Australia: Wages and jobs data the highlights

  • In the coming week, minutes of the May 4 Reserve Bank (RBA) Board meeting are issued. The March quarter Wage Price Index (WPI) and April labour force report will be scrutinised closely by investors and economists following the JobKeeper wage subsidy expiry.
  • The week kicks off on Tuesday, when ANZ and Roy Morgan jointly issue the weekly consumer sentiment survey and the Commonwealth Bank (CBA) releases its April Household Spending Intentions (HSI) report.
  • Also on Tuesday, the Bureau of Statistics (ABS) issues the “Household Impacts of COVID-19” Survey for April with household finances in focus after the expiration of the JobKeeper program.
  • The minutes of the May 4 RBA Board meeting will be dissected by economists on Tuesday. Policy settings were left unchanged at the meeting, but the Board said it will provide an update on its yield target program and future bond purchases at the July meeting. CBA Group economists expect the 3-year yield curve target to remain pegged to the April 2024 bond with a third bond buying program of $50 billion over six months.
  • On Wednesday, the ABS releases the highly-anticipated wages data for the March quarter. CBA Group economists expect that wages lifted 0.5 per cent in the quarter, but with annual growth remaining steady at a record low of 1.4 per cent. RBA policymakers estimate that wage growth won’t hit 3 per cent before 2024.
  • Also on Wednesday, the National Skills Commission issues its measure of skilled job vacancies for April. And Westpac and Melbourne Institute release the May consumer confidence index.
  • On Thursday, the all-important labour force report is released. CBA Group economists expect around 40,000 jobs to be added in April with the unemployment rate easing from 5.6 per cent to 5.4 per cent.
  • On Friday, the ‘flash’ May IHS-Markit purchasing managers’ indexes are released for the manufacturing and services sectors with the composite index at a 5-year high last month.
  • Also on Friday, the ABS issues preliminary retail trade data for April. CBA Group economists expect that spending lifted 0.8 per cent in the month.

Overseas: Chinese monthly activity data and US Federal Reserve meeting minutes are released

  • Chinese April activity data will be of most interest in the coming week together with the US Federal Reserve Open Market Committee (FOMC) April 27-28 meeting minutes. On the US data docket, housing data is in focus.
  • The week kicks off on Monday in China with April data on retail sales, industrial production, fixed asset investment, new home prices and unemployment all scheduled for release. Economists expect retail spending to lift 25 per cent on a year ago; industrial production to increase 21.1 per cent on a year ago; and fixed asset investment to climb 20 per cent in the four months to April compared with a year ago.
  • On Monday in the US, the New York Empire State manufacturing index is tipped to ease from 26.3 to 23.9 in May. While the National Association of Home Builders (NAHB) index is expected to remain steady at 83 in May.
  • On Tuesday, the weekly Johnson Redbook chain store sales figures are released with housing starts and building permits data for April. Residential housing starts could ease by 1.7 per cent to an annual rate of 1.71 million units after reaching almost 14-year highs in March at 1.739 million units. Building permits could lift by 0.6 per cent to an annual rate of 1.77 million units in April.
  • On Wednesday, the weekly Mortgage Bankers Association (MBA) mortgage applications figures are released with the FOMC meeting minutes for April. US Federal Reserve Chair Jerome Powell has said any changes to monetary policy will depend on the labour market recovery. The weaker-than-expected April jobs data likely pushes market expectations for a ‘tapering’ of the Fed’s bond purchases and policy normalisation further into the future, despite recent bond buying reductions by the Bank of Canada and England.
  • On Thursday in China, China 1- & 5-year loan prime rates are announced with no change in policy settings expected. The 1-year and 5-year rates are currently sit at 3.85 per cent and 4.65 per cent, respectively.
  • On Thursday in the US, the usual weekly claims for unemployment benefits (initial jobless claims) data will garner considerable attention with claim filings hitting pandemic lows in recent weeks. But ‘generous’ unemployment benefits, childcare responsibilities and lingering concerns about the health crisis have kept many Americans on the sidelines, reducing short-term labour supply.
  • Also on Thursday, the influential Philadelphia Federal Reserve manufacturing index is issued with the Conference Board leading index. Economists estimate that the ‘Philly Fed’ index could ease from 50.2 to 41.9 in May with the leading index up by 1.3 per cent for a second successive month in April.
  • On Friday, IHS-Markit issues ‘flash’ May purchasing managers’ indexes globally with supply delays likely to have pushed-up manufacturing prices.
  • Also on Friday in the US, sales of previously-owned US homes could lift by 0.7 per cent in April to an annualised rate of 6.05 million units after hitting a 7-month low in March.

Originally published by Ryan Felsman, Senior Economist, CommSec