The Week Ahead

Wages in focus

In Australia there are a number of indicators that track wage pressures. In the national accounts the Australian Bureau of Statistics issues a range of measures including unit labour costs, which effectively measure the cost of labour to businesses, adjusted for productivity.

Real unit labour costs (non-farm) fell by 1.0 per cent in the March quarter to be down 1.5 per cent over the year. In essence this means that workers have become more attractive to hire as their productive value more than outweighs their cost.

In the March quarter 2014, seasonally adjusted compensation of employees increased 0.7 per cent, to be up 3.2 per cent over the year. The seasonally adjusted number of employees recorded in the Labour Force survey grew 0.2 per cent. So average compensation per employee increased 0.5 per cent in the quarter.

The Business Indicators publication (next issued by the ABS on September 1) contains a series on wages and salaries, defined as Gross earnings before taxation and other deductions. Includes provisions for employee entitlements. In the March quarter this measure was up 0.2 per cent in the quarter and up 2.9 per cent over the year.

But the more well-known measures on wages are released in the coming week. The quarterly wage price index is issued on Wednesday while the biannual average weekly earnings series is released on Thursday.

The wage price index has only been issued since 1997, but in the March quarter, annual growth of wages hit a record low of 2.6 per cent. This weak rate of wage growth is a key reason why the Reserve Bank last left interest rates at 54-year lows. We expect that wages rose 0.8 per cent in the quarter and 2.8 per cent over the year.

The average weekly earnings figures are valuable because they provide dollar figures of wages for industries as well as across states and territories. In November the average wage was estimated at $74,724 a year.

Other data to watch

On Monday the lending finance figures are released while on Tuesday the ABS home price data is issued together with credit & debit card lending data, the weekly Roy Morgan-ANZ consumer sentiment survey and the NAB business survey. 

On Wednesday the monthly Westpac-Melbourne Institute is issued although it has lost relevance to the weekly survey, released the previous day. On Thursday, Jenny Hancock, senior manager, Payments System Stability, at the Reserve Bank will be a panel discussant at the Risk Australia Conference in Sydney

China dominates for a second week

With another quiet week in prospect on the economic front in the US, Chinese data again will be the main focal point for investors. As noted last week, Chinese inflation data is released on Saturday (August 9) while key monthly activity data is issued on Wednesday. Also over the week, lending figures will be released.

In the US, the Columbus Day holiday kicks off proceedings on Monday.

On Tuesday, the monthly federal budget figures are released together with the weekly figures on chain store sales -- a guide to consumer spending. Economists tip a US$82.5 billion budget deficit in July.

On Wednesday, retail sales data for July is issued alongside the weekly data on housing finance and figures on business inventories. Economists tip a 0.3 per cent lift in July retail sales, up from 0.2 per cent in June, but still a good, rather than great result. Excluding autos, sales may have risen by 0.4 per cent.

On Thursday the regular weekly data on claims for unemployment insurance is issued together with import and export price figures.

And on Friday in the US, data on producer prices is released together with capital flows, industrial production and consumer sentiment. Economists tip a modest 0.2 per cent rise in core producer prices (excludes food and energy), a 0.4 per cent rise in production and modest improvement in consumer sentiment from 81.8 to 82.5.

In China, there are no early economist forecasts for the Chinese monthly activity data. But in June retail sales were up 12.4 per cent on a year ago with production up 9.2 per cent and investment up 17.3 per cent in the seven months to July on a year earlier.

Australian profit-reporting season

The Australian profit-reporting season moves from second gear into third over the coming week.

On Monday, earnings are expected from JB Hi-Fi and Bendigo and Adelaide Bank. On Tuesday, Bradken is expected to report earnings with GPT Group.

On Wednesday, among those scheduled to issue their profit results are CSL, CBA, Computershare, Goodman Fielder, Primary Health Care, Carsales.com, Suncorp and OZ Minerals.

On Thursday, earnings are expected from Telstra, Fairfax Media, Dexus Property, Envestra, Goodman Group and SingTel.

And on Friday, Crown Resorts is expected to release its earnings result.