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By Craig James, Chief Economist, CommSec Twitter: @CommSec


Monday May 11 – NAB business survey (April) – Confidence is restrained
Tuesday May 12 – Federal Budget – Deficit is narrowing only gradually
Tuesday May 12 – Housing finance (March) – Loans to owner-occupiers may have lifted 1.3%
Tuesday May 12 – Credit & debit card lending (March) – Consumers are using credit frugally
Wednesday May 13 – Wage price index (March quarter) – Wage growth is just ahead of underlying inflation
Wednesday May 13 – Tourist arrivals (November) – Delayed data
Friday May 15 – Lending finance (March) – Business are starting to borrow again


Tuesday May 12 – US Federal Budget (April) – Budget is showing signs of stalling
Wednesday May 13 – China monthly data (April) – Retail sales, production & investment
Wednesday May 13 – US Retail sales (April) – A solid 0.6% gain is tipped
May 10-15 – China lending (April) – Lending & money supply
Thursday May 14 – US Producer prices (April) – The core rate is tipped to rise 0.2%
Friday May 15 – US Industrial production (April) – A 0.2% increase is expected
Friday May 15 – US Consumer sentiment (May) – Preliminary reading
Friday May 15 – US Capital flows (March) – Capital flows & foreign buying

Key economic data and Reserve Bank Board meeting in the spotlight

Some would claim that the release of the Federal Budget is the highlight in the coming week. But in truth, data on wages, home loans and other lending data are probably more important – especially as the Government has set its sights on a tame Budget.

The Federal Budget is released on Tuesday night at 7.30pm AEST. There is little reason for the evening release, more habit, rather than necessity. The bottom-line numbers swing on the economic assumptions, but it is generally included that the path to surplus has become flatter and more protracted.

The deficit for the year to March was $48.9 billion or around 3 per cent of GDP. The Department of Finance has indicated that the budget numbers are around $4 billion better than expected at present. But much could change in the last three months of the year. The full-year deficit was projected at $40.4 billion or 2.5 per cent of GDP.

The budget is likely to be centred on measures to boost small business activity and measures to reduce the cost of child care and increase child care places


The aim of any budget is PPP – lift productivity, lift population, and/or lift workforce participation.

But looking away from the budget, in Australia the week kicks off on Monday with the release of the NAB business survey. This survey is generally released on a Tuesday but has been brought forward ahead of the budget. At present both business conditions and confidence are relatively subdued.

On Tuesday data on housing finance is issued. Based on data from the Bankers Association, we expect that loans for owner occupation (loans for people wanting to live in homes) rose by 1.3 per cent in March. And the total value of loans (owner-occupier and investment) probably rose by 2 per cent.


The weekly consumer confidence reading is also issued on Tuesday together with credit and debit card lending figures from the Reserve Bank.

On Wednesday, the main measure of wages – the wage cost index – will be issued. Wages are up by just 2.5 per cent on a year ago, the slowest growth rate since the series began in 1997. Nevertheless, wages are still growing faster than either headline or underlying inflation rates.

Also on Wednesday, delayed tourist arrivals data for November is released together with annual government finance and taxation revenue figures.

On Thursday the Bureau of Statistics (ABS) issues detailed employment figures.

And on Friday the broader gauge of lending in the economy is released, including commercial, personal and lease loans in addition to housing finance.

‘Top shelf’ indicators on both the US and China

So-called ‘top shelf’ economic indicators are released in both the US and China in the coming week.

China may actually kick off proceedings over the week – it depends when the scheduled lending and money supply data is issued. Release is scheduled between Sunday and Friday.

In the US the employment trends index is slated for release on Monday. On Tuesday, the National Federation of Independent Business releases its Business Optimism index alongside the JOLTS survey of job openings, monthly federal budget data and weekly chain store sales figures.

On Wednesday, the first of the ‘top shelf’ indicators is issued in the US, namely retail sales. Economists tip a solid 0.6 per cent increase in April after the 0.9 per cent lift in March. But fluctuating petrol prices influence the results. Data on business inventories is released the same day with the weekly figures on mortgage lending.

In China, key ‘top shelf’ indicators are also issued on Wednesday, namely retail sales, production and investment. Annual growth rates are slowing, but that is ‘normal’ for a maturing economy.

On Thursday, the producer price data (business inflation) is released in the US. There are no signs of inflationary pressure and thus no rush to lift rates. A 0.2 per cent rise in the “core” rate (excludes food and energy) is expected. The usual weekly figures on claims for unemployment insurance are also issued.

And on Friday in the US, industrial production figures are issued together with capital flows, consumer sentiment and the New York Federal Reserve manufacturing index. A modest 0.2 per cent lift in production is tipped.


Sharemarket, interest rates, currencies & commodities

The Australian sharemarket has been making heavy weather of a push back to historic highs – and with good reason – valuations have become less enticing.

The ratio of share prices to earnings (PE ratio) stood at 16.4 in March – a 15-month high and well above the decade average of 14.3 and 15-year average of 15.2.

Some would say that higher valuations can be supported given that returns on alternative assets remain low. But property remains solidly in favour over other assets while investors remain much more risk-averse than the 1990s or early noughties.