Savanth Sebastian – Economist – CommSec
Lending data & confidence
· A plethora of economic data is released in Australia, the US and China in the coming week. In Australia, lending and confidence data dominates.
· In Australia, the week kicks off on Monday with the Australian Bureau of Statistics (ABS) releasing the Overseas Arrivals and Departures publication for August. The data includes not only tourism arrivals and departures but also migration flows.
· On Tuesday the ABS releases the August home loan figures. Based on data from the Bankers Association, it is expected that the number of commitments for those wanting a home to live in fell by 4 per cent in the month. And the value of investor and owner occupied loans may have eased by 1 per cent.
· Also on Tuesday National Australia Bank releases the monthly survey of business confidence and conditions.
· And finally on Tuesday, ANZ and Roy Morgan issue the weekly consumer confidence data. Consumers believe their finances are in good shape, auguring well for spending.
· On Wednesday, the monthly measure of consumer confidence is released by Westpac and the Melbourne Institute – more of a check on the weekly readings released by ANZ and Roy Morgan.
· Also on Wednesday, the ABS issues the June quarter Building Activity publication that includes data on dwelling starts or commencements. Dwelling starts are at record highs, pointing to a significant increase of new housing supply in the next year or so.
· And the Reserve Bank also releases the August data on credit and debit card lending on Wednesday. Many observers may be surprised – but the average credit card balance actually hit a 7-year low in July.
· On Friday, the Reserve Bank releases the half-yearly Financial Stability Review. Expect plenty of comments on the conditions in the new housing market and the potential risks that lie ahead.
· Also on Friday the ABS releases lending finance data. These are the broader statistics on new lending, covering lease, personal, commercial and housing finance commitments. Total lending has been soft in recent months before lifting 4.4 per cent in July.
Overseas: US employment data hogs the spotlight
· There is plenty to watch on overseas markets. In the US, data on producer prices and retail sales are released while the Federal Reserve Chair delivers a speech. Also the US reporting season kicks off with Alcoa reporting on Monday. And trade and inflation data is released in China.
· The week kicks off on Monday in the US with the Employment Trends report for September.
· On Tuesday in the US, the National Federal of Independent Business (NFIB) releases the September business optimism index while the usual weekly data on chain store sales is also issued.
· On Wednesday a key forward-looking measure of the job market is released – the Job Openings and Labor turnover Survey (JOLTS). In July, the JOLTS survey indicated there were almost 5.9 million jobs available in the US. On the same day the weekly mortgage lending data is released.
· On Thursday in the US, the usual weekly data on claims for unemployment insurance is released together with September estimates on the Federal Budget as well as import and export prices.
· In China on Thursday the monthly trade data for September is released – that is, the data on exports and imports. The August data proved to be better-than-expected with exports down 2.8 per cent over the year and imports up by 1.5 per cent.
· And on Friday in the US, the September data on producer prices (business inflation) is released with the retail sales data for the same month and preliminary consumer sentiment data for October. Economists expect that non-auto retail sales rose by 0.4 per cent in September after a 0.1 per cent decline August.
· On Friday, The US Federal Reserve Chair, Janet Yellen, is also scheduled to speak at the Elusive ‘Great’ Recovery: Causes and Implications for Future Business Cycle Dynamics’ conference
· In China on Friday, monthly inflation data (consumer and producer prices) for September is released. As is the case elsewhere in the world, inflation is contained with consumer prices up 1.3 per cent over the year.
Sharemarket, interest rates, currencies & commodities
· This year has been a reversal of fortunes for the Materials sector of the sharemarket, tracing the recovery of metal prices. The S&P/ASX 200 Materials index fell by 19.5 per cent in 2015. But so far this year the Materials index has lifted by 30.5 per cent.
· And the performance of the Materials sector makes sense when you consider the changes in mining/metal prices. Iron ore has lifted just over 28 per cent so far in 2016 with zinc up 50 per cent, nickel up 17 per cent, lead up 16 per cent and aluminium up 11 per cent. And thermal coal – using the current futures contact – is up 71 per cent this year.
Savanth Sebastian – Economist – CommSec