Australia: Inflation in focus

  • In a holiday-shortened week, the Australian economic calendar will be dominated by readings on inflation (price changes).
  • But the week kicks off on Monday when the Australian Bureau of Statistics (ABS) releases preliminary international trade data for December. The data is limited to exports and imports of goods (excludes services) in original terms (not adjusted for seasonal effects).
  • On Wednesday, CommSec releases the quarterly State of the States report – an assessment of state and territory economic performance. Commonwealth Bank issues weekly credit and debit card activity data. And ANZ-Roy Morgan issues consumer sentiment data.
  • Also on Wednesday, the ABS issues the Consumer Price Index for the December quarter – the main measure of inflation (price changes). The CPI is expected to have lifted by 0.9 per cent in the quarter, boosted in large part by child care costs. Seasonal effects will also influence domestic holiday travel prices, tobacco and pharmaceuticals.
  • The key ‘underlying’ measure – the trimmed mean index – may have lifted just 0.4 per cent in the quarter.
  • In annual terms the headline measure is tipped to remain unchanged with growth of 0.7 per cent while the trimmed mean maintains annual growth of 1.2 per cent.
  • The NAB business survey for December detailing confidence and conditions is also scheduled on Wednesday.
  • On Thursday, the ABS issues the international trade price indexes – that is, export and import prices. Key influences are the Australian dollar, oil, coal, natural gas and iron ore prices.
  • Also on Thursday the ABS releases more detail of the December labour market results including regional estimates of unemployment.
  • On Friday, the ABS issues the December quarter measures of business price inflation – the Producer Price indexes. More manufacturers have been highlighting the lift in raw material prices. The key question is whether the higher prices will be passed through to consumers.
  • Also on Friday, the Reserve Bank issues private sector credit data for December with a 0.2 per cent lift in loans tipped by economists.

Overseas: US Federal Reserve announces policy decision

  • In the coming week, US economic growth data and the Federal Reserve policy decision are the stand-outs.
  • The week kicks-off on Monday in the US with the national activity index produced by the Chicago Federal Reserve and the Dallas Federal Reserve regional manufacturing index.
  • On Tuesday in the US, the weekly Johnson Redbook chain store sales report is issued. There are also two reports on home prices: the S&P Case Shiller measure and the house price index from the Federal Housing Finance Agency (FHFA). Conference Board consumer confidence data for January is also issued with the Richmond Federal Reserve manufacturing index.
  • Over Tuesday and Wednesday the US Federal Reserve Open Market Committee (FOMC) meets to discuss monetary policy settings. The decision is announced on Thursday, Sydney time, at 6am. The Fed has indicated that policy will stay accommodative for quite some time.
  • Also on Wednesday, the usual weekly data on US mortgage applications from the Mortgage Bankers Association (MBA) is issued together with orders for durable goods (or long-lasting goods).
  • On Thursday in the US, weekly data on jobless claims (claims for unemployment benefits) is due with economic growth (GDP), new home sales, the advance goods trade balance, the leading index, Kansas Fed manufacturing index and wholesale inventories.
  • The ‘advance’ or ‘flash’ GDP reading is tipped to show 4.3 per cent annualised growth in the December quarter.
  • On Friday, the personal income/spending data is issued with the employment cost index, pending home sales, University of Michigan consumer sentiment index and the Chicago purchasing managers’ index.
  • In China, the December estimates for industrial profits are released on Wednesday while on Sunday January 31 the ‘official’ purchasing manager indexes for manufacturing and services are issued.

US profit-reporting season

  • Amongst the companies expected to report over the week:
  • Monday: Kimberley Clark
  • Tuesday: 3M; American Express; General Electric; Johnson & Johnson; Lockheed Martin; Verizon; Advanced Micro; Microsoft
  • Wednesday: AT&T; Boeing; Apple; Facebook; Tesla
  • Thursday: American Airlines; McDonalds; MasterCard; Amazon; ResMed; Visa; US Steel; Atlassian; Altria
  • Friday: Caterpillar; Chevron; Colgate-Palmolive

Originally published by Craig James, Chief Economist, CommSec