Second-tier data to round off financial year
• A relatively quiet week is in prospect. The focus is an appearance from the Reserve Bank Governor. No ‘top shelf’ economic data is scheduled.
• The week kicks off on Monday with the Reserve Bank Governor to participate in a panel discussion at the ANU Crawford Australian Leadership Forum in Canberra. Clearly everyone is keen to get clues on the timing of the next rate cut.
• On Tuesday, the regular weekly reading on consumer confidence is published by ANZ and Roy Morgan. And the Australian Bureau of Statistics (ABS) releases its annual publication “Selected Characteristics of Australian Business 2017/18”. Statistics include business performance, innovation and finance demand.
• Also on Tuesday Reserve Bank Assistant Governor, Michele Bullock, delivers a speech “Modernising the Australian Payments System” at the Central Bank Payments Conference in Berlin.
• On Wednesday, the ABS releases March quarter data on Engineering Construction. As well as providing data on recent activity, there are estimates of the amount of construction remaining to be done. There was $66.2 billion of engineering work yet to be done as at December 2018, up from $62.5 billion in the previous quarter. Excluding the resource sector (coal, oil, pipelines etc.) work to be done stands at $40.4 billion, below the record high of $45.3 billion in March 2012.
• On Thursday the ABS releases the Finance & Wealth publication for the March quarter. The report provides detailed estimates on household wealth. Lower home prices have restrained wealth levels. But in the March quarter wealth would have been boosted by a sharp rise in sharemarket assets. The All Ordinaries index rose 9.7 per cent in the quarter.
• On Friday, the Reserve Bank releases the estimates of private sector credit (effectively, loans outstanding). Consumers and businesses haven’t been keen to take out new debt in recent months. Annual credit growth fell from 3.9 per cent in March to a 5½-year low of 3.7 per cent in April.
• Also on Friday the Australian Prudential Regulation Authority (APRA) releases the May estimates on bank deposits and loans. APRA also provides estimates on credit card lending. Credit card lending by banks to households fell from $39.85 billion to an 8-year low of $39.62 billion in April, down 3.9 per cent over the year.
Focus on G20 Summit and US housing
• In the US, two key data surveys on home prices will be released with two readings on consumer sentiment.
• The week begins on Monday in the US when the Chicago Federal Reserve releases its National Activity index. The Dallas Federal Reserve also issues its June manufacturing activity index.
• On Tuesday in the US, a raft of data is set for release. There are two measures of home prices – the S&P/Case Shiller home price index as well as the Federal Housing Finance Agency (FHFA) measure. In March, the S&P/Case Shiller index was up 0.7 per cent to stand 2.7 per cent higher than a year ago.
• Also on Tuesday the Conference Board releases its survey of consumer confidence. The Richmond Federal Reserve issues its influential manufacturing index. There is also the regular US weekly data on chain store sales along with data on new home sales in May. And US Federal Reserve Chair Jerome Powell speaks at the Council on Foreign Relations in New York.
• On Wednesday the regular weekly reading on new mortgage applications is released together with data on durable goods orders and international trade – exports and imports of goods.
• The data on durable goods orders is seen as a proxy measure of business investment – especially the ‘underlying’ estimate that strips out ‘lumpy’ defence equipment and transport goods like aircraft. Over the past eight months, durable goods orders have effectively been marking time. Orders fell by 2.1 per cent in April.
• On Thursday, the final estimate of economic growth (change in GDP – gross domestic product) is released for the March quarter. The economy has been tracking nicely although showing some signs of slowdown in just the past few months. The economy is estimated to have grown at a 3.1 per cent annual rate in the March quarter.
• Also on Thursday, data on pending home sales is released with the regular weekly data on new claims for unemployment insurance.
• Also on Thursday in China, industrial profits figures are scheduled. Profit growth is down 3.4 per cent over the year to May as trade tensions with the US intensify.
• On Friday, data on personal income and spending is issued for May. If the economy is losing momentum, it should show up in the spending estimates. But the personal income/spending data is also important as it contains the Federal Reserve’s preferred measure of inflation – the core personal consumption deflator.
• Also on Friday in the US, the University of Michigan releases its final June estimate of consumer sentiment. And the Chicago purchasing managers index is issued.
• Also on Friday in Japan, the G20 Summit kicks off in Osaka with trade talks between US President Donald Trump and Chinese President Xi Jinping expected to resume.
Published by Craig James, Chief Economist, CommSec