Australia: The Federal Budget is handed down

  • The main focus in the coming week is the Federal Budget. But the latest business survey and retail trade data will also be keenly awaited.
  • The week kicks off on Monday when the Australian Institute of Petroleum releases the latest weekly data on petrol prices and Datium Insights updates conditions on the car market.
  • Also on Monday, National Australia Bank releases its business survey for April. In the March report, business conditions were at record highs.
  • On Tuesday, the Bureau of Statistics (ABS) issues the March and March quarter data on retail trade. Preliminary data indicated that retail trade rose 1.4 per cent in the month. And in real terms over the quarter, retail trade may have fallen by 0.6 per cent after rising 2.5 per cent in the December quarter.
  • The ABS also issues the weekly payroll jobs and wages data for the week to April 24. And on the same day ANZ and Roy Morgan issue the weekly consumer sentiment report.
  • But the main event on Tuesday is the release of the Federal Budget. Much has already been released but we will have all the facts, figures, initiatives and strategies in one publication. The budget deficit for March is currently around $30 billion smaller than where Commonwealth Treasury officials thought it would be at this stage.
  • On Thursday, the ABS issues the “Overseas Arrivals & Departures” report for March. And the Melbourne Institute releases the May update on consumer inflation expectations.
  • But the main interest will be on Friday with the provisional travel statistics for April that includes the early data on the flow of people between Australia and NZ with the opening of the travel bubble
  • And also on Friday, the ABS releases figures on the volume and value of agricultural commodities produced over the 2019/20 financial year. There is also separate data on the water use of farms over the year.

Overseas: US and Chinese inflation data to be released

  • Inflation data in the US and China is of most interest in the coming week together with US retail sales and industrial production figures.
  • The week kicks off on Monday in the US, with April data on consumer inflation expectations.
  • On Tuesday in the US, the weekly Johnson Redbook chain store sales figures are released with the Small Business Optimism index from the National Federation of Independent Business and the JOLTS series of job openings.
  • On Tuesday in China, the April data on consumer and producer prices is issued. Currently consumer prices are up just 0.4 per cent higher on the year while producer prices are up 4.4 per cent.
  • Also tentatively scheduled for release in China on Tuesday is data on vehicle sales and credit and money supply growth measures.
  • On Wednesday, the weekly Mortgage Bankers Association mortgage applications figures are released with the April data on consumer prices. The annual core rate of inflation (excludes food and energy) is expected to have lifted from 1.6 per cent to 2.3 per cent. The Federal Reserve would want to see even higher inflation readings for a number of months before it is confident that stimulus can be gradually removed.
  • Also on Wednesday in the US, the monthly budget statement is issued.
  • On Thursday, data on producer price feature in the US. The annual core rate of producer inflation may have lifted from 3.1 per cent to 3.8 per cent, reflecting higher demand and prices for raw materials.
  • Also on Thursday in the US, labour market data is in focus with the release of weekly claims for unemployment benefits (initial jobless claims).
  • On ‘Super Friday’ in the US, there are five key indicators for release: retail sales, industrial production, trade prices (exports and imports); business inventories and consumer sentiment.
  • After a super-strong 9.8 per cent lift in March retail sales, a more modest 1 per cent follow-up gain is tipped for April. Re-opening of businesses combined with US$1,400 stimulus payments and improved weather conditions have been underpinning sales.
  • Industrial production is expected to have lifted by 1.3 per cent in April after a 1.4 per cent lift in March. And the preliminary University of Michigan consumer sentiment index may have lifted from 88.3 to 90.1 in May.  In addition, export and import prices are expected by economists to have both lifted by 0.6 per cent in April.

Originally published by Craig James, Chief Economist, CommSec