Investor Signposts 19 Nov 18: Reserve Bank in the spotlight
CommSec Senior Economist Ryan Felsman previews the economic data scheduled for the week ahead, including the CommSec Home Size Trends Report, the CBA Business Sales Indicator and the latest RBA Board Minutes.
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Australia: Reserve Bank in the spotlight
• The Reserve Bank Board’s November monetary policy meeting minutes and a speech by Governor Philip Lowe at the CEDA annual dinner are the highlights in the coming week. Data releases are mostly second tier. Tourism, skilled internet job vacancies and the CBA’s ‘flash’ manufacturing and services’ gauges feature.
• The week kicks off on Monday in Australia when CommSec releases the Home Size Trends Report. Changes in the size of homes has implications for builders, developers and retailers of home appliances. If bigger homes are built, this may result in fewer homes that are needed to be constructed to absorb increases in population.
• Also on Monday, the Bureau of Statistics (ABS) releases the September overseas arrivals and departures data. The weaker Aussie dollar is supportive of overseas tourism demand. Over the year to August a record 1,435,700 tourists came to Australia from China, up by 7.7 per cent.
• On Tuesday, the regular weekly reading on consumer confidence is published by ANZ and Roy Morgan. And the Commonwealth Bank’s Business Sales Indicator for October is issued. Sales have lifted for 19 successive months.
• Reserve Bank Governor Philip Lowe speaks about “Trust and Prosperity” at the CEDA Annual Dinner in Melbourne at 7.20pm AEDT on Tuesday.
• Also on Tuesday the ABS releases the “National Accounts: Distribution of household income, consumption and wealth (2003/04-2017/18)” publication. Supplementary data on household income and wealth, access to goods and services, population, housing, government benefits and taxation will be of particular interest, given the impact on overall living standards.
• On Wednesday, the Department of Jobs and Small Business issues its monthly skilled internet job vacancies data. The Internet Vacancy Index fell by 0.6 per cent in September, but is still 1.6 per cent higher than a year ago. Job vacancies are at 6½-year highs in Tasmania, up by 16 per cent from a year ago.
• On Thursday, the ABS releases its population projections for states, territories, capital cities and state regions. According to the ABS, “the projections are not predictions or forecasts, but are illustrations of the growth and change in population which would occur if certain assumptions about future levels of fertility, mortality, internal migration and overseas migration were to prevail over the projection period.”
• On Friday the CBA releases the ‘flash’ manufacturing and services purchasing managers’ indexes for November. Business activity rose at the slowest pace in the survey’s short history in October.
US home building and durable goods orders data in focus
• In a holiday-shortened week in the US, a raft of housing-related data are issued. Durable goods orders feature with the ‘flash’ purchasing managers’ manufacturing indexes from developed economies, such as the US, Japan, UK and Eurozone.
• The week kicks off on Monday in the US, with the release of the National Association of Home Builders (NAHB) Housing Market Index. The index has held steady at around 70 points since June. NAHB Chief Economist Robert Dietz has said, ‘Favourable economic conditions and demographic tailwinds should continue to support demand, but housing affordability has become a challenge due to ongoing price and interest rate increases.’
• The usual weekly data on US chain store sales is released on Tuesday along with October monthly housing starts and building permits figures. Housing starts fell by a greater-than-expected 5.3 per cent in September as construction activity in the South fell by the most in nearly three years (down 13.7 per cent) due to Hurricane Florence disruptions. But starts are forecast by economists to rebound by 1.6 per cent in October.
• US building permits fell by 0.6 per cent in September – the second straight monthly decline – as permits for the construction of multi-family homes declined by 7.6 per cent to 390,000 units. Permits are tipped to fall by 0.8 per cent to 1.26 million units in October.
• On Wednesday in the US, the October consumer durable goods data will be issued. In September, the data was volatile, distorted by a 120 per cent surge in orders of defence aircraft. Business equipment investment rebounded in the September quarter, but economists don’t expect this to be sustained with a 2.5 per cent decline in orders tipped in the preliminary read for October.
• Also on Wednesday, weekly MBA mortgage applications and monthly existing home sales data are issued. Sales of previously-owned homes fell to the weakest level (5.29 million) in almost three years in September – the sixth straight monthly decline. US mortgage rates have lifted to the highest level in almost eight years.
• And the Conference Board’s Leading Index for October is also scheduled for Wednesday. The index, which takes into account building permits, the ISM index of new orders and sharemarket prices, has lifted for 12 consecutive months.
• US markets are closed for the Thanksgiving Day public holiday on Thursday.
• On Friday Markit’s ‘flash’ manufacturing purchasing managers’ indexes are issued for November across developed economies.
Important Information: The summary and attached report has been prepared without taking account of the objectives, financial situation or needs of any particular individual. For this reason, any individual should, before acting on the information in this report, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice. In the case of certain securities Commonwealth Bank of Australia is or may be the only market maker.