Australia: Into the December quarter

  • In the coming week, retail trade, job vacancies and housing-related data dominate the Aussie economic calendar as we begin October and enter the final quarter of 2021.
  • The week kicks-off on Tuesday when ANZ and Roy Morgan jointly release the weekly consumer confidence survey. A lift in vaccination rates alongside proposed NSW and Victorian government roadmaps out of lockdowns have boosted consumer morale in recent weeks. Sentiment is at 9-week highs.
  • Also on Tuesday, the Bureau of Statistics (ABS) issues retail trade data for August. The Delta variant outbreak in Australia’s south-east has tightened its grip on the retail sector. In July, retail spending fell by 2.7 per cent, the biggest fall in 7 months.
  • Retail sales remain above pre-pandemic levels and vaccination progress should enable an easing in lockdowns in October or November. That said, Commonwealth Bank (CBA) Group economists expect retail spending to fall 2 per cent in August.
  • On Wednesday, the ABS issues data on engineering construction activity for the June quarter with a focus on public transport-related infrastructure projects.
  • On Thursday, the ABS releases data on job vacancies for the three months to August. Vacancies hit record highs in May 2021 and were 57 per cent higher than February 2020, prior to the start of the pandemic. But job ads are likely to fall in the 3 months to August 2021 due to extended lockdowns in NSW, Victoria and the ACT.
  • Also on Thursday, the Reserve Bank issues the private sector credit (loans outstanding) data for August. Housing credit lifted 0.6 per cent in July to be up 5.8 per cent when compared to a year ago – the strongest annual pace in 3 years. CBA Group economists expect private sector credit to jump 0.5 per cent in August.
  • Also on Thursday, the ABS releases building approvals data. Council approvals to build new homes fell by 8.6 per cent in July and a fifth successive monthly decline (of around 6.5 per cent) is expected in August as the HomeBuilder stimulus wanes.
  • On Friday, CoreLogic issues the Home Value Index with national home prices expected to lift by around 1.5 per cent in September. And both the AiGroup and IHS Markit release purchasing managers’ indexes (PMIs) for the manufacturing industry.
  • And rounding-out a busy week on Friday, the ABS provides the latest “Lending Indicators” publication, containing data on new housing, personal and business loans. CBA Group economists expect the value of new home lending to decrease by 3 per cent in August.

Overseas: Chinese factory and services activity data in focus

  • In the coming week, investor attention will be firmly focused on China’s factory and services sector PMIs. In the US, personal income and spending data is issued with the US Federal Reserve’s preferred inflation measure.
  • On Monday in the US, the Dallas Federal Reserve Manufacturing index for September is scheduled alongside one of the best leading indicators of business investment – durable goods orders. The level of orders outpaced shipments in July, with solid equipment spending boding well for overall September quarter business investment, provided firms can manage supply chain bottlenecks. Orders could lift by a further 0.6 per cent in August.
  • On Tuesday in China, data detailing profits earned by industrial firms is scheduled for August.
  • On Tuesday in the US, the Johnson Redbook weekly data on chain store sales is issued with the advance goods trade balance, wholesale inventories data and the Richmond Federal Reserve manufacturing index. And two key measures of home prices – the S&P CoreLogic Case-Shiller and Federal Housing Finance Agency (FHFA) house price indexes – are both issued for July. Over the year to June, US home prices have surged by around 19 per cent.
  • Also on Tuesday, the Conference Board’s survey of consumers will be a primary focus for investors after the index dropped sharply in August to 113.8 points, the lowest level since February. While it was a troubling signal for economic momentum heading into the back end of 2021, the weak outcome was most likely the result of virus fears, rather than cooling labour market conditions. Sentiment is tipped to increase to 115 points in September.
  • On Wednesday, the weekly data on US mortgage applications from the Mortgage Bankers Association (MBA) is scheduled with pending home sales figures for August. Economists expect sales to increase by 1 per cent.
  • On Thursday in China, the National Bureau of Statistics (NBS) releases both the manufacturing and services PMIs, while Caixin issues its private sector-focused factory index for September. In August, China’s official PMIs showed manufacturing expanding, but the services sector fell deep into contraction as government restrictions were imposed to counter the Nanjing province Delta virus outbreak.
  • On Thursday in the US, the weekly data on new claims for unemployment benefits (initial jobless claims) are issued alongside the Chicago PMI and final estimate of US economic (GDP) growth for the June quarter.
  • On Friday, it is the turn of both Markit and the Institute of Supply Management (ISM) to issue PMIs covering manufacturing. Construction spending data will also feature.
  • Also on Friday, August personal spending and income figures are issued with personal consumption expenditure (PCE) measures of prices and the University of Michigan consumer sentiment index.

Originally published by Ryan Felsman, Senior Economist, CommSec