Craig James – Chief Economist (Author) – CommSec

Last hurrah

·       There are no economic statistics of note domestically from December 17 to January 6. So the coming week represents the last hurrah. And a big week is in prospect in the US with the Federal Reserve expected to lift rates for the first time in over nine years.

·       In Australia, the week kicks off on Monday with October data on credit and debit card lending from the Reserve Bank. Aussie consumers are still keen on using the plastic to make purchases, but in the case of credit cards, many are choosing the pay off debt by the due date.

·       On Tuesday the Reserve Bank releases minutes from the Board meeting held a fortnight ago. But there were probably few areas of contention for Board members to mull over at the meeting, so little in the way of ‘new’ information is likely to be uncovered from the minutes.

·       Also on Tuesday the ANZ/Roy Morgan weekly consumer sentiment survey is released together with two publications from the Australian Bureau of Statistics (ABS) – residential property prices and new vehicle sales.

·       The home price data is two months behind the results published by Core Logic RP Data. But the vehicle sales data will confirm that sales were at record highs in the year to November.

·       On Thursday there are three indicators to round off the week. The ABS publishes the latest demographic (population) figures. At the same time new estimates of wealth are released together with detailed job market figures.

·       The population data is somewhat dated, being for the June quarter, but the data has a myriad of uses for consumers, businesses and policymakers alike. Australia’s population is growing at the slowest rate since December quarter 2005. Population is up by just 1.35 per cent over the year to March, down from highs of 2.19 per cent in the year to December 2008. Still the average growth rate over the past 30 years stands at 1.38 per cent.

·       The estimates of household wealth to be released on Thursday with key financial information such as the share of Australian listed shares owned by foreign investors and the share of cash held in superannuation accounts.

·       And also on Thursday the ABS releases detailed job market data such as employment across industry sectors and unemployment rates for regions.

·       Over the week the Mid-Year Economic and Fiscal Outlook report is also released.

The US Federal Reserve takes centre-stage

·       The meeting of US Federal Reserve policymakers – the Open Market Committee – occurs over Tuesday and Wednesday and dominates proceedings over the week. But there are also plenty of ‘top shelf’ indicators to mull over.

·       The week kicks off on Tuesday with the release of key inflation data – that is, data on consumer prices. The annual rate of core inflation (excludes food and energy) may have crept higher from 1.9 per cent to 2.0 per cent. But if there was to be one, ‘last-minute’ factor to delay the Fed lifting rates then this would be it – the general absence of inflationary pressures.

·       Also on Tuesday the New York Fed manufacturing index is issued together with the housing market index from the National Association of Home Builders, weekly data on chain store sales and the October figures on capital flows.

·       The Federal Reserve starts its two-day meeting on Tuesday and a decision is announced on Thursday morning Sydney time at 6am. The Federal Reserve hasn’t touched interest rates in seven years. The last interest rate hike was 9½ years ago. So a decision to lift rates will clearly be a big deal. Fortunately, economists now believe a rate hike is almost certain, so that may cap financial market volatility. Still the language of the statement will be closely assessed.

·       On Wednesday, November data on industrial production is released alongside housing starts. Production may have edged 0.2 per cent higher in November after falling 0.2 per cent the previous month. But capacity utilisation was probably unchanged at 77.5 per cent.

·       Housing starts (commencements) have been volatile of late. And that volatility likely continued in November with starts projected to lift 6.3 per cent after an 11 per cent fall in October.

·       Also on Wednesday the early or “flash” readings on manufacturing activity in the US and Europe for December are released.

·       On Thursday in the US the usual weekly data on claims for unemployment insurance (jobless claims) is issued together with the leading index, current account and influential Philadelphia Federal Reserve index.

·       The leading index may have edged up 0.1 per cent in November after a solid 0.6 per cent gain in October.

·       And then on Friday, the Kansas City Federal Reserve index is released together with the “flash” reading on US services sector activity in December.

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