Savanth Sebastian – Economist – CommSec

Key employment data in focus

• In Australia there is a healthy offering of new economic data in the coming week. Overseas the highlight in China are trade and inflation figures. Similarly in the US inflation will be in the spotlight with retail sales.

• In Australia, the week kicks off on Monday with data on housing finance (new home loans). The tighter lending standards adopted by the banking sector are likely to result in loans for owner-occupiers (those who want to live in the homes) easing by 0.7 per cent in February. And the total value of all new loans may have fallen by 1.2 per cent in the month.

• On Tuesday, Roy Morgan and ANZ release the results of the weekly consumer confidence survey. Home prices and company tax cuts are hogging the radar screen at present.

• National Australia Bank also releases the March business survey results on Tuesday. The NAB business conditions index eased from a 9-year high of +16.3 points to +9.3 points in February. And the business confidence index eased from a 3-year high of +9.7 points to +6.9 points.

• On Wednesday, the Westpac/Melbourne monthly survey of consumer confidence is issued together with data on dwelling starts from the Bureau of Statistics (ABS).

• Also on Wednesday, the ABS releases data on lending finance – the broader data on new lending across the economy – including business, personal, housing and lease loans. Investor housing is one of the key drivers at present. Also the Reserve Bank releases February data on credit card and debit card transactions. Plastic cards are being used more often, especially for smaller transactions.

• On Thursday, the monthly employment report is released. The labour market data has been resilient despite the weaker result last month. Importantly the weakness last month was largely driven by part-time jobs. We expect that the below-average growth will give way to above-average growth in March and we are tipping job growth of around 25,000 in the month. The jobless rate should remain near 5.9 per cent.

• Also on Friday the Reserve Bank releases its bi-annual Financial Stability Review. While primarily designed to check the health of the financial system, a big focus in Thursday’s report will be comments on the home building markets in various capital cities, notably Brisbane and Melbourne.

China inflation & trade; US inflation

• Chinese and US economic data compete for top billing in the coming week. The highlight is probably Chinese trade data on Thursday and the US retail sales and inflation data both due on Friday.

• On Monday the week kicks off in the US with the Employment Trends report.

•  On Tuesday the NFIB Business Optimism index is issued – a gauge of small business sentiment. And on the same day the JOLTS report of job openings is released – a forward-looking indicator on the strength of the job market. The usual weekly data on chain store sales is also issued on Tuesday.

• On Wednesday, Chinese data on producer prices and consumer prices are released. Business inflation is no longer going backwards, and the latest result should show that producer prices are up 7.6 per cent over the year – just off the fastest growth in eight years. In contrast, data should show consumer prices are lifting at a more sedate pace with 1.0 per cent annual growth of prices expected in March.

• Also on Wednesday in the US, data on export and import prices are to be released together with the monthly budget statement. The usual weekly data on mortgage finance is also issued.

• On Thursday in the US the weekly data on claims for unemployment insurance is released together with data on producer prices and the preliminary University of Michigan consumer confidence reading for April. Excluding food and energy prices, overall producer prices may have lifted by 0.2 per cent in March, keeping annual growth near 1.5 per cent.

•  In China on Thursday, March trade data is issued in China. Data from previous months has been complicated by the timing of the Lunar New Year holidays. A US$10 billion trade surplus is tipped for March.

• On Friday, two key US indicators are slated for release; US consumer prices and retail sales. The Federal Reserve is keeping a close eye on inflation especially with regards to the timing for future rate hikes. For the record, the headline inflation reading may have actually edged up only 0.1 per cent in March, leaving headline growth near 2.7 per cent. But the more important core inflation measure (excludes food and energy) is likely to have risen by 0.2 per cent in the month to be up 2.2 per cent over the year.

•  In terms of spending, economists expect that US retail sales rose by 0.3 per cent in March with a similar increase expected when auto sales are excluded.

• Also on Friday, data on US business inventories is released with a 0.3 per cent increase expected.

Financial markets

•  The US first quarter earnings season gets underway in the coming week. Alcoa is slated to release earnings on Monday. And on Thursday, Citigroup, JP Morgan Chase and Wells Fargo are expected to report. Thomson Reuters tips 10.1 per cent annual growth in earnings by S&P 500 companies over the season.

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