Australia: Reserve Bank on centre-stage

  • A busy week lies ahead with ‘top shelf’ economic indicators due for release with a Reserve Bank Board meeting and quarterly Statement on Monetary Policy.
  • But the week starts on Monday, with a bevy of indicators due for release. The Australian Bureau of Statistics (ABS) issues the March building approvals series. The Melbourne Institute releases the April inflation gauge and ANZ releases its April data on job advertisements.
  • The building approvals data is notoriously volatile but the trend gives a guide to future construction work. And the job ads data will certainly get plenty of attention, especially relative to the latest gauge on inflation.
  • On Tuesday, the Reserve Bank Board meets but no change in settings is expected. Already maximum monetary stimulus is being applied.
  • In terms of economic data on Tuesday, the ABS’ weekly payroll jobs and wages data is due and the Federal Chamber of Automotive Industries issues the April car sales data. The AiGroup releases its construction index. And CommBank issues its April services index. Roy Morgan and ANZ will also release the weekly reading of consumer sentiment on Tuesday.
  • On Wednesday, the ABS releases the retail sales data for the March quarter. Early data showed a record 8.2 per cent lift in retail spending in March. If that data is confirmed and there is also a solid lift in inflation-adjusted sales in the quarter, then analysts will start questioning whether economic growth may have miraculously lifted over the quarter.
  • Also on Wednesday, the ABS issues lending indicators for March and the Living Cost Indexes for the March quarter.
  • On Thursday the AiGroup will release its purchasing manager’s index for the services sector. In March the services gauge stood at 38.7 – well below the 50 reading that separates expansion from contraction.
  • Also on Thursday the ABS issues the ‘final’ international trade figures for March. Preliminary March data showed goods exports lifting 29 per cent in March with goods imports up 10 per cent. The data – which will include services receipts and payments – will lead to early estimates being made of net exports in the quarter (exports less imports).
  • On Friday, the Reserve Bank issues the keenly-awaited Statement on Monetary Policy. It is a difficult time to forecast, but investors will be looking to guidance from the RBA, even if the forecasts are only expressed in broad ranges.

Overseas: Jobs, jobs and more jobs

  • There is plenty of data to monitor over the week. But the gazes of investors will be firmly fixed on data to be released late in the week. The ADP data on private sector payrolls is out Wednesday in the US with the weekly claims for unemployment insurance on Thursday and the pivotal non-farm payrolls on Friday.
  • The week kicks off in China on Monday when results of the private-sector Caixin manufacturing gauge are released. The survey of purchasing managers stood at 50.1 in March, signifying flat activity. The equivalent gauge for the services sector will be issued on Wednesday.
  • On Monday in the US, the ISM New York Index for April is released with factory orders for March.
  • On Tuesday in the US, March data on international trade is issued with the ISM services gauge for April and the May IBD/TIPP economic optimism gauge. The weekly Johnson Redbook chain store sales figures and ‘final’ April reading for the Markit services purchasing manager’s index are also scheduled.
  • On Wednesday in the US, the ADP survey of private sector payrolls and the regular weekly data on US mortgage applications from the Mortgage Bankers Association (MBA) are both due.
  • Most interest is in the ADP survey and the early forecasts are indicating a 2.1 million loss of jobs over April.
  • On Thursday in China the April International trade data is expected. In March a surplus of US$19.9 billion was produced despite exports falling 6.6 per cent over the year and imports only falling 1.0 per cent.
  • On Thursday in the US, the weekly data on new claims for unemployment insurance is issued with the Challenger series of job cuts, consumer credit data and quarterly readings of labour costs and productivity.
  • On Friday the US Bureau of Labour Statistics releases the closely-watched April jobs report. Based on early forecasts, non-farm payrolls (employment) may have slumped by 2.1 million, causing the jobless rate to rise from 4.4 per cent to 16.2 per cent. The figures are staggering but understandable given these exceptional times.

Financial markets: US corporate reporting season

  • In the US the profit-reporting or earnings season moves into full swing. Amongst companies scheduled to report are:
  • On Monday: Tyson Foods.
  • On Tuesday: Du Pont; Fiat Chrysler, Newmont Mining
  • On Wednesday: Barrick Gold; General Motors; CVS Health; New York Times; Office Depot; Waste Management; Wendy’s
  • On Thursday: Anheuser Busch; Arcelor Mittal; Bristol-Myers Squibb; Hilton Worldwide; JetBlue Airways; Moderna
  • On Friday: Bloomin Brands; Brookfield Infrastructure

Craig James, Chief Economist, CommSec