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Craig James – Chief Economist – CommSec

Data, data, data
·       A bevy of key indicators are generally released at the start of each month and November is no exception. Around half a dozen indicators are released in Australia in addition to key speeches, reports and an interest rate decision from the Reserve Bank.
·       The week kicks off in Australia on Monday with CommSec releasing the Home Size Trends Report – detailing the size of new homes built in 2015/16. The report provides another perspective on the supply and demand for homes in Australia.
·       Also on Monday the Reserve Bank releases the “Financial Aggregates” publication for September. We expect that private sector credit (loans outstanding) rose by 0.4 per cent in September, to be up 5.8 per cent on the year.
·       On Tuesday the Reserve Bank meets to decide interest rate settings. But following the latest inflation data, financial markets have downgraded the chances of a rate cut to just 4 per cent.
·       Also on Tuesday, key home price figures from Core Logic and the Performance of Manufacturing index are slated for release. The Home Value Index will draw the most interest. Based on figures released to date, Australian home prices may have been flat to slightly negative (down 0.1 per cent) in the month. However healthy price gains have been recorded for Sydney and Perth (both up around 0.5 per cent), and Brisbane (up 0.7 per cent). The drag is a fall in Adelaide home prices (down 2.7 per cent) and Melbourne (down 0.7 per cent).
·        On Wednesday the Australian Bureau of Statistics (ABS) releases figures on building approvals. Building approvals have been volatile over the past couple of months, falling by 1.8 per cent in August after rising by 12 per cent in July. Importantly the pipeline of new building will continue to support broader-based economic growth over the coming 12-18 months.
·       On Thursday the ABS releases September figures for international trade (exports and imports). We expect the trade deficit remained significant although it is likely to have narrowed from $2 billion in August to near $1.8 billion in September.
·       And on Friday the Reserve Bank will issue its quarterly Statement on Monetary Policy. No doubt if interest rates are cut earlier in the week, the report will provide policymakers with an avenue to expand on their decision. But the report will contain the latest forecasts on economic growth and inflation.
·       It clearly is a big day on Friday. Not only is the central bank in focus but data on retail trade for September and the September quarter will be released. Retail sales lifted by 0.4 per cent in August, but strip out food, and non-food retailing rose by a larger 0.5 per cent. The lift in retail activity was previewed by the Commonwealth Bank Business Sales index. Overall it is still early days, but it does seem like spending plans are healing. For the record, we expect retail sales to lift by a further 0.4 per cent in September.
Overseas: US Federal Reserve meeting and US jobs data dominate interest
·       There are ‘top shelf’ indicators to watch in both China and the United States over the coming week. The highlight is likely to be the employment report (non-farm payrolls) in the US on Friday.
·       The week kicks off on Monday in the US with the release of influential regional surveys – Dallas Fed Index and the Chicago Purchasing Managers index. In addition personal income and spending figures and also the Federal Reserve’s preferred inflation measure – the core PCE – are slated for release. Analysts expect that the annual core PCE will hold around 1.7-1.8 per cent. So inflation is still below the Fed’s 2 per cent target rate.
·       On Tuesday and Wednesday in the US the Federal Reserve Open Market Committee meets to decide on interest rate settings. No change in rates is expected but the wording of the statement will be scrutinised.
·       In terms of US data on Tuesday, auto sales, construction spending and the ISM manufacturing index are released. Economists expect that the ISM index held steady at 51.5. 
·       In China on Tuesday, the official statistician (National Bureau of Statistics) releases the manufacturing purchasing manager’s index while the private sector variant from Caixin will also be issued.
·       In the US on Wednesday, the ADP survey of private sector employment is issued with the ISM survey for the New York region. Private sector jobs are tipped to have lifted by 163,000 in October, up from the 154,000 gain in September. Also on Wednesday the usual weekly report on mortgage transactions – purchases and refinancing – is scheduled
·       On Thursday, US data on factory orders is released, alongside the weekly data on claims for unemployment insurance, the ISM services index, the Challenger job layoffs series and preliminary data on both labour costs and productivity.
·       And on Friday the highlight of the week – the non-farm payrolls or employment report – is released together with international trade data.
·       In September, job growth disappointed, only lifting by 156,000. Economists tip a stronger result in October with jobs up by 170,000. The unemployment rate is tipped to fall from 5 per cent to 4.9 per cent, while earnings may have lifted by 0.3 per cent. Stronger-than-expected results – particularly on earnings (wages) and the jobless rate would boost chances of a December rate hike.
Financial markets
·       The annual general meeting season continues – an opportunity for companies to update investors about how they are tracking. Major banks are reporting earnings – on Thursday ANZ reports with Westpac to follow on Monday November 7.

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