Savanth Sebastian – Economist – CommSec

A big week

·       Arguably this is the last big week of economic data with economic growth and a Reserve Bank Board meeting in Australia and pivotal jobs data in the US.

·       In Australia, each change of season is ushered in by a barrage of economic data. So next week investors need to brace for the ‘Summer Tsunami’ with almost a dozen indicators expected together with the Reserve Bank Board meeting.

·       The week kicks off on Monday with the Business Indicators publication from the Bureau of Statistics (ABS) including data on sales, profits and inventories.

·       Also on Monday TD Securities and Melbourne Institute release the inflation gauge while the Reserve Bank issues data on private sector credit (effectively, loans outstanding).

·       On Tuesday the Reserve Bank Board meets. But while an “easing bias” exists, this is more of an insurance policy – there is no need for further interest rate stimulus at present. In fact economic momentum seems to be lifting, courtesy of home building.

·       Also on Tuesday there is a raft of indicators due for release including building approvals, home prices, the balance of payments, government finance and a gauge on the manufacturing sector.

·       On Wednesday, the ABS releases the economic growth figures for the September quarter with the National Accounts publication. The economy may have lifted 0.9 per cent in the quarter after the scant growth of 0.2 per cent in the June quarter. Annual economic growth is below average near 2.00-2.25 per cent, but oddly the unemployment rate has been falling, not rising.

·       Also on Wednesday the Reserve Bank Governor delivers a breakfast speech in Perth. The title for the talk – Economic Conditions & Prospects – gives Glenn Stevens a broad canvas on which to paint.

·       On Thursday the ABS releases the trade (exports and imports) data for October ($2.8 billion deficit expected). In addition the Federal Chamber of Automotive Industries issues November data on new vehicle sales. In the year to October, vehicle sales were at record highs. The Performance of Services index is also released.

·       On Friday the ABS issues the October data on retail spending. Spending is recording healthy growth at present – growing broadly in line with longer-term averages. Retail trade may have risen 0.2 per cent in October.

·       Also on Friday the ABS releases October tourism data. In September, greater China (mainland China plus Hong Kong) passed New Zealand with the highest number of tourist arrivals in Australia.

US jobs data pivotal to rate expectations

·       There is plenty of data to watch in the US, and normally investors would only have eyes for the non-farm payrolls (employment) data on Friday. But the Federal Reserve Chair, Janet Yellen, has a number of appearances that will be closely monitored.

·       In the US, the week begins on Monday with the release of the Chicago Purchasing manager’s index, pending home sales index and the Dallas Federal Reserve manufacturing index.

·       On Tuesday, purchasing manager surveys for the manufacturing sector are released across the globe. In the US, it takes the form of the ISM manufacturing gauge. While in China the National Bureau of Statistics issues its survey results for manufacturing but also publishes the services sector survey the same day.

·       Also on Tuesday, data on new vehicle sales is issued together with construction spending data and the weekly data on chain store sales.

·       On Wednesday, the Federal Reserve Chair, Janet Yellen, speaks before the Economic Club of Washington. At present, no topic is set down for the speech.

·       Also on Wednesday, the ADP National Employment index is released, an influential survey of private sector jobs. While the data doesn’t always line up with the “official” figures, it is still closely watched by investors. Revised data on labour costs and productivity is also issued on Wednesday together with the ISM New York index and weekly mortgage finance figures.

·       On Thursday, Federal Reserve Chair Janet Yellen testifies before the congressional Joint Economic Committee. The appearance – a day before the important monthly job figures – will likely be ‘make or break’ for those expecting a rate hike in December.

·       Also on Thursday, the ISM gauge for the services sector is issued in the US together with factory orders and the weekly data on claims for unemployment insurance.

·       And on Friday the non-farm payrolls report is released. In October, 271,000 jobs were created, above expectations with the jobless rate falling to 5 per cent. In November it is expected that 190,000 jobs were created with the jobless rate unchanged. If the employment results are in line with the forecasts, this will set the scene for a rate hike in December.

>> BACK TO THE NEWSLETTER: Click here to read other articles from this week’s newsletter