China restrains itself; the US goes on a tear

<p>Kia ora,</p><p>Welcome to Monday's Economy Watch where we follow the economic events and trends that affect New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news of some remarkable improvements in American income and spending activity.</p><p>But first, we should note that China is on its week-long "Labour Day" holiday now. Its financial markets will be closed Monday through Wednesday. But for most, it is expected to be a period of enthusiastic domestic travel.</p><p>At the same time, China is <a href="http://www.pbc.gov.cn/redianzhuanti/118742/4122386/4122510/4242269/index.html" target="_blank"><strong>claiming</strong></a> "remarkable results in stabilising leverage and promoting growth" by reducing its country-wide leverage ratio by -2.6% in Q1-2021. It fell to a still-sky-high 277%, with their government ratio at 45%, households at 72% and business enterprises at an eye-watering 160%. (For perspective, New Zealand's <a href="https://www.treasury.govt.nz/system/files/2021-03/fsgnz-8mths-feb21.pdf" target="_blank"><strong>government ratio</strong></a> is 33%, our <a href="https://www.rbnz.govt.nz/statistics/c5" target="_blank"><strong>households</strong></a> are our problem at just over 100% due to housing debt, and our <a href="https://www.rbnz.govt.nz/statistics/c5" target="_blank"><strong>business enterprises</strong></a> at only 56%, for a total country level of 189% of <a href="https://www.rbnz.govt.nz/statistics/m5" target="_blank"><strong>GDP</strong></a>.)</p><p>In China there were two factory PMIs reported over the weekend for April. The private Caixin survey <a href="https://www.markiteconomics.com/Public/Home/PressRelease/5060907cf6194928863af561c9c0dd0e" target="_blank"><strong>reported</strong></a> an expanding sector with the strongest increases in output and sales for four months. New orders increased but supply chain issues are holding them back from even better results. The official version of this survey was more restrai