Savanth Sebastian, Economist, CommSec


Monday June 1 – Performance of Manufacturing (May) – The manufacturing sector remains soft

Monday June 1 – Monthly home prices (May) – From CoreLogic & RP Data

Monday June 1 – Monthly inflation gauge (May) – Provides accurate monthly readings on inflation

Monday June 1 – Business indicators (March Quarter) – Sales, wages, profits and inventories

Monday June 1 – Building approvals (April) – Approvals are expected to fall by 3%

Tuesday June 2 – Balance of Payments (March Quarter) – Includes data on external debt

Tuesday June 2 – RBA Cash Target Rate – No change in rates is expected

Wednesday June 3 – Economic growth (March quarter) – Annual growth is around 2%

Thursday June 4 – Trade Balance (April) – A trade deficit of $1.8 billion is expected

Thursday June 4 – Retail Sales (April) – A 0.4% lift in sales is expected


Monday June 1 – China official PMI (May) – The April reading was 50.2

Monday June 1 – US ISM Manufacturing Index (May) – The key index is tipped to rise from 54.9 to 55.5

Monday June 1 – US Construction Spending (April) – A 0.7% lift in spending is expected

Tuesday June 2 – US Factory Orders (April) – Economists tip a 0.2% fall

Tuesday June 2 – US Vehicle Sales (May) – A good gauge of household big ticket spending

Wednesday June 3 – US ADP Employment Change (May) – Private sector jobs growth of 205,000 is expected

Wednesday June 3 – US Federal Reserve Beige Book – Released ahead of Federal Reserve meeting

Friday June 5 – US Non-farm Payrolls (May) – An increase of 215,000 jobs is tipped

Business spending dominates attention

– The start of a new month ushers in a barrage of economic data with a Reserve Bank Board meeting thrown in for good measure. Over the past week parts of the economic growth jigsaw puzzle were released and on Wednesday the official economic growth figures for the March quarter are issued and will take centre stage. In the US the spotlight shines strongly on Friday’s employment data (non-farm payrolls). Meanwhile in China, key manufacturing data is released on Monday, with services sector data on Wednesday.

– In Australia, the week kicks off on Monday when no fewer than five indicators are set for release. The Bureau of Statistics (ABS) releases a publication entitled Business Indicators, containing figures on sales, profits, inventories and wages.

While the profits data attracts most attention, the other data is useful in gauging the health of the broader economy.

– Also on Monday, TD Securities and the Melbourne Institute release the monthly inflation gauge for May. And while there are no signs of inflationary pressures at present, the ongoing lift in the petrol price bears close monitoring. So far in the June quarter (since April 1) petrol has lifted 11.7 per cent. If prices are sustained, petrol may add 0.4 percentage points to June quarter inflation.

– Alongside the business indicators release, the ABS releases data on building approvals on Monday, while the CoreLogic/RP Data home value index is also released. We tip a 3 per cent fall in April approvals while house price growth is likely to be focused on Sydney and Melbourne. The Performance of Manufacturing survey is also issued.

– On Tuesday the Reserve Bank Board hands down its latest monetary policy decision. Given that rates were cut at the start of May, policymakers will be hard pressed to provide further stimulus. Rather the focus will be on how the economic recovery will pan out post-budget. Confidence levels have lifted and the Aussie dollar has depreciated. It will be interestingly to see if there is any discussion by Board members on the capital expenditure – or business investment data. The likelihood of any further interest rate cuts will be dependent on how the business investment landscape evolves over the coming year. We expect the Reserve Bank to stay on the interest rate sidelines and attempt to gauge how the economy tracks over coming months.

– Also on Tuesday the current account data for the March quarter is issued with plenty of interest in the extent to which net exports (exports less imports) boosted economic growth in the quarter.

– On Wednesday the ABS issues March quarter gross domestic product (GDP) or economic growth data. On current indications the economy recorded strong growth of around 0.7 per cent in the quarter, with annual economic growth holding around 2.0 per cent – well below longer-term averages.

– Also on Wednesday the Performance of Services gauge and new car sales data are released.

– And on Thursday the monthly trade figures are issued. Trade deficits have been the norm over the past year, highlighting the effect the slide in commodity prices is having on our external accounts. A trade deficit of $1.8 billion is tipped for April. In addition the ABS releases retail trade figures for the April. Activity levels have been healthy and we expect retail trade to have lifted for the 10th consecutive month, up by 0.4 per cent in April.

Overseas: US employment data & global manufacturing figures in the spotlight

– China will hold the interest of investors in the early part of the week, when the official manufacturing gauge and equivalent HSBC measures are released on Monday and the services gauge on Thursday.

– In the US, the week kicks off on Monday with the ISM manufacturing gauge, alongside new figures on construction spending. Economists tip a lift in the ISM gauge to 52.0, in expansion territory – above the 50 line that separates expansion from contraction. The April data on construction spending is released the same day with a 0.9 per cent lift expected.

– On Tuesday, new vehicle sales data is released together with factory orders and weekly chain store sales.

– On Wednesday the usual weekly data on housing finance activity is released alongside the ADP employment index, trade data and the ISM services index. A trade deficit of $43 billion is expected for April, while the service sector index should post a reading around 57.0.

– Also on Wednesday the Federal Reserve issues its Beige Book – a summary of conditions across the 12 Fed districts. If there are signs of both stronger activity and inflation, Fed members will become more confident to lift rates.

– On Thursday the weekly data on jobless claims is issued together with the Challenger job layoff series and March quarter productivity.

– And on Friday in the US, the pivotal non-farm payrolls or employment data is released. If the Federal Reserve policymakers decide to start lifting interest rates in the second half of 2015, one key metric that will give them confidence will be ongoing improvement in the labour market. Economists expect that 215,000 jobs were created in May, although the unemployment rate is expected to hold steady at 5.4 per cent.

CallSend SMSCall from mobileAdd to SkypeYou’ll need Skype CreditFree via Skype