Craig James – Chief Economist – CommSec

Jobs and lending in focus

·       Another healthy batch of statistics will be released in Australia in the coming week with the focus on the job market and lending.

·       In Australia, the week kicks off on Monday with the release of a key leading indicator of the job market – job advertisements. Each month ANZ tracks the number of job ads placed by employers on internet sites and newspapers. Historically it can take up to 5-6 months from the time the ad is placed to the time when the new worker starts work at the new workplace.

·       Job ads have risen in 16 of the last 18 months and are up 12.3 per cent on a year ago.

·       On Tuesday, the Reserve Bank releases the November data on credit and debit card activity. The average credit card balance has barely budged on a year ago but plastic cards are still actively used.

·       Also on Tuesday, the ANZ/Roy Morgan consumer sentiment survey is released. Consumers currently believe that their finances are in good shape (best reading in seven years) while also believing that now is a good time to buy a major household item like a television or refrigerator.

·       And also on Tuesday the Bureau of Statistics (ABS) will release the November figures on tourist arrivals and departures as well as longer-term inflows and outflows of migrants. The lower Aussie dollar is serving to support the tourism sector at present.

·       On Wednesday the ABS releases the quarterly job vacancies data – a variant on job ads and thus another leading indicator of the job market.

·       On Thursday the ABS releases the December job market report. If one indicator has surprised with its strength in recent months it has been the job market.

·       In November employment rose by 71,400 after rising by 56,100 in October – the biggest back-to-back gains in jobs in 28 years.

·       In December we expect that more sedate job growth of around 10,000 people is likely while the unemployment rate may be largely unchanged near 5.8-5.9 per cent.

·       On Friday, the ABS issues the housing finance data for November. The number of loans by owner-occupiers (those wanting to live in the homes as opposed to a property investment) was broadly unchanged. But the value of loans to investors may have fallen 2 per cent in response to tighter lending controls.

Plenty to watch in both the US and China

·       Overseas, the key Chinese economic data occurs early in the coming week while the key US data is populated late in the week.

·       While some key Chinese data is likely to be released early in the week, the actual release dates haven’t been firmly decided, so money supply and lending figures could be issued between January 9-15.

·       The Chinese inflation figures for December (producer and consumer prices) are set for release on Saturday January 9. Consumer prices are up just 1.5 per cent over the year with producer prices down 5.9 per cent.

·       And on Wednesday in China, international trade (exports and imports) figures are slated for release.

·       In the US, the week kicks off on Monday with the employment trends report while on Tuesday the National Federation for Independent Business (NFIB) releases its small business optimism index. The weekly data on chain store sales is also issued on Tuesday.

·       On Wednesday the Federal Reserve releases its Beige Book – a summary of economic conditions across Federal Reserve districts. This survey of economic conditions is a key input to the decision making at the January 26-27 Federal Reserve meeting. Federal budget figures are also released on Wednesday together with the regular weekly figures on housing finance.

·       On Thursday the December data on import and export prices is released together with the weekly figures on new claims for unemployment insurance (jobless claims).

·       Up to this point there hasn’t been much in the way of ‘top shelf’ or market-moving economic data. That all changes on Friday with data on producer prices, retail sales, industrial production and consumer sentiment al slated for release.

Sharemarkets, interest rates, exchange rates and commodities

·       The US earnings season begins on Monday January 11 – that is, the time when companies release their quarterly financial results. First cab off the rank is Alcoa on Monday with JP Morgan Chase and Intel amongst those reporting on Thursday. And on Friday, Blackrock, Citigroup, US Bancorp and Wells Fargo are expected to issue results. Overall, 32 companies are expected to release earnings data over the week.

·       Investors don’t have high expectations. According to S&P Capital IQ, fourth quarter S&P 500 earnings are projected to decline 5.2 per cent with estimates regularly being wound back. Six out of 10 sectors are expected to report year-over-year earnings declines for the fourth quarter.