Resilient US economy defies doomsters again

Kia ora,Welcome to Thursday’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.And today we lead with news the world's largest economy keeps on throwing up unexpected positive surprises.First up today, there was a very strong August services ISM PMI out for the giant American economy. It is a widely-watched and influential metric and it rose unexpectedly with its strongest growth in six months. Faster increases were seen in business activity, and both new orders and employment especially. It's a confirmation of the resilience we have been pointing out recently, and might even change the mind of some Fed waverers. Markets think so, and equities recoiled somewhat on the prospects of a rate hike again.A widely-watched GDP-Now tracker is suggesting that most analysts are significantly underestimating American economic growth for Q3-2023.Unnoticed, small business optimism rose sharply too in its independent August survey.Meanwhile, the yo-yoing of mortgage application levels continued last week with them falling -2.9% from the prior week after an earlier lift. But the outsized fall took them down to their lowest level since the end of 1996 - and that was despite mortgage interest rates easing slightly in the same period.The Redbook survey of American bricks & mortar retail activity is again reporting a year-on-year sales increase higher than inflation, a situation that has only turned positive in the past couple of weeks.US exports rose +1.6% in August to a four month high but the US merchandise trade deficit widened marginally , even if -US$3 bln less than expected. Exports were boosted by vehicles, airplanes and pharma.The US Fed's September Beige Book update reported that economic growth was modest during July and August. Consumer spending on tourism was stronger than expected, surging during what most considered the last stage of pent-up demand for leisure travel from the pandemic era. The found that labour market pressures are easing but many employers still see shortages. Price rises are easing they said, but they did find sharp increases in property insurance costs during the past few months.Of course, not everything is positive, and the threats to regional banks who loaded up on commercial real estate remain large.The Bank of Canada held its policy rate unchanged at 5% in its September meeting overnight, as largely expected by financial markets and marks an extended pause in its tightening cycle. But it is still selling down its bond holdings.In China,