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Australia: Quiet week ahead

• The fourth week of the year looks to be a quiet one for economic data, both in Australia and the US. In Australia consumer sentiment and employment data dominate the list of scheduled releases.

• The week kicks off on Tuesday when the Commonwealth Bank releases the December Household spending intentions report.

• Also on Tuesday, the weekly reading on consumer sentiment is scheduled from Roy Morgan and ANZ. While Aussie consumers believe their finances are in good shape and likely to stay that way over the next year, they still appear worried about the impact of bushfires on the economy.

• On Wednesday, the monthly reading of consumer confidence is released by Westpac and the Melbourne Institute. This survey is more of a check on the weekly survey. And effectively the same questions are posed by both the weekly and monthly surveys.

• In December the consumer sentiment index fell by 1.9 per cent after rising by 4.5 per cent in November. The index stands at 95.1 points, below the longer term average of 101.5 points. A reading below 100 points denotes pessimism.

• On Thursday, the Australian Bureau of Statistics (ABS) releases the December Labour Force report. In November, employment rose by 39,900 after falling by 24,800 in October. There has only been one monthly fall in jobs in 16 months. The jobless rate fell from 5.3 per cent to 5.2 per cent. The under-employment rate also fell in the month.

• Commonwealth Bank group economists expect that 20,000 new jobs were created in December with the jobless rate steady and the participation rate at record highs.

• On Friday the Commonwealth Bank & IHS Markit releases the ‘flash’ or preliminary purchasing manager surveys covering the manufacturing and services sectors. Purchasing managers are upbeat on future prospects after the US-China ‘Phase 1’ trade deal but actual activity still remains soft.

Overseas: US housing data in focus

• A quiet week is prospect for new US and Chinese economic data. A number of US housing market readings are worth watching. The earnings season moves into top gear.

• The week kicks off in China on Monday with the People’s Bank of China (central bank) to announce the monthly loan prime rate (LPR) – the benchmark for pricing outstanding floating-rate loans. The one-year LPR stands at 4.15 per cent and the 5-year LPR stands at 4.80 per cent.

• On Monday, the International Monetary Fund updates its global economic forecasts.

• In the US on Tuesday, the weekly data on chain store sales is released.

• On Wednesday in the US, the Mortgage Bankers Association releases weekly data on mortgage applications. Also the Chicago Federal Reserve releases the National Activity index while data on house prices and existing home sales are released.

• The Federal Housing Finance Agency (FHFA) said that house prices rose by 0.2 per cent in October after lifting 0.7 per cent in the prior month. A 0.3 per cent rise in house prices is expected for November.

• And existing home sales may have fallen 0.2 per cent in December after a 1.7 per cent drop in November. Existing home sales have held at a 5.2-5.5 million annual rate in the past 10 months and annualised sales stood at 5.35 million rate in November.

• On Thursday in the US, weekly figures on new claims for unemployment insurance (initial jobless claims) are released together with the Kansas City Federal Reserve manufacturing index and the Conference Board’s Leading Index.

• After three straight monthly declines, the leading index was unchanged in November.

• And on Friday in a raft of countries including the US, Germany, France and Japan, ‘flash’ (or preliminary) purchasing manager survey results are expected. The purchasing managers are surveyed each month to get a sense on activity in manufacturing and services sectors.

Financial markets

• The US profit-reporting (or earnings) season is underway. Over the coming week a number of household names will be reporting on their financial performance over the December quarter. Analysts “expect profits for S&P 500 companies to have declined 0.6 per cent in their second consecutive quarterly decline”, according to Refinitiv IBES data.

• The following companies are included amongst those reporting over the week.

• Tuesday: Haliburton, IBM, Netflix, TD Ameritrade, United Airlines.

• Wednesday: Baker Hughes, Johnson & Johnson, Teradyne, Texas Instruments

• Thursday: American Airlines, Comcast, Freeport-McMoRan, Kimberly Clark, Procter & Gamble, Travelers, Atlassian, E*Trade, Intel.

• Friday: American Express, Ericsson.

Published by Craig James, Chief Economist, CommSec