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Investor Signposts 24 Sep 18: US Fed expected to raise rates on Wednesday.
CommSec Senior Economist Ryan Felsman previews the economic data scheduled for the week ahead including the US Federal Reserve interest rate meeting and Australian job vacancies & wealth data.
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Australia: Household finances and wealth in focus
• September concludes with updates on consumer confidence, construction activity, household wealth, job vacancies and credit growth. The latest update on Aussie household finances will be most keenly observed given the laser-like focus of the Reserve Bank on the biggest driver of economic growth – household consumption.  
• The week kicks-off on Tuesday when the Roy Morgan-ANZ weekly consumer confidence survey is released.
• On Wednesday, the Bureau of Statistics (ABS) releases the June quarter publication of Engineering Construction Activity. While the ‘top level’ results have already been published, the publication goes into more detail about where the work is being done and how much activity is still to be completed.
• Engineering construction work done rose by 2.8 per cent in the March quarter to stand 13.7 per cent higher than a year ago. Engineering work done for the public sector rose by 6.3 per cent in the March quarter. Over the year, a record $35.8 billion of work was done for the public sector.
• On Thursday the ABS releases the Finance & Wealth publication, which contains the most complete figures on household finances. For the first time in two years wealth eased slightly in the March quarter due to falling home prices. Total household wealth (net worth) fell by 0.4 per cent to $10,222.8 billion. In per capita terms, wealth eased from a record $414,277 to $410,708 in the March quarter.
• Also on Thursday the latest data on job vacancies is issued by the ABS – a key leading indicator of the job market. Vacancies rose by 5.7 per cent to a record 236,000 in the three months to May. And vacancies are up by 24.1 per cent over the year – the strongest growth rate in 7½ years.
• The Reserve Bank also issues the August Financial Aggregates publication on Friday. Most interest is in the estimate of private sector credit (effectively loans outstanding) but measures of money supply are also released. Private sector credit rose by 0.4 per cent in July. Credit was up 4.4 per cent over the year – the equal slowest growth rate in 4½ years. Annual growth of investor housing finance eased to a record low of 1.5 per cent.
Overseas: US Federal Reserve takes centre stage
• The US Federal Reserve’s monetary policy meeting is the primary focus for investors this week. But the release of Chinese purchasing managers’ indexes (PMI) are equally important, given the ongoing trade dispute with the US. And US economic growth, trade, inflation, consumer confidence and business survey data are all issued.
• The week kicks off on Monday in the US with the release of manufacturing gauges from the Chicago and Dallas Federal Reserve districts. We will pay particular attention to the planned capital expenditures questions in both surveys.
• On Tuesday the S&P/Case-Shiller and FHFA home price indexes are released with annual growth running at a healthy 6.3-6.5 per cent. The Conference Board’s consumer confidence index, the Federal Reserve Bank of Richmond manufacturing survey and the regular weekly data on chain store sales are also issued.
• On Wednesday the US Federal Open Market Committee (FOMC) meeting concludes with the federal funds rate target expected to be lifted by 0.25 per cent to 2.00-2.25 per cent. Influential New York Fed President and FOMC Vice Chair, John Williams, recently said that current US economic conditions are “as good as it gets”. Wages growth has lifted to decade-highs in response to a tighter labour market and inflation is seen climbing above the Fed’s 2 per cent goal. Chair Jerome Powell’s press conference will be closely followed by economists and traders.
• Also on Wednesday new home sales and weekly data on new mortgage applications are issued in the US. Sales of new single-family homes fell to a nine-month low in July due to supply constraints and mortgage rate hikes. 
• On Thursday profits for China’s industrial companies are scheduled. Over the year to July, profits grew by 16.2 per cent, down from 20 per cent in June.
• The data deluge continues in the US on Thursday. Pending home sales, weekly new claims for unemployment insurance, the ‘advance’ August data on trade in goods, durable goods orders, the final economic (GDP) growth reading for the June quarter, wholesale inventories and the Kansas Fed Manufacturing Index are all issued. Annual GDP growth is expected to have remained near four-year highs at 4.2 per cent.
• On Friday Caixin China releases its manufacturing PMI for September. While the headline index was still expansionary in August, manufacturing growth fell to a 14-month low. New export orders have contracted for five successive months as the US ramps-up tariffs on Chinese goods.
• Also on Friday in the US, the personal income and spending report, Chicago PMI for September and the final August reading on consumer confidence from the University of Michigan are all scheduled. The Federal Reserve’s preferred measure of inflation – the core personal consumption expenditure deflator – will be keenly observed. The deflator is expected to increase by 0.1 per cent in August.
• On Sunday China’s official PMIs are scheduled. The manufacturing PMI rose to 51.3 points in August, up from 51.2 points in July, remaining above the 50-point mark that separates growth from contraction for a 25th straight month.

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