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Savanth Sebastian – Economist – CommSec

Mixed data offerings in Australia

• Economic data releases over the coming week cover a variety of topics including consumer confidence and spending, housing activity and the job market. Thursday’s job figures are the highlight.

• In Australia, the week kicks off on Monday with the release of the Overseas Arrivals and Departures publication from the Australian Bureau of Statistics (ABS). Not only does the data cover tourism flows but also longer-term migration in and out of the country. A lower Australian dollar is encouraging more tourists to choose Australia over other destinations. Tourist arrivals are up 12.7 per cent over the year while departures are up just 4.3 per cent.

• On Tuesday, there are three indicators of note: housing finance, new vehicle sales and the weekly series of consumer sentiment.

• Based on data from the Bankers Association, the number of new home loans may have fallen 1.5 per cent in November. In part, home buyers have become more wary about purchasing property. But also there are fewer homes on the market than a year ago, causing budding buyers to be more patient.

• The vehicle sales data for December has already been released by the industry body – the Federal Chamber of Automotive Industries. The sales data issued by the ABS on Tuesday merely recasts the bottom-line figures in seasonally adjusted and trend terms.

• On Wednesday the ABS releases the Building Activity publication which includes the latest figures on dwelling starts (commencements). Starts have been volatile in recent quarters – falling 9.5 per cent in the June quarter after lifting 8 per cent in the March quarter. Starts should have rebounded in the September quarter.

• The weekly consumer confidence data is released on Tuesday with the monthly measure issued on Wednesday.

• On Thursday, the ABS releases the monthly labour market figures for December. After an out-sized 39,100 lift in jobs in November, we are looking for a more sedate 10,000 lift in jobs in December. But little change is expected in unemployment and the participation rate with the jobless rate steady at 5.7 per cent. Forward-looking indicators point to modest reductions in the jobless rate over the coming year.

• On Friday the CommBank Business Sales Index is released with new home sales data.

Overseas: Quiet start to the week

• Overseas, there is plenty to watch in the coming week. But events are largely confined to the second half of the week including the US Presidential Inauguration and Chinese economic growth figures on Friday.

• The week kicks off on Tuesday in the US with the release of the influential Empire State manufacturing survey and regular weekly data on chain store sales.

• On Wednesday in the US the December data on consumer prices and industrial production are released with the National Association of Home Builders index for January and November data on capital flows. Consumer prices are edging higher, influenced by firmer gasoline prices. And production may have lifted 0.4 per cent after a similar sized fall the previous month.

• On Thursday in the US, the December data on housing starts is released with January data for the influential Philadelphia Federal Reserve index. Starts slid 18.7 per cent in November but are tipped to have rebounded by 10 per cent in December. On the same day the weekly data on claims for unemployment insurance is released.

• On Thursday in China, the December data on house prices is expected. And on Friday the spotlight shines brightly on the December quarter economic growth figures – released alongside the latest monthly data on retail sales, production and investment. The Chinese economy probably expanded at a 6.7 per cent annual pace in the quarter and economists expect growth of between 6-7 per cent over 2017.

• And on Friday in the US, Donald Trump is formally sworn in as President. Sharemarkets have been rallying on hopes for tax cuts and infrastructure spending. Now we want to see the legislation outlining the changes.

Sharemarkets, interest rates, exchange rates and commodities

• The US earnings season cranks up a notch in the coming week.

• On Tuesday, earnings are expected from 18 companies including Morgan Stanley and Advanced Micro Devices.

• On Wednesday, around 27 companies are to report including Charles Schwab, Citigroup, Goldman Sachs and US Bankcorp.

• On Thursday, profit results are listed for 35 companies including American Express, E*Trade, Atlassian, BNY Mellon and IBM.

• On Friday, only eight companies are slated to release earnings including General Electric.

• According to Zacks, fourth quarter “earnings for the S&P 500 companies are expected to be up 3.1 per cent from the same period last year on 3.9 per cent higher revenues. This would follow the 3.8 per cent growth in Q3 earnings on 2.3 per cent higher revenues, the first instance of positive earnings growth for the index after five quarters of back-to-back declines.”

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