Australia: Retail spending data and Reserve Bank hog the spotlight

  • The release of provisional retail trade data is the highlight of the coming week. Minutes of the last Reserve Bank (RBA) Board meeting are also released with preliminary IHS Markit purchasing managers’ indexes for July.
  • The week kicks-off on Tuesday when the RBA Board issues minutes of the meeting held on July 6. At the meeting, policymakers left the target rates for both the cash rate and 3-year government bond yield (April 2024 maturity) at 0.1 per cent. But the RBA will slow its bond-buying program (Quantitative Easing, ‘QE’) from early September, reducing its weekly bond purchases from $5 billion to $4 billion until at least mid-November.
  • In terms of economic data on Tuesday, Commonwealth Bank (CBA) Group economists issue the June Household Spending Intentions (HSI) report. And ANZ and Roy Morgan jointly release the weekly consumer confidence survey.
  • On Wednesday, the Bureau of Statistics (ABS) publishes its preliminary estimate of retail trade. Spending, especially on services, is expected to be adversely impacted by Covid-19 lockdowns. CBA Group economists expect a 1.2 per cent decline in retail sales in June with spending on hospitality, and clothing and footwear likely to be hardest hit.
  • Also on Wednesday, the National Skills Commission’s final detailed May skilled job vacancies report is scheduled.
  • On Thursday, the ABS releases June estimates of international trade. Income from iron ore exports rose 18.3 per cent to a record $16.6 billion in May, while wheat exports reached their highest level ever at $954 million.
  • Also on Thursday, the ABS issues weekly payroll jobs and wages data for the fortnight ended July 3. Detailed labour force data is also scheduled for June, including estimates of regional unemployment rates.
  • On Friday, IHS Markit provides an update on activity in the Aussie manufacturing and services activity. Both gauges eased from record highs in June with border restrictions, lockdowns, supply disruptions and rising input costs likely to again weigh on the expansion in activity in July.

Overseas: US housing and manufacturing data in focus

  • In the US, housing data and regional manufacturing surveys headline a quiet week on the economic calendar.
  • The week kicks-off in the US on Monday when the National Association of Home Builders (NAHB) issues the July housing market index. The gauge of builder sentiment fell to a 10-month low of 81 in June as elevated costs continued to dampen demand for new homes. A steady reading of 82 is expected in July.
  • On Tuesday in China, the People’s Bank of China announce 1-year and 5-year loan prime rates.
  • On Tuesday in the US, the weekly Johnson Redbook chain store sales figures are released with housing data. US housing starts rose slightly in May and building applications dropped to a 7-month low, suggesting the pace of residential construction may be easing after a lift in the cost of building materials. Economists expect residential starts to lift 1.2 per cent in June with building permits up 0.6 per cent.
  • On Wednesday, weekly mortgage application data from the Mortgage Bankers Association (MBA) is scheduled.
  • On Thursday, weekly data on initial jobless claims (claims for unemployment benefits) is issued with the Kansas City Federal Reserve manufacturing activity index and Conference Board leading index. The leading index is tipped to have increased by 0.9 per cent in June after a 1.3 per cent lift in May.
  • Also on Thursday, data on sales of previously-owned US homes are issued for June. Contract closings decreased by 0.9 per cent in May to an annualised 5.8 million units, falling for a fourth straight month as higher home prices and lean inventories weighed on home buying. Economists expect that existing home sales rose by 2.2 per cent in June to an annual rate of 5.93 million.
  • On Friday, the preliminary July IHS Markit purchasing managers’ indexes (PMI) are scheduled across developed economies. The JPMorgan global PMI, compiled by IHS Markit, showed global growth ‘tapping the breaks’ in June with the composite output index easing to 56.6, a 3-month low from the 15-year high in May.

US corporate earnings season

  • Investors will closely watch quarterly reports for early clues on the how long the US economic recovery may last, with June quarter earnings per share (EPS) for S&P 500 companies expected to rise 66 per cent, according to IBES data from Refinitiv. According to FactSet it could be the strongest annual growth in earnings since the December quarter, 2009 (up 109.1 per cent).
  • Companies to report this week, include: IBM; Steel Dynamics (Monday). United Airlines; Halliburton; Chipotle; Tesla; Netflix; Kinder Morgan (Tuesday). Kaiser Aluminium; Baker Hughes; Whirlpool; Coca-Cola; Northern Trust; Verizon Communications; Moelis; Harley-Davidson (Wednesday). American Airlines; Southwest Airlines; AT&T; Biogen; Nucor; Dow; Freeport-McMoRan; Snap; Twitter (Thursday). AMEX; Kimberly-Clark; Schlumberger (Friday).

Originally published by Ryan Felsman, Senior Economist, CommSec