CommSec Senior Economist Ryan Felsman previews the economic & financial market events scheduled for the week ahead including the Reserve Bank Board meeting minutes, Skilled internet job vacancies & US Federal Reserve (FOMC) minutes.
Australia: Reserve Bank in focus
• In the absence of ‘top-shelf’ economic data releases, communication from Australia’s central bank takes centre stage in the coming week. Governor Philip Lowe gives a speech on Monday, the Board’s November 5 monetary policy meeting minutes are issued on Tuesday, while Assistant Governor (Financial Markets) Christopher Kent gives remarks on a panel, also on Tuesday. Skilled job vacancies data will provide most data interest.
• The week kicks-off on Monday when Reserve Bank Governor Philip Lowe gives a speech at the Trans-Tasman Business Circle at the Australian Stock Exchange in Sydney from 12 noon AEDT.
• On Tuesday, Christopher Kent, Reserve Bank Assistant Governor (Financial Markets) participates in a panel discussion at the Australian Securitisation Forum 2019 at 9.05am AEDT.
• The Reserve Bank’s November 5 Board minutes are issued on Tuesday. Interest rates were left unchanged at a record low 0.75 per cent following a third rate cut in October. But the Board reiterated that it’s prepared to ease further, if needed, to try to re-invigorate growth, boost labour hiring and spark inflation growth. That said, the policymakers acknowledged in the Statement on Monetary Policy on November 8 that “further easing could unintentionally convey an overly negative view of the economic outlook [to consumers].” Commonwealth Bank Group economists have pencilled in another rate cut in February 2020.
• Also on Tuesday, the regular weekly measure of consumer confidence is issued by ANZ and Roy Morgan. Sentiment will be closely watched this week as Aussie shoppers gear-up for major online sales events – Black Friday and Cyber Monday. Commbank also provides an update on its Household Spending Intentions Series (HSI). October HSI readings were consistent with the Reserve Bank’s view that the economy is at a ‘gentle turning point’ due mainly to an uptrend in home buying intentions. But motor vehicle purchase intentions remain in negative territory.
• On Wednesday, the Department of Employment, Skills, Small and Family Business’ releases the skilled internet job vacancies gauge for October. In trend terms, the Internet Vacancy Index decreased by 0.7 per cent in September – the 9th successive monthly fall. The index is 7.1 per cent lower than a year ago – the biggest annual decline in 5½ years.
• In the year to September, job vacancies increased in Canberra (up by 12.9 per cent – the strongest annual growth rate in three years), Hobart (up by 12.7 per cent), Perth (up by 1.3 per cent) and Adelaide (up by 0.8 per cent). But vacancies fell in Sydney (down by 14.7 per cent), Melbourne (down by 7.4 per cent), Brisbane (down by 5.9 per cent) and Darwin (down by 5.1 per cent).
• On Thursday, the Bureau of Statistics releases detailed estimates on the job market for October. In September, the regions with the highest unemployment rates were dominated by Queensland, South Australia and Western Australia. The regions with the lowest jobless rates can be predominately found in NSW, ACT and Victoria. Participation rates for Aussies aged 60-64 as well as those 65 years plus are at fresh record highs. The proportion of the population not in the workforce is at 7-year lows.
• On Friday, the Commonwealth Bank/IHS Markit issues the ‘flash’ services and manufacturing purchasing manager indexes for November.
Overseas: US housing market and Federal Reserve meeting minutes in the spotlight
• In the coming week, the focus will be on the release of the minutes of the US Federal Reserve October meeting on Wednesday. US housing data features along with purchasing managers indexes globally.
• The week begins on Monday in the US, with the release of the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index for November. In October, the NAHB Index rose for a fourth successive month. US homebuilder sentiment rose to the highest level since February 2018 due to lower borrowing costs and a solid labour market. But supply-side constraints still remain a challenge for homebuilders.
• On Tuesday, housing starts and building approvals data are both issued for the month of October. Starts fell by 9.4 per cent in September, but economists are expecting starts to rebound by 4.7 per cent in October. Meanwhile building permits are tipped to fall by just 0.1 per cent in October following a 2.4 per cent decline in September.
• Also on Tuesday, the regular weekly chain store sales figures are issued.
• On Wednesday the US Federal Reserve Open Market Committee (FOMC) issues minutes of the October 29-30 meeting. Interest rates were cut by a quarter point to a target range of 1.5-1.75 per cent, but the FOMC dropped its pledge to ‘act as appropriate’, dampening down market expectations for future rate cuts. Economists don’t expect any further move on interest rates in December.
• Also on Wednesday, weekly US data on mortgage applications are scheduled for release.
• On Thursday, the influential regional gauge – the Philadelphia Fed Business Outlook survey – is due for November. Business activity in the ‘Philly’ region fell by more-than-expected in October, but the underlying components were stronger than the headline result. Importantly, advances in the 6-month ahead business conditions and activity components – including new orders and employment – signalled an improvement in factory conditions. Recent progress in trade talks between the US and China was not reflected in the October data.
• Also on Thursday, the usual weekly data on claims for unemployment insurance (jobless claims), monthly existing home sales figures and the Conference Board Leading Index are all released. Existing home sales increased at a 12 per cent annualised growth rate in the September quarter, meaning that residential dwelling investment is likely to make its first positive contribution to GDP growth in two years.
• On Friday in the US, the Kansas City factory gauge is due.
• Also on Friday, IHS/Markit releases ‘flash’ purchasing manager indexes for November. Manufacturing readings for export-facing economies such as Germany and Japan will be heavily scrutinised for signs of a stabilisation after a prolonged period of contraction due to increased trade protectionism.