Craig James – Chief Economist (Author) – CommSec

Jobs, jobs, jobs

·       The last major Australian economic indicators for 2015 are released in the coming week. In Australia the focus will be on the labour market. In China, trade, inflation and broader economic activity indicators are released throughout the week. In the US, data on retail sales and producer prices are the highlights.

·       In Australia, the week kicks off on Monday with November data on job advertisements to be released by ANZ. Job ads have been trending higher for 15 of the past 17 months and are now up almost 13 per cent over the year. The latest Reserve Bank interest rate decision and minutes of the last Board meeting commented on the improvement in labour market conditions.

·       On Tuesday the National Australia Bank business survey is released. The business survey covers key business indicators, a reading on business confidence as well as gauges on prices, wages and finance. The indicators of confidence and conditions have showed encouraging improvement since the Budget, with a particular focus on a lift in profitability.

·       Also on Tuesday the ANZ/Roy Morgan weekly consumer sentiment survey is released. Sentiment levels have softened in the past three weeks although that should hardly be a surprise. Currency, commodity and share markets have proved volatile and that has affected consumer sentiment – not just in Australia, but across the globe. In addition, the weaker Aussie dollar is causing consumers to worry about the higher cost of overseas travel and dearer imported goods.

·       On Wednesday two indicators of note are released: The monthly Westpac/Melbourne Institute consumer confidence survey is released alongside housing finance data. For the most part the monthly confidence reading should mirror the more timely weekly survey released each Tuesday by ANZ/Roy Morgan.

·       The main value of the monthly sentiment survey now is the additional survey questions that are posed each quarter. And the upcoming December survey includes these extra questions, notably consumer views on the wisest places for savings. Interestingly last quarter Real Estate surpassed Banks as the wisest place to put new savings – the first time since September 2007. It is very likely given tighter lending standards and the pullback in property prices that Banks take the ascendancy once again.

·       The housing finance data will focus on new commitments made by lenders for the purchase or building of homes and renovations. We expect that the number of loans made to owner-occupiers (those who want to live in the homes) rose by 0.5 per cent in October after a 2 per cent lift in September. Clearly housing remains the growth driver for the broader economy.

·       On Thursday the ABS releases the monthly employment figures. Overall we expect that the number of jobs fell by around 10,000 in in November. And while the participation rate may have eased from 65.0 per cent to 64.9 per cent, it is unlikely to stop the unemployment rate lifting modestly from 5.9 per cent to 6.0 per cent.

·       Closing out the week on Friday, the Bureau of Statistics will release lending finance figures – includes housing, personal, business and lease loans. The September lending statistics showed a sizeable 6.4 per cent lift to $75.3 billion – a 7½-year high, encouragingly driven by the strength in commercial finance.

Chinese economic data in the spotlight

·       There are sparse helpings of ‘top shelf’ US economic data in the coming week with the main interest in retail sales on Friday. But all the key monthly Chinese indicators are issued.

·       The week kicks off on Monday with the release of US consumer credit figures are released, with analysts expecting a result near US$17.5 billion. The JOLTS job openings index is also released.

·       On Tuesday, the focus shifts to the Chinese trade (exports and imports) figures for November. The trade surplus is significant at present at US$61.6 billion, suggesting there are still healthy global markets for Chinese goods. At the same time imports continue to slow.

·       On Wednesday the monthly US wholesale sales and inventories figures are released alongside the usual weekly data on mortgage finance commitments. Meanwhile in China, the National Bureau of Statistics issues inflation figures – the data on producer and consumer prices. Producer prices are still in decline, down 5.9 per cent over the year. And consumer prices are rising at a modest 1.3 per cent annual rate. Further tame inflation readings would leave the door open to another round of stimulatory measures.

·       On Thursday in the US the usual weekly data on claims for unemployment insurance (jobless claims) is issued together with the import price index for November.

·       And then on Friday retail sales data is released together with US business inflation figures – the producer price index – and consumer sentiment data. There has been much debate about the strength of sales around Thanksgiving Day – some suggesting that Black Friday sales were soft due to more online shopping taking place and less consumers heading to stores. So the data will end some of the debate.

·       On Saturday the monthly batch of Chinese economic indicators are released – retail sales, production and investment. Chinese economic activity is decidedly mixed. Production and investment growth are slowing while retail sales growth is firm. Expect annual retail sales growth near 11 per cent (the highest reading in nearly a year) with production near 5.7 per cent and investment near 10.2 per cent. The risk is that the results print on the weaker side of expectations over the next couple of months – especially given that air pollution levels in Beijing and North China are the most severe in a year. As a result main iron ore ports have been closed while the government has ordered over 2,000 industrial enterprises to limit or halt production.

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