Rates rise with inflation, consequences yet to hit

<p>Kia ora,</p><p>Welcome to Thursday’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>Today we lead with news that tomorrow will be as good as today, and it will stay like that for a while. But more international data is softening.</p><p>US <a href="https://www.mba.org/news-and-research/newsroom/news/2022/06/01/mortgage-applications-decrease-in-latest-mba-weekly-survey" target="_blank"><strong>mortgage applications decreased</strong></a> yet again last week and that was even though mortgage interest rates slipped a bit.</p><p>But last week's <a href="http://www.redbookresearch.com/8702.html" target="_blank"><strong>survey of retail activity</strong></a> remained strong, expanding faster than the prior week and holding on to the momentum they have had since mid 2021.</p><p>There were two PMI reports out for the US factory sector overnight and both are recording a continuing healthy expansion. The widely watched local <a href="https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/may/" target="_blank"><strong>ISM</strong></a> one reported a faster expansion, while the internationally-benchmarked <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/3cf8dc89abac45b2a279baa8b71a684a" target="_blank"><strong>Markit</strong></a> one recorded a slower expansion.</p><p>They are backed up by the Fed's month <a href="https://www.federalreserve.gov/monetarypolicy/files/BeigeBook_20220601.pdf" target="_blank"><strong>Beige Book</strong></a> surveys which also record modest to moderate growth in almost all their regions, but with hints of slowing conditions.</p><p>Also confirming the continuing expansion are the American <a href="https://www.bls.gov/news.release/jolts.nr0.htm" target="_blank"><strong>JOLTS data</strong></a> for April. The number of job openings in the US was 11.4 mln at the end of the month, down from a revised record high o