Investor Signposts: July 16, 2018
Australian jobs data, and a big week in China and the US.
Australia: Money for nothing
- The mid-winter lull in economic data continues in Australia. However, the all-important June employment report is issued on Thursday. Tourism and business sales data will also be keenly observed.
- The week kicks off on Monday, with the Overseas Arrivals & Departures publication from the Australian Bureau of Statistics (ABS). As well as providing data on tourist arrivals and departures, there are figures on longer-term migration flows. Tourist arrivals fell by 1.9 per cent to 756,300 in April, down from a downwardly revised record-high of 770,800 (previously 771,600) in March. Departures rose by 1.3 per cent in April to a record-high of 923,400, up from 911,200 in March. Over the past year, a record-high 800,240 permanent and long-term migrants moved to Australia, up by 4.0 per cent.
- On Tuesday, the minutes of the last Reserve Bank Board meeting will be released. Each meeting, there is a special issue or topic that is discussed. That discussion can prove useful in gauging member views on interest rate sensitivities. For example, wages growth remains a key focus of Board members. In the July 3 policy Statement, the commentary highlighted that, “there are increasing reports of skills shortages in some areas”. Economists will be keeping an eye out for some evidence of this development through its business liaison program.
- Also on Tuesday is the regular weekly gauge on consumer confidence from Roy Morgan and ANZ.
- On Thursday, the ABS issues the June employment report. Job creation has slowed in recent months, with 12,000 full-time jobs added in May. The unemployment rate is at six-month lows of 5.4 per cent and the last time it was lower was five and a half years ago in January 2013. Another key leading employment indicator – the Bureau of Statistics' job vacancies – was at record-high levels in May, with the strongest annual growth rate in seven and a half years. Economists tip an increase in total jobs of around 15,000 during the month.
- On Friday, the CBA Business Sales Indicator is released for June. Growth in economy-wide spending slowed in May, growing at the weakest trend pace for over a year. The BSI rose by 0.3 per cent in trend terms in May, and the annual trend growth in sales held at 7.7 per cent – the fastest growth in three and a half years.
Overseas: China data blockbuster
- Over the coming week, China's economic growth, investment, production, retail sales and house price data will all be issued. In the US, retail spending, housing, industrial production and the US Fed's Beige Book will be in focus.
- The week begins in China on Monday, when the much-anticipated June quarter GDP report is released, together with the June monthly retail sales, investment and production activity data. Growth appears to have decelerated in most industries, including construction, consumption, service, manufacturing, employment and trade.
- Chinese production was strong in April, but weakened in May. The June official manufacturing purchasing managers index was softer, signalling weaker growth momentum. A rebound in retail sales is tipped in June, after annual spending growth was the slowest it's been in 15 years in May. Fixed asset investment is expected to moderate further as the economy rebalances. Overall, annual GDP growth is tipped to fall by 0.1 per cent to 6.7 per cent.
- Also on Monday, US retail spending data and the New York Fed purchasing managers' index are released. Consumer spending surged 0.8 per cent in May and a further 0.6 per cent lift is forecast in June.
- On Tuesday, China house price data is scheduled to be issued. Out of the 70 cities the National Bureau of Statistics monitors, more cities saw housing prices increase in May compared with April.
- Also on Tuesday in the US, the National Association of Home Builders will release the activity survey for July, and industrial production data and weekly data on chain store sales are issued. Sentiment among US homebuilders fell in June to equal the lowest level this year, reflecting elevated lumber costs. Industrial production is tipped to rebound by 0.5 per cent in June, after a contraction in manufacturing output in May.
- On Wednesday, the US Federal Reserve takes centre stage. In the most recent Beige Book – a national survey – Fed officials characterised the economy as performing well. Manufacturers raised production, banks reported stronger loan demand and homebuilders' activity was robust. Trade worries will be a key focus in June's edition.
- Also on Wednesday, US housing starts and building permits are issued for June. In May, starts posted the biggest increase since July 2007, up 5 per cent, led by a 62 per cent surge in the US Midwest.
- On Thursday, the weekly data on new claims for unemployment insurance is issued, together with the influential Philadelphia Federal Reserve manufacturing gauge and Conference Board's Leading Economic Index. Seven of ten leading indicators increased in May, with building permits, manufacturing workweek and initial claims down.
- The US company reporting season continues. FactSet is forecasting S&P500 earnings growth of 20 per cent for the second quarter.
- On Monday, Bank of America, BlackRock and Netflix report.
- On Tuesday, Goldman Sachs, Johnson & Johnson, United Continental and UnitedHealth are among those reporting.
- On Wednesday, Alcoa, AMEX, eBay and Morgan Stanley report.
- On Thursday, earnings are due from Bank of New York/Mellon, Domino's Pizza, Microsoft, Nucor, PayPal and Travelers report.
- On Friday, Baker Hughes, General Electric, Honeywell, Schlumberger and State Street report.
Ryan Felsman is a Senior Economist at CommSec
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