Drought to affect ship freight rates

<p>Kia ora,</p><p>Welcome to Wednesday’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 global financial markets await signals from Jackson Hole at the weekend.</p><p>In the meantime in the US, there was an unusual surge in retail sales at bricks & mortar stores last week, <a href="https://www.redbookresearch.com/" target="_blank"><strong>reporting</strong></a> their strongest week-on-week gain in four months (+2.9% from a year ago). And it is the first time that rise has matched inflation in 2023.</p><p>But US existing home sales came in very sluggish. The American housing market remains in the doldrums, with <a href="https://www.nar.realtor/newsroom/existing-home-sales-slipped-2-2-in-july" target="_blank"><strong>an annualised sales rate of 4.07 million units</strong></a> in July 2023, the lowest level since January and below market expectations of 4.15 million. That's more than -16 % below year-ago levels. They have 14 weeks of unsold inventory on hand now. Higher mortgage rates and limited inventory continued to be the main factors behind the decline with sellers not really interested in participating in a falling market.</p><p>'Sluggish' is also the word to describe the next regional factory survey, <a href="https://www.richmondfed.org/-/media/RichmondFedOrg/region_communities/regional_data_analysis/regional_economy/surveys_of_business_conditions/manufacturing/2023/pdf/mfg_08_22_23.pdf" target="_blank"><strong>this one from the Richmond Fed</strong></a> in the mid-Atlantic states region. But more measures 'improved' including for new orders, even if the 'improvement' is just a lesser decline in this region. Interestingly however, this is another region where manufacturers are looking ahead to much better outcomes, so are still hiring and investing.</p><p>And staying in the US, S&P has followed Moody's in trimming the ratings of a set of regional