Craig James – Chief Economist – CommSec

 Business investment and retail sales to dominate domestic interest
• A new month beckons and that means the release of top tier economic data – not just in Australia but also in the US. In Australia the focus will be on the quarterly business investment survey (Thursday) and retail trade(Friday). And in the US, it is time again for another batch of jobs data (Friday).
• In Australia the week kicks off on Tuesday with the weekly consumer sentiment survey. Household sentiment remains in a healthy place and should support activity in the lead up to Christmas.
• On Wednesday, the Housing Industry Association releases figures on new home sales, while the Reserve Bank  releases the “Financial Aggregates” report for October, which includes money supply measures and private sector credit (loans outstanding). We expect that credit rose by 0.4 per cent in October to be up around 5.5 per cent over the year.
• Also on the Wednesday the Australian Bureau of Statistics (ABS) will issue data on building approvals for October. The data represents the collated information of approvals by local councils to build new homes and commercial buildings. Given the “lumpy” nature of apartment approvals the data does tend to be volatile.
• On Thursday, the Performance of Manufacturing index, home prices and private capital expenditure data are issued. The manufacturing sector should continue to expand supported by the lower Australian dollar. 
• In terms of home prices, the Spring selling season is well and truly in swing. Auction clearance rates are holding at around 75-80 per cent, particularly across the Eastern Seaboard. In September capital city home prices rose by 0.5 per cent to be up 7.5 per cent on a year ago. According to the CoreLogic Daily home price index, Australian prices should rise by around 0.3 per cent in November. Once again it seems Sydney home prices continue be the key driver, potentially up another 1 per cent in November. Yet regional prices look to only be up just over 1 per cent over the year – highlighting the diversity of housing activity across regions.
• Also on Thursday, the ABS will release the September quarter estimates on business investment. This data is also an input into the calculation of economic growth. But also insightful are the estimates of planned investment for the coming year.
• Overall we expect that investment remained soft in the quarter, reflecting the ongoing winding down of the mining construction boom. However the recent surge in commodity prices – if sustained – is certainly encouraging for the sector over the medium term. The Reserve Bank will be interested in estimates of non-mining investment.
• On Friday, the ABS will issue data on retail trade. Retail spending has shown some encouraging signs over the past couple of months. Retail spending rose by 0.6 per cent higher in September, to be up 3.3 per cent over the year – a 4-month high. More importantly, non-food retailing has risen by 1.5 per cent in the past two months – the strongest two-month result in 20 months. Similarly a 0.6 per cent lift in spending expected in October.
US employment under the spotlight
• Most investors will be focussed on the US jobs figures (Friday). But there is also key Chinese manufacturing data to digest.

• The week kicks off on Monday in the US with the release of the influential regional survey on Dallas manufacturing activity. A modest lift in activity is expected for the November result.
• On Tuesday, data on US economic growth, home prices and consumer confidence are slated for release. The September quarter growth reading may be revised up from 2.9 to 3 per cent, while home prices may have lifted at a 5.3 per cent annual pace and confidence is expected to rise from 98.6 to 100.0 in November.
• On Wednesday in the US, the ADP national employment report is released with the personal income/spending data, Chicago Purchasing Manager index, pending home sales and weekly figures on housing finance. The ADP series will garner the most interest, give it is the fore-runner to the “official” jobs report and is expected to show a 160,000 gain in private sector jobs in November. • Also on Wednesday, the Federal Reserve will release the Beige Book – anecdotal views on how the economy is tracking across the 12 Federal Reserve districts. The report is likely to be more upbeat ahead of the anticipated December rate hike.
• On Thursday, the Challenger series on job layoffs is issued together with construction spending data, the ISM manufacturing index and the usual weekly data on claims for unemployment insurance. Construction spending is expected to have lifted by 0.5 per cent while the manufacturing gauge should show a modest improvement from 51.9 to 52.0 in November. Any reading above 50 indicates expansion in the manufacturing sector.
• In China on Thursday, the National Bureau of Statistics releases purchasing manager surveys for both the manufacturing and services sectors. The private sector Caixin purchasing manager index for manufacturing is also issued.
• On Friday, arguably the most important of the week’s economic data is released – the US non-farm payrolls or monthly employment report. After the healthy October result – 161,000 lift in jobs – employment is expected to have strengthened even further in November, with forecasts of a lift 175,000 in jobs. Economists expect that the unemployment rate held at the seemingly “full employment rate” of 4.9 per cent. As always the interest will be in whether the tight job market shows up in higher wages. 

>> BACK TO THE NEWSLETTER: Click here to read other articles from this week’s newsletter