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CommSec Chief Economist Craig James previews the economic & financial market events scheduled for the week ahead including CoreLogic home prices, the Reserve Bank Board meeting minutes & China Purchasing manager indexes.

Australia: Pandemic pandemonium

  • We begin April with the release of several ‘tier-1’ economic data releases. Of particular interest to investors will be home prices, building approvals, retail trade and purchasing manager surveys from CBA and AiGroup The latter will show the impact of the coronavirus (COVID-19) crisis on the Aussie manufacturing and services sector industries.
  • The week kicks off on Tuesday with the regular weekly reading on consumer confidence to be published by ANZ and Roy Morgan. Sentiment is the weakest in 30 years.
  • Also on Tuesday, the Reserve Bank releases the private sector credit data. The report includes data on loans outstanding (credit) as well as monetary aggregates like broad money. Credit growth remains soft and is tipped to lift by 0.3 per cent in February. New homes sales data for February is also scheduled.
  • On Wednesday, CoreLogic publishes the March results for home prices. Prices may have lifted by 0.7 per cent with strength concentrated in Sydney, Melbourne and Brisbane.
  • Also on Wednesday, both the AiGroup and CommBank issue separate March survey results on manufacturing activity. Elsewhere, the Bureau of Statistics (ABS) publishes the building approvals data – a key leading indicator for home building.
  • The Reserve Bank Board also issues its minutes from the extraordinary March 18 meeting on Wednesday. Interest rates were cut to a record low 0.25 per cent. The Board also announced unconventional policy measures, including the targeting of the 3-year Commonwealth Government bond yield at around 0.25 per cent; a term funding facility to support small businesses hit by the COVID-19 crisis; and an increase in exchange settlement balances. It remains to be seen whether stimulus can fend off Australia’s first recession in almost three decades.
  • On Thursday, backward-looking job vacancies data for the three months to February are released.
  • On Friday, the final estimate of retail spending for February is issued by the ABS. In order to better assist the government, retailers, businesses and economists in tracking the impact of COVID-19 on consumers, the ABS released a preliminary estimate of spending. Sales provisionally rose by 0.4 per cent. The CommBank ‘final’ services gauge and AiGroup’s construction activity index – both for March – round out a busy week.

Overseas: Assessing the impact of the coronavirus crisis

  • In the coming week a raft of indicators will be issued with particular interest in Chinese purchasing managers’ indexes and US jobs and consumer confidence data. US factory and services activity gauges are also issued.
  • The week kicks off in the US on Monday when the Dallas Federal Reserve releases the March manufacturing activity index, while pending home sales data for February is also scheduled.
  • On Tuesday in China, official purchasing manager indexes are due for March. In February, both manufacturing and services sector activity plunged to record lows due to restrictive COVID-19 containment measures by the Chinese government. Factories were shut down, supply chains disrupted and travel bans implemented.
  • On Tuesday in the US, the regular weekly reading on US chain store sales is due with the Chicago purchasing managers’ index, S&P Case-Shiller home prices and consumer confidence figures from the Conference Board. A combination of the sharemarket downturn and early reports of widespread job losses is expected to weigh on consumer sentiment. Wards is also scheduled to report on motor vehicle sales in March with 15.5 million tipped.
  • On Wednesday in China, Caixin issues the private sector reading on manufacturing activity in March.
  • On Wednesday in the US, the regular weekly data on mortgage applications is released with construction spending, ADP’s private payrolls (employment) report for March and the Institute of Supply Management’s (ISM) manufacturing purchasing manager’s index. IHS-Markit also issues its ‘final’ reading on manufacturing activity.
  • On Thursday, weekly data on new claims for unemployment insurance (jobless claims) is issued with updates on international trade, factory orders and the ISM New York index.
  • Attention will be drawn to the impact of the virus crisis on leading indicators of the US labour market – such as jobless claims and the Challenger Job Cuts. Applications for unemployment benefits are expected to surge as the coronavirus pandemic forces workers to stay indoors and businesses to cut jobs, despite a battery of supportive policy measures from the US government and central bank.
  • On Friday in China, Caixin issues the private sector reading on services activity in March. Some improvement in activity is expected with a slowdown in virus infection cases late in the month. Bloomberg estimates that China’s back-to-work rate moved to 85 per cent for the week ending March 20 as the economy slowly recovers from the crisis.
  • On Friday in the US, the all-important nonfarm payrolls (employment) report, ISM non-manufacturing (services) purchasing managers’ index and ‘final’ IHS-Markit non-manufacturing index are all released to conclude the busy week.
  • It is almost impossible forecasting US payrolls during the unfolding COVID-19 crisis, with large scale shutdowns of US industries to combat the virus. But economists estimate job losses of at least 100,000 in March with the unemployment rate jumping from 3.5 per cent to around 4 per cent.