CommSec Chief Economist Craig James previews the economic & financial market events scheduled for the week ahead including a Speech by Reserve Bank Governor, Business investment & US Consumer confidence.
Australia: Reserve Bank remains in focus
• The Reserve Bank remains in focus in the coming week with key speeches from top officials. And investors will start turning their minds to the September quarter economic growth figures with key inputs expected on Wednesday and Thursday.
• The week kicks-off on Tuesday when Reserve Bank Governor Philip Lowe gives a speech at the Australian Business Economists annual dinner. The speech is entitled “Unconventional Monetary Policy: Some Lessons from Overseas.” The question is whether the Governor will reveal preferences for the Australian version of “unconventional policy” or whether he throws cold water on the subject by highlighting the lack of success of such policies overseas.
• Also on Tuesday, Reserve Bank Deputy Governor, Guy Debelle, speaks at the Australian Council of Social Services National Conference.
• In terms of economic data on Tuesday, the regular weekly measure of consumer confidence is issued by ANZ and Roy Morgan.
• On Wednesday, the Australian Bureau of Statistics (ABS) issues the publication “Construction Work Done”. The data on residential activity largely represents the Dwelling Investment component of gross domestic product (economic growth) for the September quarter.
• On Thursday, the ABS issues the publication “Private Capital Expenditure”. Simply, this is the business investment data for the September quarter – spending on equipment and buildings.
• New business investment fell by 0.5 per cent in the June quarter after falling by 1.3 per cent in the March quarter. But the third estimate of spending in 2019/20 was $113.4 billion, up 10.7 per cent on the second estimate for 2018/19 and the strongest growth of expectations in seven years.
• On Friday, the Reserve Bank issues the “Private Sector Credit” publication (effectively, data on outstanding loans. Credit growth remains weak because more businesses are paying off or paying down their debt and new lending is growing only slowly.
• Private sector credit rose by 0.2 per cent in September after also lifting 0.2 per cent growth in August. Annual credit growth fell from 2.9 per cent to an 8-year low of 2.7 per cent.
Overseas: Shortened week in the US for Thanksgiving Day holiday
• In the coming week, US citizens will give thanks on Thursday for all manner of things including the great shape of the economy. Economic growth data is also released.
• The week begins on Monday in the US, with the release of the Chicago Federal Reserve National Activity index and the Dallas Federal Reserve Manufacturing index. Federal Reserve chair, Jerome Powell, delivers a speech to the Greater Providence Chamber of Commerce annual dinner.
• On ‘Super Tuesday’ in the US there is a mountain of economic data to be released. There are two measures of home prices – the S&P/Case Shiller index and the index from the Federal Housing Finance Agency. Data on new home sales is released with the international goods trade balance, Conference Board consumer confidence index. Wholesale inventories and the Richmond Federal Reserve manufacturing index. And thrown in for good measure, the regular weekly chain store sales figures are issued.
• On Wednesday the second reading of economic growth in the US is released. Annual economic growth is near 2 per cent. Also the personal income and spending figures are released. Most interest is in the core personal consumption deflator (excludes food and energy) – the inflation measure watched by the Federal Reserve.
• The Federal Reserve Beige Book is also issued on Wednesday. This is a qualitative assessment of economic conditions across Federal Reserve district banks. The report is released ahead of meetings by the Fed’s monetary policy committee.
• Also on Wednesday, data on durable goods orders and pending home sales with weekly US data on mortgage applications and data on claims for unemployment insurance (jobless claims).
• On Thursday, US financial markets are closed for Thanksgiving Day.
• On Friday in the US, the Chicago purchasing manager’s index is due.
• In China in the coming week, the October data on industrial profits is issued. In the nine months to September, profits were down 2.1 per cent on a year ago.
• On Saturday in China, the National Bureau of Statistics releases the results of purchasing manager surveys for both services and manufacturing sectors. The manufacturing reading for October was below 50 at 49.3, signifying contraction of activity while the services reading stood at 52.8.