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Ryan Felsman – Economist – CommSec

Australia: Business sales, confidence, productivity & job vacancies
• The Australia Day public holiday is observed on Friday. With a shortened week, no ‘top shelf’ economic indicators are released.
• The week begins on Monday with the release of Commonwealth Bank’s Business Sales index measuring economy-wide spending.
• On Tuesday the weekly ANZ-Roy Morgan Consumer Confidence survey is issued. Sentiment has risen to 4-year highs in early 2018, consistent with a pick-up in retail spending, strong jobs growth and growing expectations for an extended period of interest rate stability.
• On Wednesday, the Department of Jobs and Small Business releases its internet skilled job vacancies gauge. The index has risen for 13 consecutive months through to November and is up by 8.5 per cent from a year ago. The Reserve Bank has stated that it has observed emerging skilled shortages in industries such as information technology and construction as the labour market tightens. This is important for the wages growth outlook and inflation.
• Also on Wednesday, the Bureau of Statistics (ABS) issues its estimates of labour and capital productivity for 2016-17. Labour productivity growth is a key determinant of improving Australian living standards. An increase in the ratio of capital to labour has supported modest productivity growth in recent years.
• On Thursday the ABS releases detailed December estimates of the job market including geographical and demographic estimates. 
Overseas: US economic growth and housing data in focus along with Chinese business profits
• In the US, most interest will be in economic growth and housing data. In China, the industrial profits data will be issued.
• On Tuesday and Wednesday, keenly observed regional manufacturing activity gauges from the Chicago and Richmond Federal Reserve districts are released.
• Also on Wednesday the Federal Housing Finance Agency (FHFA) home price index is released. The index is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. House prices were up 6.6 per cent in the year to October.
• Data on existing home sales for December is released on Wednesday together with the usual weekly data on mortgage finance. Existing home sales are expected to have declined from near 11-year highs due to harsh winter weather. Also a chronic shortage of houses at the lower end of the market is keeping prices elevated and sidelining some first-time buyers.
• Also on Wednesday Markit issues the keenly observed ‘flash’ manufacturing and services activity gauges for January. US factory activity is currently at its highest level since March 2015. Input price pressures have intensified with the rate of cost inflation accelerating on rising raw materials prices. The Conference Board’s leading economic index has increased for 15 straight months and is also issued on Wednesday.
• New home sales data is released on Thursday. Sales probably fell by 3.5 per cent, affected by the powerful blizzards that occurred in the month.
• Weekly data on new claims for unemployment insurance is also issued on Thursday, together with wholesale sales/inventories. The US trade deficit is expected to narrow by US$1.2 billion to US$68.8 billion in December.
• On Friday the first estimate of US economic growth for the December quarter is released. The annual growth rate is forecast to fall slightly to 3.0 per cent. Durable goods orders data for December are also released. The key takeaway from the report is that it will likely be a positive input for GDP since shipments of capital goods orders likely increased by 0.8 per cent on top of a 1.3 per cent increase in November.
• The focus then shifts to China on Friday. Profit growth at Chinese industrial firms slowed in November as producer prices softened. A further decline is expected in December with business inflation decelerating further. 
Financial markets
• The US corporate reporting season continues into a second week.
• The fourth quarter of 2017 was the final quarter where corporations were subject to the 35 per cent corporate tax rate. And companies are expected to detail how the new Trump tax plan will impact expected margins.
• Positive earnings results, together with tax reform and strong economic activity were some of the major reasons why Wall Street continued to breach record high levels in 2017. 
• According to Bespoke, the US stock market value measured by the Russell 3000 index crossed US$30 trillion for the first time last Friday and is now up more than US$6.5 trillion under President Donald Trump. The Russell 3000 represents about 98.5 percent of the total US market capitalisation.
• Netflix and Halliburton are among the key companies expected to release results on Monday.
• Johnson & Johnson, Kimberly-Clark, Procter & Gamble, State Street, Texas Instruments and Verizon all report on Tuesday.
• Ford and General Electric follow on Wednesday.
• On Thursday earnings are expected from Caterpillar, Dow Chemical, Intel and Starbucks. And on Friday, Colgate and Honeywell report earnings.

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