The week kicks-off on Monday when AiGroup provides an update on construction activity.
On Tuesday, weekly consumer sentiment data is issued by ANZ and Roy Morgan. Tax relief, the revival in property prices and positive superannuation returns are likely to support consumer spending. But tepid wages growth, elevated mortgage debt and rising unemployment are keeping consumer cautious. Also, on Tuesday, NAB provides an update on Aussie business confidence and conditions while ANZ issues its job advertisements series. Momentum in the business sector continues to weaken. Sluggish domestic demand, global trade uncertainty, rising input costs and subdued selling prices are weighing on business profitability and expansion plans. Job ads are important given the labour market focus of the RBA.
On Wednesday, monthly consumer confidence data is scheduled from Westpac and the Melbourne Institute. Sentiment has been choppy, down by 1.7% in September after a 3.6% increase in August. Consumer views on unemployment and property expectations will be closely monitored. Also, on Wednesday, the Bureau of Statistics (ABS) issues building data for the June quarter. The slowdown in home building continues. And the amount of work entering the pipeline is declining, having peaked a year ago. The number of homes currently being built across Australia is the lowest level since December 2015.
On Thursday, lending finance data is released by the ABS for August. Housing finance approvals rebounded in July as lending conditions continued to improve. The total value of owner-occupier and investor loans rose by 5.1% and another 4% lift is expected in August. The size of home loans is lifting – presenting some challenges for Reserve Bank policymakers in the medium term with still-elevated household mortgage debt.
Overseas: US Federal Reserve and inflation data take centre stage
China returns from its National Day Golden week holiday period, but little data is scheduled. In the US, Federal Reserve Chair Jerome Powell speaks and the minutes of the Federal Open Market Committee (FOMC) September meeting are issued. And proposed US-China trade talks will be closely watched.
The week begins on Monday in China when Caixin releases its private sector services activity gauge. Credit growth and money supply data are also scheduled for release during the week. On Monday in the US, consumer credit data is due. Total credit rose by US$23.3 billion in July, but most attention in the month was focused on the jump in credit card balances – which rose the most since 2017.
On Tuesday, the regular weekly reading on US chain store sales is due together with producer prices data for September and the release of the NFIB small business activity gauge. Despite US-China trade uncertainty the NFIB index remains at elevated levels with activity still robust. Also, on Tuesday, US Federal Reserve Chair Jerome Powell is scheduled to speak at the annual meeting of the National Association for Business Economists in Denver.
On Wednesday, the weekly reading on mortgage applications is issued as well as job openings and inventories data. The Job Openings and Labor Turnover (JOLTS) survey in July pointed to a loss of momentum in the US jobs market. Job vacancies eased to 5-month lows with the number of positions waiting to be filled falling by 31,000 to 7.22 million. The quits rate rose to 2.4% – the highest since April 2001 – suggesting that workers still remain confident about finding work with prospective employers.
Also, on Wednesday, the FOMC releases the minutes of its September 18 meeting where the federal funds rate was cut by 25 basis points to a target of 1.75 to 2.00%. The FOMC cited “the implications of global developments for the economic outlook as well as muted inflation pressures” as the primary reason for the cut. Commonwealth Bank Group economists still expect the FOMC to cut interest rates again in December.
Over Thursday and Friday high-level trade talks are due to be held between the US and China. The outlook for the global economy is dependent on a deal being secured. On Thursday, attention shifts to the release of consumer price data for August. The annual growth rate of US core inflation rose to 2.4% in August. Tariffs drove goods prices higher, while medical care, shelter, apparel and used car prices all rose.
On Friday, trade prices data is issued, completing the trifecta of inflation releases for September. The preliminary October update on consumer confidence from the University of Michigan is the other highlight to conclude the week.