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CommSec Senior Economist Ryan Felsman previews the economic & financial market events scheduled for the week ahead including the CBA Household Spending Intentions, Building approvals & US House Price Indexes.

Australia: Business investment and construction activity data in focus

  • The coming week features new data on business investment and speeches from the Reserve Bank Governor and Deputy Governor.
  • On Monday, investors will be able to respond to a speech by Reserve Governor Lowe (delivered Sunday 2.25am AEST).
  • On Tuesday the weekly series of consumer confidence will be released by Roy Morgan and ANZ. Tax refunds, low mortgage rates and a bottoming of the property market are supporting consumer sentiment.
  • Also on Tuesday, the July Commonwealth Bank (CBA) Household Spending Intentions gauge is released. June readings showed weakness persists in the retail and motor vehicle sectors. But other sectors appear to be bottoming out with home buying intentions improving.
  • Also on Tuesday, the Reserve Bank Deputy Governor Guy Debelle is scheduled to speak at the Economic Society of Australia (ACT) lunch in Canberra at 12pm AEST.
  • On Wednesday, the Australian Bureau of Statistics (ABS) provides an update on construction activity. In the year to March, construction work done was at record highs in New South Wales, South Australia and Tasmania. But CBA Group economists forecast a decline of 1.0 per cent in construction activity in the June quarter.
  • On Thursday, the ABS issues the publication Private New Capital Expenditure and Expected Expenditure” for the June quarter, including estimates of future investment. The second estimate of spending in 2019/20 was $99.1 billion, up 12.8 per cent on the second estimate for 2018/19 – the strongest increase in 7 years. CBA Group economists expect that new investment (spending on buildings and equipment) was flat in the June quarter.
  • On Friday, the ABS releases the July data on building approvals – the consents granted by local councils to build new houses and apartments. Home building is easing in most states and territories.
  • Also on Friday, the Reserve Bank releases the estimates of private sector credit (effectively, loans outstanding). Annual housing credit growth was at historical lows of 3.5 per cent in June.
  • Also on Friday, the Australian Prudential Regulation Authority (APRA) releases estimates on bank deposits, loans and credit card lending for July.

Overseas: US economic growth and Chinese manufacturing activity in focus

  • As the Northern Hemisphere summer draws to a close, US investors have plenty of data releases to digest, including the second estimate of June quarter economic (GDP) growth. Chinese industrial profits and the ‘official’ manufacturing and services gauges are also scheduled.
  • The week begins on Monday in the US with the release of durable goods orders and business surveys from the Chicago and Dallas Federal Reserve. The strong US dollar, weak demand for exports, slowing global growth, soft Boeing aircraft orders and trade policy uncertainty are all weighing in US business investment.
  • On Tuesday, the regular Redbook weekly reading on US chain store sales is released along with home prices, consumer confidence and manufacturing data from the influential Richmond Federal Reserve.
  • On Tuesday in China, industrial profits data is scheduled. Falling corporate profits constrain firm’s capacity to expand production, investment and hiring. Falling producer prices are a headwind to the Chinese economy.
  • On Wednesday, weekly mortgage applications figures from the US Mortgage Bankers Association are due.
  • On Thursday, the weekly figures on jobless claims are issued, along with US GDP growth, pending home sales, trade, wholesale inventories and corporate profits data. The second estimate of June quarter annualised GDP growth is forecast to be weaker at 1.9 per cent, down from 2.1 per cent. Consumer spending remains solid due to low unemployment and robust wages growth, but business investment contracted due to trade policy uncertainty.
  • On Friday, personal income and spending data is issued along with the Chicago purchasing managers index and final consumer confidence reading from the University of Michigan. The personal income data includes pivotal inflation data – the core personal consumption expenditure deflator – the measure tracked by the Federal Reserve. The core PCE deflator may have lifted 0.2 per cent in July to stay 1.6 per cent higher on the year.
  • On Saturday in China, the National Bureau of Statistics releases the manufacturing and services purchasing manager indexes for August. Factory activity has contracted for five out of seven months so far in 2019 as the trade war with the US bites. That said, the services sectors contribution to GDP growth is over 50 per cent, and non-manufacturing activity continues to expand, supported by tax cuts.

Financial markets

  • The Australian corporate reporting season – the time when listed companies report earnings results – enters its final week. While subject to change, major companies expected to report include:
  • On Monday: Fortescue Metals Group and Resolute Mining.
  • On Tuesday: Adairs, AUB Group; Caltex Australia; CleanTeQ; Fleetwood; G8 Education; Japara Healthcare; Paladin Energy; Spark Infrastructure; Wesfarmers; Yowie.
  • On Wednesday: Accent; Appen; Bega Cheese; Bravura Solutions; Eagle Health; Independence Group; Orocobre; OZ Minerals; Prime Media; Salmat.
  • On Thursday: Adelaide Brighton, Bellamy’s; Boral; Clinuvel Pharmaceuticals; Metro Mining; Ramsay Health; Regional Express; Village Roadshow; Virgin Australia; Woolwworths.
  • On Friday: Austal; Chant West; Freedom Foods; Harvey Norman; Kingsgate; Sandfire Resources; Slater & Gordon.

Published by Ryan Felsman, Senior Economist, CommSec