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Craig James – Chief Economist – CommSec

Jobs, people and prices
·       Across major economies, the stand-out event in the coming week is the US interest rate decision. In Australia, there is a mix of indicators due for release including population figures.
·       The week kicks off in Australia on Tuesday when the Reserve Bank releases minutes of the last Board meeting. There wasn’t too much new in the statement after the RBA meeting so the Board minutes are similarly not expected to prove illuminating.
·       Also on Tuesday Commonwealth Bank releases the Business Sales index, a measure of economy-wide spending. Sales growth slowed in the early months of 2016 after solid gains in 2015.
·       The Australian Bureau of Statistics (ABS) also releases data on Tuesday – the Residential Property price indexes. The data is a bit dated (June quarter) but is another check on price pressures in the housing market.
·       And to round off a busy day on Tuesday the weekly consumer confidence survey is issued by ANZ and Roy Morgan. Confidence has lifted to near 3-year highs on a rolling monthly average basis.
·       On Wednesday, the Head of the Reserve Bank’s Economic Analysis Department, Alexandra Heath, delivers a speech in Brisbane : Future Skills: The Education and Training Pipeline.
·       On Thursday there are two indicators of note. The ABS releases both population data (Australian Demographic Statistics) and employment by industry (contained in detailed Labour Force data)
·       The population figures cover the March quarter so are still a little dated compared with other indicators. But if more people are being born and more people are coming to our shores then this translates to activities like increased spending and demand for homes.
·       Each quarter, the ABS releases data on employment by industry in addition to regional and demographic job market estimates. The August data is issued on Thursday.
Overseas: US interest rates hog the spotlight
·       All other economic indicators take a back seat in the coming week to the US Federal Reserve meeting. The policymakers meet over Tuesday and Wednesday with the decision handed down on Thursday morning at 4.00am Sydney time.
·       But before the rates decision there is economic data to digest. On Monday in China, the August reading on Chinese house prices is released. Over the year to July, house prices recorded a solid increase of 7.9 per cent.
·       In the US on Monday, the National Association of Home Builders (NAHB) releases the September index. A reading of 60 is tipped, unchanged from August.
·       On Tuesday in the US, August data on building permits and housing starts is released. Permits – the leading indicator – are forecast to rise 1.3 per cent in August while starts may have eased by less than 1 per cent.
·       Also on Tuesday, the regular weekly US data on chain store sales is released
·       As noted above, the US Federal Reserve meeting will be held over Tuesday and Wednesday. The probability of a rate hike at the meeting has ebbed and flowed over time but it has never really exceeded 30 per cent. In part this has been because Federal Reserve Governors and Presidents have expressed a range of views on the matter. The only real consistency between Fed officials has been a lack of urgency about raising rates, reflecting benign inflationary pressures.
·       On Wednesday in the US the regular weekly mortgage finance data is released.
·       On Thursday, in the US the National Activity index is issued together with the Federal Housing Finance Agency (FHFA) measure of home prices. Home prices stand 5.6 per cent higher than a year ago.
·       Also on Thursday, the leading index is released with data on existing home sales and the regional Kansas City survey. The leading index is expected to have been broadly unchanged in August after a solid 0.4 per cent gain in July. And existing home sales may have lifted by 0.9 per cent in August after easing by 3.2 per cent in July.
·       The usual weekly data on claims for unemployment insurance (jobless claims) is also issued on Thursday in the US – a key weekly gauge on the job market.
·       On Friday, the Markit “flash” purchasing managers indexes for manufacturing are released in the US, Europe and Japan. The indexes are designed to give the timeliest readings of any indicators on economic activity.
Sharemarket, interest rates, currencies & commodities
·        In the past week, volatility has seemingly returned to global sharemarkets. In the US the Dow Jones fell 2.1 per cent on September 9, rebounded by 1.3 per cent the next day (September 12) before falling 1.4 per cent on September 13. In the previous 44 days there had only been one day in which the Dow Jones moved by more than 1 per cent.
·        In Australia, there have only been five days with daily moves above or below 1 per cent on the ASX 200 since the start of July. On average, volatility in recent months has been around the lowest in almost four years.
·        Current uncertainties include the timing of US rate hikes, the outlook for Japanese and European monetary policy, the outlook for oil prices and US politics.

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