Australia: A new financial year commences

  • The 2020/21 financial year commences mid-week with a slew of ‘tier-1’ data releases, including figures on home prices, building approvals, international trade, job vacancies, retail trade and purchasing manager indexes.
  • The week kicks off on Monday when the Bureau of Statistics (ABS) releases its latest weekly “Household Impacts of COVID-19 Survey.”
  • On Tuesday, weekly readings on consumer confidence (ANZ-Roy Morgan), credit & debit card spending (Commonwealth Bank) and “Payroll Jobs and Wages” (ABS) are released.
  • Also on Tuesday, the Reserve Bank (RBA) releases private sector credit data for May. The report includes data on loans outstanding (credit) as well as monetary aggregates like broad money. And RBA Deputy Governor Guy Debelle speaks via webinar at the Economic Society on “The Reserve Bank’s policy actions and balance sheet” at 12.30pm AEST.
  • On Wednesday, manufacturing surveys from AiGroup and CBA are expected to show an improvement in factory activity as the economy reopens. And the ABS issues March quarter engineering construction activity data with May building approvals figures. Council building consents were surprisingly resilient in April, but this may be a poor guide to building activity near-term. COVID-19 disruptions could see commencements delayed on many approved projects and interruptions to projects already under construction.
  • Also on Wednesday, CoreLogic’s national home price index may have declined around 0.7 per cent in June. A decline in dwelling prices in Melbourne (down 0.8 per cent), Perth (down 0.7 per cent) along with Sydney (down 0.7 per cent) are expected to be the biggest drags on the index.
  • On Thursday, Australia is expected to post another trade surplus in May after preliminary readings showed that imports of goods (down 9.1 per cent) fell more than exports (down 4.3 per cent).
  • On Friday, ABS data is expected to re-affirm the record bounce back in retail trade in May (up 16.3 per cent). Both the AiGroup and the CBA release the June surveys on services activity. And the Federal Chamber of Automotive Industries issues the June data on new vehicle sales. The AiGroup construction gauge is also issued.

Overseas: US jobs data and China purchasing managers indexes in focus

  • A plethora of data is issued in the US ahead of the Independence Day public holiday. While the jobs figures will be a key focus, the minutes of the US Federal Reserve’s June meeting will be scoured for hints about further stimulus. China’s manufacturing and services sectors are expected to expand as the economy gradually recovers.
  • The week kicks off on Sunday in China with May industrial profits data scheduled.
  • In the US on Monday, May data on pending home sales are issued together with the Dallas Federal Reserve manufacturing activity index.
  • On Tuesday in China, the official National Bureau of Statistics (NBS) manufacturing and services purchasing managers indexes (PMI) are due. For manufacturing the slow recovery in export orders appears set to continue in June due to weak global demand. But services sector activity has improved after hitting record lows in February.
  • On Tuesday in the US, the weekly Johnson Redbook chain store sales figures are released with April home prices data from S&P CoreLogic Case-Shiller. The Market News International (MNI) Chicago PMI is issued for June. And the Conference Board consumer confidence index is expected to lift to 90 in June from 86.6 in May.
  • Also on Tuesday in the US, Federal Reserve Chairman Jerome Powell and US Treasury Secretary Steven Mnuchin both testify about the COVID-19 response before the US House Financial Services Committee.
  • On Wednesday in China, the private sector focused Caixin manufacturing PMI is scheduled for June.
  • In the US on Wednesday, weekly data on US mortgage applications from the Mortgage Bankers Association (MBA) is released with vehicle sales and construction spending data. Challenger, Gray & Christmas issue the job cuts figures for June, ADP reports on private payrolls (jobs), IHS Markit provides a final reading on June factory activity and the Institute of Supply Management (ISM) issues its much-anticipated June manufacturing index.
  • Also on Wednesday, the US Federal Reserve Open Market Committee (FOMC) issues its June meeting minutes. The FOMC left monetary policy unchanged, but continued to warn of major downside risks to growth.
  • On Thursday, the weekly data on new claims for unemployment insurance (jobless claims) are issued with factory orders, international trade and durable goods orders data.
  • But the most important release will come from the US Bureau of Labor Statistics (BLS) on Thursday when the all-important nonfarm payrolls (jobs) report for June is issued. Economists reportedly had the “biggest miss ever” when forecasting a consensus loss of 7.5 million jobs in May – serving to highlight the difficulty in forecasting during the pandemic. A record 2.5 million jobs were added in May and economists are estimating additional job gains of around 3 million in June. The unemployment rate could fall back to near 12.3 per cent, down from 13.3 per cent in May.
  • On Friday in China, the Caixin services gauge is scheduled to round-out a hectic week.
  • On Friday in the US, financial markets are closed to observe the Independence Day public holiday.

Published by Ryan Felsman, Senior Economist, CommSec