US economy losing momentum

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Kia ora. Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand. I'm David Chaston and this is the international edition from interest.co.nz. Today we lead with news global oil prices have risen again with no end to Trump's Hormuz adventure. In something of a gigantic own-goal, the US economy is losing momentum rather quickly now. But first, the overnight full dairy auction came in better than the futures market had signaled, up +2.3% from the prior full event. This was largely driven by the milk powder gains with WMP up +3.0% and SMP up +7.6%. However, most of the milk fats fell. The overall gains in NZD were slightly better, up +2.6%. But despite this recent turn higher, prices are still almost -9% lower than year-ago levels, even if they are up almost +10% from the start of 2026. In the US, the latest weekly jobs update from ADP has stayed low with less than a +10,000 gain over the past four week. In contrast to the positive July factory report in the New York state region we noted yesterday, their services survey in the same region wasn't very good. The business climate index remained deeply negative, with almost half of respondents reporting unfavourable business conditions. US industrial production data for July was modestly positive from June and that has resulted in a +1.1% gain from a year ago, although lower than the June +1.3% expansion. US pending home sales were lower in July, both from June, and from a year ago. There is no spark in evidence in this sector, and perhaps not surprisingly when home loan interest rates are high at 6.8% and likely to rise from here. Every region is posting both month-on-month and year-on-year declines now. US housing starts fell back sharply in July, down -13.5% from year-ago levels. In fact, the last time they had a July this low was in 2019. And in Canada, they also reported a sharp drop in new housing starts in July, their lowest for that month also since 2019. But July housing market sales actually rose and delivered the highest levels they have had in 2026 (even if this isn't a particularly high bar). Meanwhile, negotiations between Canada and the US over Trumps 50% tariff threat seem to be going nowhere, and they are due to come into effect tomorrow. Interestingly, included in the stoush is Canada's aluminium exports and if they are tariffed, the hurt to US businesses will be significant. In China, they have a slowing momentum too. Households are clearly worried because they hare paying down debt faster and prioritising cash reserves in the face of a glum outlook. In Australia, their consumer sentiment has improved from low levels but it is still net-negative and still below last year's level at this time. The improvement was driven by mortgages holders who were relieved that the RBA didn't increase rates at its last decision. The survey also shows house price expectations declined as the housing market weakened. But renters are less likely to expect price falls and are more downbeat about home purchases. The UST 10yr yield is now just on 4.71%, down -2 bps from this time yesterday.  The price of gold is falling back, now at US$4353/oz, down -US$30 from yesterday at this time. Silver has fallen -US$ to just under US$64. Oil prices are up another +US$1 from yesterday at just over US$85/bbl in the US, while the international Brent price is now just on US$91/bbl and up +50 USc. Hormuz transits have stayed very low. There has been only one crude tanker and 4 cargo ship exiting over the past 24 hours (2 dark with transponders off) and eight entering for new loads (3 dark), again all Iran-linked. There have been deadly attacks on a few of these ships crossing. The Red Sea activity is still only about 20 exits at the Yemen chokepoint, little-change. The Kiwi dollar is down -25 bps from yesterday at just under 58.8 USc. Against the Aussie we have dropped -20 bps to 82.9 AUc. Against the euro we are down -25 bps at 50.8 euro cents. That all means our TWI-5 starts today at just on 62.3, down -30 bps from this time yesterday. The bitcoin price starts today at US$64,667 and up +0.7% from yesterday. Volatility over the past 24 hours has also been low at just on +/-0.7%. You can get more news affecting the economy in New Zealand from interest.co.nz. Kia ora. I'm David Chaston and we’ll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI