US workers get 80 year low share of their economy

Kia ora,

Welcome to Monday’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 the world is looking for even more workarounds to avoid having to deal with a Trump-America.

First however, this week is going to be a busy one locally with important data releases on December retail sales (another less-than-inflation tiny rise is expected), and the Q4 CPI data (expected to hold at 3.0%). But a higher-than-expected result will likely bring outsized financial market reactions. There will also be another full dairy auction on Wednesday.

In Australia, it will all about their December jobs data, and a good bounce-back from the unexpectedly weak November result is being looked for.

Globally, the most interest will be on the big data dump from China this week. Their Q4-2025 GDP growth is expected to slow to 4.4% dipping their full year expansion to 4.9%. House price, retail sales, and industrial production data is also due, and they are all expected to be tame. Their central bank will review its Loan Prime Rates, but no change is expected from their already record low levels.

In Japan, their central bank will be reviewing their policy settings, although no change is anticipated this time. However there is intense interest about possible future rate signals.

Central banks in Indonesia and Malaysia are scheduled to announce monetary policy decisions as well.

In the US, financial markets will be closed tomorrow for MLK Day. But then they will release key data on inflation, the PCE version, as well and the second Q4-2025 GDP update. But most interest will be on a flood of Q4-2025 corporate earnings reports, dominated by their big industrials.

Over the weekend there were important data releases from the US too. Industrial production rose marginally in December from November to be +2.0% higher than year ago levels.

The January NAHB/Wells Fargo Housing Market Index retreated in January from December and back to October levels and -21% lower than year ago levels. Builder sentiment deteriorated across all components of the index.

The New York Fed's regional services sector tracking reports yet another sharp contraction in their region in January, although not as sharp as in December.

US data is often confusing, telling different stories. Enough so all sides can claim 'victory'. But some overarching measures paint a tougher story. Inflation feels like stagflation to most consumers. And that is confirmed by the latest data on the share of economic activity flowing to workers. It is now at its lowest level ever, since this series began 80 years ago. It is a telling data series, one that has dived fast recently.

Across the border, Canadian housing starts turned in another strong result in December, up by +11% from November, to the highest rate in five months. That caps a good full year, up +5.6% in 2025 from 2024.

The Canadian prime minister has been in China and has negotiated a truce with Beijing in their tariff tussle. The Chinese will now import large volumes of Canadian crops in return for up to a 49,000 car concession for Chinese EVs. Those will displace US-sourced EVs. The Canadian farm lobby is happy, their car-manufacturing lobby isn't.

China continues to run down its holdings of US Treasury investments with them falling -11.2% in November from a year ago. Their holdings of US paper drops them to third place behind Japan and the UK.

Malaysia's economic activity continues to impress. They recorded Q4-2025 GDP growth of +5.7% with a strong factory sector supported by strong internal demand.

Singapore's (non-oil) exports rose +6.1% in December from a year earlier, a moderated pace of growth from November. (Their refined oil exports grew at more than twice that pace.) This means that Singapore's non-oil full-year 2025 exports came in +4.8% above their equivalent 2024 level.

The UST 10yr yield is now just on 4.23%, unchanged from this time Saturday and its highest since September. 

The price of gold will start today at US$4596/oz, and up +US$15 from Saturday. Silver is now just under US$90/oz.

American oil prices are down -50 USc from Saturday at just under US$59.50/bbl, while the international Brent price is now at US$64/bbl.

The Kiwi dollar is little-changed from Saturday, now at just over 57.5 USc. Against the Aussie we are also little-changed at 86.1 AUc. Against the euro we are up +10 bps at just on 49.6 euro cents. That all means our TWI-5 starts today just over 61.7, and up +10 bps from Saturday, up +20 bps for the week.

The bitcoin price starts today at US$95,130 and up +0.6% from this time Saturday. Volatility over the past 24 hours has been very low at just on +/- 0.3%.

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.