal with inflation, which has been on a downward trend as central-bank-induced slower growth has eased price pressures despite the war by Russia. But this supply cut is again raising oil prices. It looks like we will generally keep the lower growth but the benefit of lower inflation has been pushed away.</p><p><a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/5c9ad0804dd34d4ab5e1af7f16072fef" target="_blank"><strong>Globally</strong></a>, there were many manufacturing PMI's out overnight and they paid a picture of a sector that is nether expanding nor contracting. Output is rising as new order intakes are still weakish but show signs of stabilising. Supply chain pressures ease as does inflationary pressure with both input cost and selling price inflation both pulling back. But all this was before the OPEC announcement.</p><p>In the US, there were two PMI reports out overnight and both recorded contractions and greater than the overall global rate. The widely-watched local <a href="https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/march/" target="_blank"><strong>ISM</strong></a> one reported a fifth consecutive monthly decline, although only marginally more than for February. New orders and production are contracting. Prices are now decreasing and export demand is lower. The internationally benchmarked <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/70b28232e2b943e9ba0cc7b4fe1d6ffe" target="_blank"><strong>Markit</strong></a> on