Craig James – Chief Economist – CommSec

Big week of economic data
·       To claim that the upcoming week is a big week for economic events borders on under-statement. Around a dozen key events are scheduled and at least a dozen events are in focus overseas.
·        In Australia, the week kicks off on Monday with the release of the Business Indicators publication from the Bureau of Statistics (ABS). The publication includes data on profits, sales, wages and inventories.
·        On Tuesday the weekly consumer confidence data from ANZ and Roy Morgan is released. The ABS issues building approvals, government finance and balance of payments data. The Reserve Bank releases data on private sector credit (broadly, outstanding loans).
·        On Wednesday, the March quarter economic growth figures are released – that is, growth in gross domestic product. The data is somewhat dated, covering the March quarter. But currently the economy is growing at a world-leading annual pace of 3 per cent.
·       Also on Wednesday, CoreLogic RP Data releases May data on home prices. Of some concern for the Reserve Bank, latest data suggests Sydney prices have accelerated, up 3.3 per cent over May to stand 13.3 per cent higher than a year ago. Nationally, prices are up 1.6 per cent in May and up 10.2 per cent over the year.
·       On Thursday, the ABS will release April data on retail spending as well as international trade (exports and imports). Retail trade is growing at a 3.5-4.0 per cent annual pace, well above the 1.3 per cent rate of inflation.
·       And on Friday, the ABS releases the “Overseas arrivals & departures” publication. The main interest is in the data on tourist arrivals and departures. But the publication also includes longer-term immigration flows.
·       Also on Friday the Federal Chamber of Automotive Industries releases the May data on new car sales. Annual sales figures have been consistently setting new highs in recent months.
Chinese purchasing managers surveys & US jobs data in focus
·       In the US, the highlight in the coming week is the release of employment data on Friday. And in China, gauges on manufacturing and services sector activity are released.
·       The US celebrates the Memorial Day holiday on Monday. But on Tuesday economic data arrives in spades with readings on home prices, consumer confidence and personal income and spending all slated for release. Home prices are up by a healthy 5.4 per cent over the year. And spending is tipped to have lifted 0.6 per cent in April, ahead of the 0.4 per cent expected lift in incomes. The usual weekly data on chain store sales is also released on Tuesday.
·       On Wednesday the Federal Reserve Beige Book is released with the ISM purchasing managers index for manufacturing, the ADP employment index, construction spending, auto sales and weekly data on home purchase and refinancing. The ISM gauge may have been little changed near 50.8 in May suggesting modest expansion in the manufacturing sector. The ADP survey is expected to show an 180,000 lift in private jobs in the month.
·       Also on Wednesday, in China the National Bureau of Statistics will release results of purchasing manager surveys for both manufacturing and services sectors. The equivalent Caixin survey for manufacturing (final reading) is also issued on Wednesday with the result for the services sector on Friday.
·       On Thursday, the Challenger job layoffs series is released in the US together with the ISM New York index and the usual weekly data on new claims for unemployment insurance (jobless claims).
·       And on Friday in the US, the pivotal non-farm payrolls (employment) data is issued. Analysts expect that jobs grew by 170,000 in May while at the same time earnings grew by 0.2 per cent and unemployment was unchanged at 5.0 per cent. The jobs market is at or near “full employment”. But with wages only growing modestly, the Federal Reserve has been reluctant to lift interest rates.
·       Also on Friday, the US ISM services sector survey results for May will be released. Analysts expect a reading near 55.7, confirming that the sector is expanding at a moderate pace.
·       As usual speeches by US Federal Reserve officials will be watched closely over the week.
Sharemarket, interest rates, currencies & commodities
·       Over the year the ASX 200 index has fallen by around 6 per cent. While disappointing, the UK market is down 13 per cent and Japanese market has fallen by 18 per cent, although the US market is down only 4 per cent.
·       And while the Australian market is down over the year, it’s not the same for all companies. The MidCap 50 index has lifted by around 5 per cent over the year while the Small Ordinaries index has lifted by 1 per cent. At the other end of the scale the ASX 100 index has fallen by almost 8 per cent while the ASX 20 – representing the sharemarket’s heavyweights – has fallen by almost 13 per cent.

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