Australia: Spotlight on business investment and construction data

  • In the coming week, there are a couple of indicators to be released that are key inputs into the June quarter economic growth (GDP) calculations – business investment and construction work activity.
  • But the week kicks-off on Monday when IHS Markit release the ‘flash’ or preliminary purchasing managers’ indexes (PMIs) for August. Manufacturing sector growth slowed in July amid virus disruption and supply constraints. The services or business activity index declined from 56.8 to 44.2 in July, ending a 10-month growth streak.
  • On Tuesday, ANZ and Roy Morgan also jointly release the weekly consumer confidence survey. And the Bureau of Statistics (ABS) issues the “Counts of Australian Businesses, including Entries and Exits” for the year ended June 30.
  • On Wednesday, the ABS releases the “Construction Work Done” publication for the June quarter. The report is important as the data on residential work is an input into the economic growth calculations. In the June quarter, CBA Group economists expect that construction work done rose by 1.0 per cent.
  • Also on Wednesday, the ABS issues provisional mortality data to May. And Reserve Bank Deputy Head (Payments Policy), Ellis Connolly, speaks at the Risk Australia Virtual Conference.
  • On Thursday, the ABS issues the June quarter data on business investment (“Private New Capital Expenditure and Expected Expenditure”). The report includes data on business capital spending (buildings and equipment) and forecasts for spending over the next year. CBA Group economists expect that investment increased by 2.5 per cent in the June quarter.
  • Also on Thursday, the ABS publishes weekly payroll jobs and wage data for the fortnight ended July 31 with detailed labour force estimates for July. The latter includes estimate of unemployment by region and demographic group.
  • On Friday, Commonwealth Bank (CBA) Group economists expect that retail spending fell by 2.0 per cent in July. And the ABS provides the latest estimates of regional population by age and sex for 2020.

Overseas: US Federal Reserve Jackson Hole symposium and US economic growth data feature

  • US central bankers, policymakers and economists will assemble in Jackson Hole, Wyoming for the annual economic policy symposium. Data on US economic growth and personal income and spending will also feature.
  • On Monday in the US, the Chicago Federal Reserve National Activity index is released with existing home sales figures for July. Sales of previously-owned US homes rose for the first time in five months in June as housing inventory improved. But economists expect sales eased by 0.3 per cent to an annual rate of 5.84 million in July.
  • Also on Monday, ‘flash’ manufacturing or services PMIs are issued for August across developed economies.
  • On Tuesday, the weekly Johnson Redbook chain store and new home sales figures are issued with the influential Richmond Fed manufacturing gauge. New home sales could rebound by 3.6 per cent in July after unexpectedly dropping 6.6 per cent in June with demand weakening due to elevated home prices and tight supply.
  • On Wednesday in the US, data on durable goods orders – a proxy for business investment – is issued with the weekly data on US mortgage applications from the Mortgage Bankers Association (MBA). Durable goods orders may have eased by 0.1 per cent in July, following a 0.9 per cent lift in June on the back of a surge in transportation equipment. The level of core capital goods orders has outpaced shipments so far in 2021.
  • On Thursday, the weekly data on jobless claims (unemployment benefits) will dominate market attention, as will the second estimate of June quarter economic (GDP) growth. The US economy expanded at a 6.5 per cent annual pace in the quarter as personal consumption surged by an annualised 11.8 per cent, the second largest advance since 1952. And the Kansas Fed manufacturing index for August is also scheduled.
  • On Thursday and Friday, the Federal Reserve Bank of Kansas City plans to host a modified, in-person program for this year’s Economic Policy Symposium, “Macroeconomic Policy in an Uneven Economy,” in Jackson Hole, Wyoming. The participants convene to discuss the economic issues, implications and monetary policy options.
  • In China on Friday, industrial profits figures are scheduled in July. Profit growth slowed in June as output cooled.
  • On Friday in the US, personal income and spending figures are issued with the US Federal Reserve preferred inflation measure – the core Personal Consumption Expenditure (PCE) deflator. The core price index, which excludes food and energy, rose by 0.4 per cent in June to be up 3.5 per cent from a year ago, the largest annual gain since 1991. And the goods trade balance, wholesale inventories and consumer sentiment round-out a busy week.

Originally published by Ryan Felsman, Senior Economist, CommSec