Australia: Business and consumer confidence in focus

• In the coming week there will be more insights into the economic environment in terms of business conditions and consumer sentiment. Home lending data will be scrutinised for a continued stabilisation in housing finance commitments. And the deceleration in Chinese tourist arrivals is expected to continue due to slowing Chinese economic growth and retail spending.

• The week kicks-off on Monday when the Australian Bureau of Statistics (ABS) issues new lending data for July. Property market conditions and activity have improved, boosting hopes of a continued stabilisation in housing finance approvals. But the all-important spring selling season is crucial to the demand outlook.

• On Tuesday weekly consumer confidence data is issued by ANZ and Roy Morgan. Sentiment is around long-run average levels with volatility in sharemarkets, Aussie dollar weakness and elevated petrol prices counterbalanced by lower mortgage rates, tax cuts and a bottoming in home prices.

• Also on Tuesday NAB’s August business survey is released. Australia’s business sector lost momentum prior to the federal election> Forward looking indicators – particularly trading conditions and profitability – don’t point to an improvement in the near term. Global trade frictions are also weighing on sentiment, but lower interest rates and tax offsets are expected to eventually feed through to firms.

• On Wednesday, monthly consumer confidence data is issued by Westpac and Melbourne Institute. Sentiment lifted by 3.6 per cent in August – the biggest lift in six months – propelled higher by a pick-up in consumer views on home purchases. Sentiment towards buying a dwelling is the most positive in 5½ years.

• Also on Wednesday, tourism data is released by the ABS. In June, a record 11.2 million annual trips were made by Aussies – 5.4 million more than 10 years ago. But the annual growth rate for Chinese tourists travelling to Australia was just above 9-year lows at 1.4 per cent.

• On Thursday, the Reserve Bank issues updated credit and debit card lending data for the month of July.

Overseas: Inflation data issued in the US and China

• In the US, the two stand-out economic data releases in the coming week are consumer prices (inflation) and retail spending. In China, the focus is on international trade and inflation data.

• The week begins on Sunday in China when the National Bureau of Statistics issues international trade data for August. Exports unexpectedly rose by 3.3 per cent in the year to July, with goods shipped to the European Union and South-East Asian nations lifting, offsetting a decline in US exports due to rising tariffs.

• On Monday in the US, July consumer credit (or lending) data is also issued. Consumer credit card debt rose by US$14.6 billion in June – the weakest amount in three months – perhaps due to greater economic uncertainty.

• On Tuesday in China, consumer and producer prices data are scheduled. Consumer prices are lifting due to elevated fruit and meat prices. But the drop in producer prices signalled that China’s industrial sector had slipped back into deflation due to lower automobile and raw material prices.

• On Tuesday in the US, the regular weekly reading on US chain store sales is due together with the JOLTS series of job openings report. The number of job vacancies (7.3 million) remains above the number of unemployed (6.1 million) in the US due to a skills shortage and tight labour market.

• Also on Tuesday, investor attention will be on the reaction of the US small business sector (NFIB survey) to the latest escalation in China trade tensions. The details of the survey will be scrutinised, especially with respect to new business investment intentions and capital spending plans amid rising political uncertainty.

• On Wednesday in the US, the weekly reading on mortgage applications is issued as well as producer prices and wholesale inventories data. Core producer prices unexpectedly declined by 0.1 per cent in July – the first fall in two years – as costs declined for guestroom rentals, loan services, physician care and truck freight transportation.

• On Wednesday, Chinese data on new vehicle sales is expected.

• On Thursday, the weekly figures on jobless claims are issued in the US, along with consumer prices and the monthly budget statement. US core inflation rose by 0.3 per cent to 2.2 per cent from a year earlier in July, above economists’ expectations. Rising shelter, medical, clothing and used car prices are challenging US policymakers’ view that a return to its 2 per cent inflation target would take longer than previously anticipated. Rising tariffs on goods could limit the case for additional US Federal Reserve rate cuts, despite weakening business investment.

• On Friday, the all-important US monthly retail sales report is issued. In July, consumer spending lifted by 0.7 per cent – the most in four months – as Amazon Prime Day sales boosted online sales. Job and wage gains have buoyed consumer sentiment, despite concerns about the levying of import duties on consumer goods prior to Thanksgiving and Christmas.

• Also on Friday, the University of Michigan’s preliminary consumer confidence survey for August is issued. The survey was at 7-month lows in July, contrasting with near-cycle highs for the Conference Board measure.

• US trade prices are also released. Import prices rose by 0.2 per cent in July after falling by the most in seven months in June with US dollar strength keeping a lid on import costs.

• On Friday in China, money supply data may be released.

Published by Ryan Felsman, Senior Economist, CommSec