The Week Ahead

The final countdown

The cupboard is largely bare in terms of key domestic economic indicators or events until January 7. Still, the private sector credit or lending figures are released on New Year's Eve and then on January 2 the CoreLogic RP Data Home Value index is issued.

In terms of private sector credit, lending probably advanced by 0.6 per cent in December, lifting the annual growth rate from 5.7 per cent to a near 6-year high of 5.8 per cent. Housing is largely driving credit growth; especially loans to housing market investors, but there have been credible signs of a lift in business loans in recent months. No doubt the Reserve Bank would like to see a translation from the healthy consumer and businesses confidence levels to a lift in borrowings.

The first indicators to be published in the New Year will be the December data on home prices from CoreLogic RP Data. There will be a lot of focus on the result not only because it will confirm total returns for property over 2014, but also given that prices eased in November, albeit modestly. Across the nation house prices are still up 8.9 per cent on a year ago and the strength in price continues to be driven by Sydney and Melbourne.

In contrast to Australia, there are still plenty of indicators to watch in the US, focussing on consumer spending, consumer confidence and the housing market. But also one of the highlights of the coming fortnight is the ISM manufacturing gauge on January 2. Any reading for the ISM above 50.0 indicates expansion of the manufacturing sector and the current reading of 58.7 suggests that the sector is in good shape.

Overall, US economists are forecasting modest improvements in indicators to be released over the coming fortnight, supporting optimism expressed by the December Federal Reserve meeting - where policymakers kept interest rates on hold, but offered a strong signal that they were on track to raise interest rates next year.