CommSec Chief Economist Craig James previews the economic & financial market events scheduled for the week ahead including the State of the States report, Private sector credit & US Federal Reserve rates decision.
Australia: Inflation data hogs the spotlight
• In Australia, investors will be focussed on the latest inflation report. But the latest data on home prices and the gauges of activity in manufacturing will also compete for attention.
• The week kicks-off on Monday when CommSec releases its State of the States report – a quarterly report in its 11th year that assesses the performance of state and territory economies.
• On Tuesday, the Reserve Bank Governor, Philip Lowe, is scheduled to deliver the Sir Leslie Melville Lecture in Canberra (5.45pm AEDT).
• Also on Tuesday, the regular weekly measure of consumer confidence is issued by ANZ and Roy Morgan. Consumers remain wary in the current environment.
• On Wednesday, the Australian Bureau of Statistics (ABS) issues the Consumer Price Index (CPI) for the September quarter. Inflation is under control but the drought may show up in higher food prices in the quarter.
• Headline inflation is tipped to rise 0.5 per cent, lifting the annual rate from 1.6 per cent to 1.7 per cent. The main measure of ‘underlying’ prices – the trimmed mean – is expected to lift by 0.4 per cent, leaving the annual rate near 1.6 per cent.
• On Thursday, there are three indicators to spark investor interest: international trade prices (exports and imports); building approvals; and private sector credit (or loans outstanding).
• Building approvals is a forward-looking measure of new construction – council approvals to building new homes or commercial buildings – the latter being in the strongest shape at present.
• Private sector credit likely rose by 0.3 per cent in September with an increase in new home loans starting to lift the volume of outstanding loans.
• On Friday, CoreLogic issues the Home Value Index for October – the most timely measure of home prices. On the data currently available, home prices may have risen by 1 per cent in October, led by Melbourne (up 1.4 per cent) and Sydney (1.3 per cent). Rate cuts still work – at least in lifting home prices.
• Also on Friday both CBA and the AiGroup release their surveys of purchasing managers that are employed in the manufacturing sector.
Overseas: US Federal Reserve meets
• Arguably one of the last ‘big’ weeks for finance events in 2019 lies ahead. Not only does the US Federal Reserve meet to decide interest rate settings, but also US jobs and economic growth data are released.
• The week begins in China on Sunday with the September industrial profits figures due for release. In the year to August, profits were down by 2 per cent. The slowdown in industrial production and sales are weighing on producer prices and company profits amid trade uncertainty.
• In the US on Monday, the Chicago Federal Reserve national activity index is released with the Dallas Fed manufacturing index and export/import figures for September.
• On Tuesday the US Federal Reserve Open Market Committee (FOMC) begins a two-day meeting. When the decision is released (Thursday morning 5am AEDT) a 25 basis point (quarter per cent) rate cut is expected to be delivered. But the text is likely to downplay the potential for further cuts in the short-term.
• In economic data on Tuesday, consumer confidence is expected together with the S&P/Case Shiller home price series, pending home sales and weekly chain store sales figures.
• On Wednesday, the weekly reading on mortgage applications is issued as well as the ADP National Employment Report and the first look (‘flash’ reading) on economic growth in the September quarter. The economy grew at a 2 per cent annual rate in the June quarter. And the ADP survey measures data on private sector jobs – measuring actual payroll data. Private sector jobs rose by 135,000 in September.
• On Thursday, the usual weekly data on claims for unemployment insurance (jobless claims) are released, together with the Challenger series on job cuts, the quarterly employment cost report and personal income/spending. The latter contains the Federal Reserve’s preferred measure of inflation.
• Also on Thursday in China the ‘official’ purchasing manager surveys on manufacturing and services sectors are released. The Caixin manufacturing survey is released on Friday.
• On Friday in the US, the non-farm payrolls report is released. The number of jobs may have lifted by 95,000 in October after a gain of 136,000 in September. And the jobless rate stands at a 50-year low.
• Also on Friday the ISM purchasing manager’s survey for manufacturing is released together with data on new vehicle sales.