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 Savanth Sebastian, Economist, CommSec

Australia

Tuesday June 9 – Job advertisements (May) – Job ads continue to lift modestly

Tuesday June 9 – Housing finance (April) – Loans for owner occupiers may have fallen by 3%

Tuesday June 9 – NAB Business survey (May) – Expect confidence levels to lift

Wednesday June 10 – Consumer Sentiment (June) – Includes data on the wisest place for new savings

Wednesday June 10 – Speech by RBA official – Governor Glenn Stevens speaks in Brisbane

Thursday June 11 – Employment/unemployment (May) – Jobs growth of 20,000 is expected

Friday June 12 – Credit/debit card lending (April) – Consumers are favouring debit cards

Friday June 12 – Overseas arrivals (February) – Chinese tourists are growing at double digit annual rates

Friday June 12 – Lending finance (April) – Housing, personal, business and lease loans

Overseas

Monday June 8 – China Trade (May) – A trade surplus of around $30 billion is forecast

Tuesday June 9 – China Inflation (May) – Deflation is still happening in the business sector

Tuesday June 9 – US Wholesale sales (April) – Modest gain is expected

Wednesday June 10 – US Federal Budget (May) – Annualised deficit near 2.5% of GDP

Thursday June 11 – US Retail sales (May) – A solid 0.6% lift in ex auto sales is expected

Thursday June 11 – US Import/export prices (May) – Import prices are tipped to lift 0.7%

Thursday June 11 – China monthly data (May) – Covers retail sales, industrial production and investment

Friday June 12 – US Producer prices (May) – Business inflation is still restrained

Friday June 12 – US Consumer sentiment (June) – Expected to rise from 90.7 to 92.0

Employment and business confidence in focus

– In Australia, there is a solid schedule of economic events over the week, with the labour market in focus, alongside business and consumer sentiment surveys. In China, the economic data fest starts on Monday with trade data, followed by economic activity indicators like retail sales. And in the United States the key data releases take place late in the week.

– In Australia, the economic data kicks off on Tuesday after a Monday holiday (all states except Western Australia). On Tuesday housing finance data is released together with the NAB business survey and job advertisements. Based on Bankers Association data we tip a 3 per cent fall in the number of loans to owner-occupiers with the value of all loans lifting 1 per cent.

– In terms of the NAB business survey we anticipate that the tame federal budget and resulting favourable policy for small and medium businesses should lift business confidence and conditions. Businesses have been holding back from embracing super-low interest rates, however the federal government’s $5.5 billion small business package (which includes the $20,000 asset write-offs as well as a 1.5 per cent tax cut) may lift investment plans.

 

– On Wednesday the Westpac/Melbourne Institute consumer confidence survey is released. No doubt the weekly Roy Morgan consumer sentiment figures will continue to steal some of the former’s thunder, being released on Tuesday – the first sentiment gauge to assess the recent Reserve Bank interest rate decision. Expect a flat reading given that stability on rates is balanced against a weaker Aussie dollar and sharemarket. However of interest in the Westpac survey will be the survey respondents’ views on the wisest place to put new savings.

– Also on Wednesday, the Reserve Bank Governor Glenn Stevens delivers a speech in Brisbane to the Queensland chapter of the Economic Society of Australia. No subject has been set for the speech at this stage but investors would be hoping that it provides more clarity on future rate movements.

– On Thursday the Bureau of Statistics issues the May employment figures. The employment figures have been rather upbeat in recent months. And we expect that hiring rose further in May with jobs up by 20,000 and the unemployment rate holding around 6.2 per cent. Given the recent improvements in the labour market, more focus will be paid on hours worked – which at present is rising as the fastest pace in four years.

– On Friday the Reserve Bank releases monthly data on credit and debit card lending. Consumers are still spending, but most prefer to use their own money to make purchases rather than using credit. In fact Commonwealth Bank credit card statistics show that around 57 per cent of our credit card customers  currently pay no interest on their credit card, paying off the full amount outstanding on every statement.

– Lending finance data is also out on Friday, covering housing, personal, commercial and lease finance. The ongoing lift in total lending finance commitments is certainly encouraging, particularly given that lending is been driven by the commercial and residential space. The only area of weakness is personal borrowings. Keep in mind the May rate cut has shifted consumer sentiment and may result in a lift in household activity.

China data will dominate investor attention

– The US will play second fiddle to the “top shelf” Chinese data releases over the early part of the week.

– China kicks of proceedings on Monday with the release of import and export data on Monday. Exports and imports have continued to decline in recent months, highlighting the slowdown in the Chinese economy. A trade surplus of around $30 billion is expected.

– On Tuesday Chinese inflation data is released. There are no signs of inflationary pressure at present. In fact businesses are experiencing a deflationary environment. In essence inflation is not going to be a stumbling block for further rounds of targeted stimulus.

– In the US, wholesale sales and inventories are issued on Tuesday.

– On Wednesday the usual weekly data on housing finance activity is released alongside the monthly estimates of the Federal Budget. A budget deficit of around $100 billion is expected.

– On Thursday the weekly data on jobless claims is issued together with retail sales, import and export prices and business inventories. Economists expect that retail sales lifted by 0.8 per cent in May, or up 0.7 per cent if sales of automobiles are excluded.

– And on Friday in the US, the producer price index (PPI) is issued alongside consumer sentiment figures.

Economists expect that business inflation was contained with a small 0.4 per cent lift in the PPI. Core inflation (ex food and energy) is anticipated to lift by just 0.1 per cent in May. And the preliminary reading on consumer confidence is expected to show a lift from 90.7 to 91.5 in June.

Sharemarket, interest rates, currencies & commodities

– In Australia the end of the financial year is around the corner. In other economies, the focus is on the end of the month and the end of the quarter. But the one common feature will be the likelihood of “window dressing” over the next few weeks. This is the practice where ordinary fund managers and hedge funds attempt to buy and sell securities with the aim of improving their performance figures before books get ruled off. So expect to see a lift in volatility.

– With just over three weeks to go, the ASX 200 has managed to eke out a 3.5 per cent gain for the financial year. In the US the Dow Jones has gained 7.4 per cent so far. And the technologyheavy Nasdaq has been the outperformer, lifting by 15.7 per cent. However the real winners have been the Japanese Nikkei, which has lifted by 35 per cent, and the German Dax, up by 16.1 per cent. No doubt the European Central Bank and Bank of Japan stimulatory measures, and resulting currency stgaluation, have been big drivers of the gains.