Keep an eye on China's energy stress, US margin debt

<p>Kia ora,</p><p>Welcome to Tuesday'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 China is facing a major energy crisis that could have worldwide implications just as it tries to deal with its Evergrande property crisis.</p><p>But first in the US, American <a href="https://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf" target="_blank"><strong>durable goods orders</strong></a> rose more than expected in August, up +10% above the July level, and up +25% above the pandemically-affected August 2020 level. A more relevant comparator is the August 2019 level and they were +5.3% higher than that. So, overall a very positive result.</p><p>Further, <a href="https://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf" target="_blank"><strong>new orders for capital goods</strong></a> were similarly impressive and also a new record high. Boardrooms seem to be investing heavily again. But with both sets of data you can't help but wonder what the impact of higher prices has been on the results.</p><p>However, the <a href="https://www.dallasfed.org/research/surveys/tmos/2021/2109.aspx#tab-results" target="_blank"><strong>Dallas Fed factory survey</strong></a>, while still expanding, did pull back in terms of overall general business conditions. In fact, the forward outlook turned negative in the face of hesitating order levels and sharply rising costs.</p><p>Meanwhile the <a href="https://fiscal.treasury.gov/reports-statements/mts/current.html" target="_blank"><strong>latest update</strong></a> of the US federal budget shows a narrowing of their large deficits, down -7% lower than last year and down to -12.5% of US GDP from -16.1% in 2020. By the way, there is still no resolution to the US debt limit crisis.</p><p>Taiwanese i<a href="https://eng.stat.gov.tw/point.asp?index=6" target="_blank"><strong>ndustrial production</strong></a> is still rising at a fast clip, but thei