Australia: Corporate reporting season and confidence surveys in focus

  • In the coming week, the Aussie company profit reporting season cranks up a gear. In a quiet week on the economic calendar, both consumer and business confidence gauges vie for attention.
  • But the week kicks-off on Monday when the National Skills Commission issues the preliminary job vacancy report for July. Job advertisements fell by 0.5 per cent (or 1,200 job advertisements) in June to stand at 241,900 available positions. Vacancies may have declined for the second time since April 2020 due to virus lockdowns.
  • Also on Monday, Datium Insights provides a comprehensive weekly snapshot of the used car market.
  • On Tuesday, the regular ANZ/Roy Morgan weekly consumer confidence survey is issued. Consumer optimism could be dented by Brisbane’s escalating Covid-19 delta variant outbreak.
  • Also on Tuesday, the Bureau of Statistics (ABS) provides additional regional  building approvals information for June.
  • But the NAB business survey will take centre stage on Tuesday. The business confidence index fell by 9.3 points in June – the most in 11 months – to 10.7 points. And the conditions index fell from a record high 35.8 points in May to 24.1 points in June with the 11.7 point decline the biggest in 14 months.
  • But declines in key business condition measures – trading, employment and profitability – are anticipated in July amid multiple capital city shutdowns, border closures, supply shortages and soaring business costs.
  • The federal government and state governments of NSW and Victoria have recently announced increased support to distressed business owners. Affected NSW businesses will receive up to $100,000 a week for retaining their workers. And the Commonwealth is offering grants to Victorian businesses still affected by capacity limits, and rent relief to landlords who are prepared to reduce rent for their tenants. Total cost is around $400 million.
  • On Wednesday, Westpac and the Melbourne Institute issue the August monthly survey of consumer confidence. Consumer views on job security and their finances will be key issues as the highly-contagious Covid-19 delta variant prompts tougher lockdown restrictions in Greater Sydney and Brisbane. Income support to affected workers has been ramped-up by the federal government, who will now provide workers with $750 per week cash payments (previously $600) if their hours have been reduced by at least 20 hours per week. And $450 per week (previously $375) if the workers hours have been reduced by 8-20 hours per week.
  • On Thursday, consumer inflation expectations figures are issued for August by the Melbourne Institute. Rising food and petrol prices, health care costs and utilities bills have increased household cost of living pressures.

Australian profit reporting season

  • ASX-listed companies to report this week include: Aurizon, Suncorp, Transurban (Monday). Challenger and Megaport (Tuesday). CBA, IAG  (Wednesday). AMP, Downer EDI, Telstra, AGL Energy, Mirvac, Goodman Group, QBE Insurance (Thursday). Baby Bunting, Bailador Technology Investments (Friday).

Overseas: Inflation figures in the limelight

  • Inflation reports in both the US and China headline the overseas economic calendar in the coming week.
  • The week kicks-off in China on Monday when consumer and producer prices data are issued. China’s economy has slowed with inflationary pressures retreating in June. Annual producer prices eased from a 13-year high of 9.0 per cent in May to 8.8 per cent in June. Consumer price inflation is largely contained, growing at an annual rate of just 1.1 per cent in June from a year ago. Lower food prices – particularly pork – are keeping inflation in check.
  • On Monday in the US, the Bureau of Labor Statistics issue the Job Openings and Labor Turnover Survey (JOLTs) for June. Vacancies hit a series high of 9.21 million in May, underscoring persistent hiring difficulties for US businesses, with a record 9.3 million positions expected to have been available in June.
  • Also on Monday, annual consumer inflation expectations could have lifted to 4.7 per cent in July.
  • On Tuesday, the weekly Johnson Redbook chain store sales figures are issued with the National Federation Independent Business (NFIB) small business optimism index for July. More small businesses raised prices in June than at any time since 1981 as companies attempt to pass on the costs of rising wages.
  • Also on Tuesday, June quarter unit labour costs and non-farm productivity data are both issued.
  • On Wednesday, weekly mortgage MBA applications data is scheduled with consumer prices and the monthly Budget Statement. The consumer price index (CPI) rose by 0.9 per cent in June to be up 5.4 per cent on the year – the biggest rise in 13 years. Excluding food and energy, the core CPI was up 0.9 per cent in the month to be up 4.5 per cent on the year – the largest increase in almost 30 years. Core CPI is tipped to lift 0.4 per cent in July.
  • On Thursday, weekly data on claims for unemployment benefits (initial jobless claims) are issued with producer prices. The producer price index (PPI) rose by 1.0 per cent in June to be up 7.3 per cent on the year – the fastest in a decade. Both the headline and core PPI (excluding food and energy) could increase around 0.5 per cent in July.
  • On Friday, import and export prices are scheduled for July. The preliminary August reading on consumer sentiment from the University of Michigan is due. Consumer inflation expectations hit 13-year highs in July.
  • Also in China during the week, credit growth data, including broad money (M2), aggregate social financing, new loans and local government bond issuance are all scheduled.

Originally published by Ryan Felsman, Senior Economist, CommSec