Australia: Reserve Bank and wages data dominates

In the coming week, the Reserve Bank dominates the Australian financial markets calendar. And the main
economic data to watch is the Wage Cost Index on Wednesday.

The week kicks-off on Monday when the Australian Bureau of Statistics (ABS) releases industry multi-factor productivity data. One for the purists.

On Tuesday, ANZ and Roy Morgan jointly release the weekly consumer confidence index. And Commonwealth
Bank (CBA) Group economists are scheduled to issue weekly credit and debit card spending data.

Also on Tuesday, the Reserve Bank releases minutes of the Board meeting held a fortnight earlier. This was the meeting where Board members decided to scrap the 3-year bond yield target.

And to round off a busy Tuesday, the Reserve Bank Governor delivers a speech with the working title “Recent Trends in Inflation”. The question & answer session may prove insightful.

On Wednesday, the ABS releases the main measure of wages in the economy – the Wage Price Index. Wages rose by just 0.4 per cent in the June quarter to be up 1.7 per cent on the year. But anecdotal
evidence suggests that wages are lifting in hospitality and construction sectors due to international border restrictions.

On Thursday, the ABS issues detailed labour force data for October with main interest in the regional and demographic estimates.

Also on Thursday, two Reserve Bank officials deliver speeches. Tony Richards, Head of Payments Policy delivers an online speech to the Australian Corporate Treasury Association. And Luci Ellis, Assistant Governor (Economic), speaks at the Committee for Economic Development of Australia (CEDA) event in Perth.

And on Friday, the ABS releases the annual State Accounts for the 2020/21 year, a report that includes estimates of economic growth – gross state product.

Overseas: Key Chinese and US activity indicators in focus

In the coming week, the monthly ‘data dump’ occurs in China. There are mixed offerings in the US.

The week kicks-off in China on Monday, with the release of a host of key economic data. The focus is on retail sales, production and investment but the jobless rate estimate is also provided with separate data on the house price index. High freight costs, elevated raw materials prices, electricity shortages and environmental curbs have all been factors affecting the Chinese economy in recent months. That said, export growth has been strong.

On Monday in the US, the influential New York Empire State manufacturing index is issued. The index has been bouncing around a sideways trend over the past five months.

There is a gamut of economic data on Tuesday, so much that it could be labelled ‘Super Tuesday’. Retail sales and industrial production headline the day’s releases. But there is also data on export & import prices, business inventories, capital flows and the weekly Redbook data on chain store sales. Then for good measure, the National Association of Home Builders (NAHB) releases its Housing Market index for November. The index currently sits ata 3-month high.

In terms of the major data, US economists tip a 0.8 per cent lift in October retail sales after a 0.7 per cent gain inSeptember. And industrial production is tipped to have also lifted 0.8 per cent in October after a 1.3 per cent fall in September.

On Wednesday in the US, weekly data on US mortgage applications from the Mortgage Bankers Association isissued with the October data on housing starts and building permits. The forward-looking permits data recorded a 7.8 per cent fall in September to a 12-month low. But a 2.8 per cent lift is expected in October.

On Thursday, the weekly data on new claims for unemployment benefits are scheduled alongside the leading index. Jobless claims stand at the lowest levels since the pandemic hit the US in March 2020.

And there are two influential regional gauges to watch out for on Thursday: the Philadelphia Federal Reserve manufacturing index (Philly Fed) and Kansas Federal Reserve manufacturing index. Both surveys will be closely scanned for signs of continued price and wage pressures.

On Friday in China, the foreign direct investmentfigures are released for October.

Originally published by Craig James, Chief Economist, CommSec