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James
Craig James
Economy Expert
+ About Craig James
About Craig James

Craig James is CommSec’s Chief Economist.

On leaving school Craig James joined the (then) Rural Bank, whilst undertaking university studies. He received his Bachelor of Commerce (Economics) at University of NSW in 1984 and then a Master of Commerce (Economics) at the same university in 1988.

He remained at the Rural Bank, which became the State Bank over time and then Colonial, working in branches, Corporate, Planning and Economic Research.

He became chief economist of Colonial Group in September 1987, before becoming chief economist at CommSec in August 2000 with the Commonwealth takeover of Colonial.

In 2002 Craig had a sea-change, joining the Australian Financial Review. He had always wanted to pursue a role in journalism and enjoyed the role as an economic commentator and analysts, finding that he could pursue a journalistic-type role as well as doing more electronic media work at CommSec and rejoined the group in 2003.

On taking the reigns of chief economist at Colonial, Craig endeavoured to style their research in a “user-friendly” way – something that set their research apart and still does today. The approach has been successful in their media work and in promoting Colonial, and then CommSec, to the general public. CommSec is the most quoted economic group in the mainstream media.

CommSec economic reports are a bit different in that they devise tools such as the ‘Mums and Dads’ share index and the iPod index, and undertake research on the weather and demographic changes to show how they affect the economy.

Craig currently does around 2-3 regular TV crosses a day, ad hoc radio and newspaper interviews and writes regular commentaries as well as presenting to staff, clients and external organisations.

Outside work, Craig's main interests are athletics (cross country in winter), weight training, reading widely across a range of newspapers, magazines and electronic media, and trying to keep up with the children.

Australia: Business investment and credit growth data in focus

Friday, May 24, 2019

In the coming week updates on business investment, building approvals and credit growth feature on the data docket. The figures on investment spending will help formulate views on economic growth for the March quarter. The report also includes estimates of future investment. The first estimate of spending in 2019/20 was $92.14 billion, up 11% on the first estimate for 2018/19 and the strongest growth in seven years. 

Furthermore, Commonwealth Bank Group economists forecast new business investment (spending on buildings and equipment) to fall by 0.7% in the March quarter.

On Tuesday

The week kicks off on Tuesday when the weekly Roy Morgan-ANZ measure of consumer sentiment is released. Consumer reaction to the re-election of the Morrison government and new Reserve Bank commentary on interest rates and the economic outlook will be closely observed.

On Thursday

On Thursday the Bureau of Statistics (‘ABS’) issues the publication “Private New Capital Expenditure and Expected Expenditure” for the March quarter. In the December quarter new business investment (spending on buildings and equipment) rose by 2% to be up 1.9% over the year. Also, on Thursday one of the major leading indicators for home building - council approvals to build new homes - is released. Approvals fell by 15.5% in March to be down by 27.3% over the year.

In March, the total number of new council approvals on a rolling annual basis fell below 200,000 units for the first time since June 2014. While there is still a reasonably healthy pipeline of residential building taking place, dwelling commencements have fallen to three-year lows, reducing demand for residential construction workers.

On Friday

On Friday the Reserve Bank releases its “Private Sector Credit” data (a measure of loans outstanding). Annual credit growth fell to a five-year low of 3.9% in March due to the decline in housing finance and falling home prices. Annual investor housing credit growth is the weakest on record. Also, on Friday the Australian Prudential Regulation Authority (‘APRA’) releases credit card data. Bank lending to households by credit card fell by 4.8% in the year to March – the second biggest annual decline since June 2002. Debit cards and ‘buy now, pay later’ platforms, such as Afterpay, are increasingly being used by younger Australians to finance their purchases of goods.

Overseas: US economic growth and inflation data released after Memorial Day holiday 

The Memorial Day public holiday is observed in the US on Monday. Financial markets are closed. But over the week the second estimate of US economic growth, an update on US income and spending (including the US Federal Reserve’s key inflation measure) and China’s official factory gauge will dominate headlines.

US Federal Reserve Chair Jerome Powell has cautioned that low inflation in the US is likely be “transitory”. Chair Powell has cited categories including portfolio management and investment advice services, clothing and footwear, and air transportation for depressing prices. But rising gasoline prices and increased customs duties (such as tariffs) on Chinese imported goods are likely to boost US producer and consumer prices.

On Monday

The week begins on Monday in China when industrial profits data is released for April. Annual profits for China's industrial companies grew by 13.9% in March. Profit margins, however, are being pressured by slowing domestic demand and US tariffs on imported Chinese goods. That said, the cut in the Chinese government’s Value Added Tax (‘VAT’) effective from April 1 may support profit growth for manufacturing enterprises.

On Tuesday

On Tuesday in the US, data on consumer confidence and home prices are issued with the influential Dallas Federal Reserve manufacturing index. And the regular weekly reading on chain store sales is scheduled.

On Wednesday

On Wednesday, the weekly mortgage applications data is released by the Mortgage Bankers Association. And the Richmond Federal Reserve manufacturing gauge is also scheduled.

On Thursday

On Thursday data on pending home sales is issued with the advance reading on goods trade and weekly figures on new claims for unemployment insurance. Also, on Thursday, the second estimate of economic growth (GDP) for the March quarter is released. The annual growth rate is forecast to be revised down by just 0.1% to 3.1% according to economists surveyed by Bloomberg. The composition of growth drivers will be of most interest to investors with household and government spending both slowing at the start of 2019.

On Friday

On Friday in the US, the Chicago business barometer is tipped to lift by 3.4 points to 56 points in May. In April, business activity in the Chicago region registered its biggest slowdown since January 2017. Also, on Friday, the US personal income release includes a key inflation reading. The personal consumption deflator is the preferred inflation measure of US Federal Reserve policymakers. The annual growth rate of the core personal consumption expenditures price index is forecast to remain subdued at around 1.6% in April.

On Friday in China, the National Bureau of Statistics manufacturing and services purchasing manager indexes are scheduled for May. Factory activity expanded at weaker pace in April after a solid rebound in March.

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Jobs data: Something for everyone

Friday, May 17, 2019

There is seemingly something for everyone in the latest labour force data. The pessimists will focus on a slight rise in the jobless rate. The optimists will focus on another month of job gains and a record labour force participation rate. But what is the objective assessment of the data? It was a good, but not great set of numbers. Although, arguably it was a stronger outcome than most economists had expected. Job growth again exceeded expectations.

A softer result was to be expected given the extended holiday period in April and slowdown in business activity ahead of the election. Over four of the past five polls (including the current poll), trend job growth slowed. There is also the global economic slowdown caused by the USChina trade dispute. Full-time job growth was always going to correct after the out-sized job gain of near 50,000 in March. And then there is the small matter of hiring of election workers to further muddy the waters. The proportion of Australians in work or looking for work is at record highs. In fact the record participation rate applies to female workers and to both male and female workers combined. That means it is getting harder for employers to find the right staff for unfilled positions – fewer ‘suitable’ candidates are available.

Does this make it more or less likely that the Reserve Bank will cut rates in the months ahead? While the jobless rate edged up a touch, that result can be attributed to the pre-election economic slowdown. When the election is out of the way, business will get back to business as we have seen after previous polls. More people are finding work and more people are looking for work. The NSW trend jobless rate is still at record lows. So, the job market remains solid. The Reserve Bank will not make a knee-jerk response to the latest jobs figure. It will wait for clear air to make a judgement.

If interest rates were to be cut, August seems the earliest time period that this could occur – after two more months of job figures. It must be remembered that stimulus from tax cuts is likely to flow through to workers from July/August. And that could push any need for monetary stimulus out to November. 

What do the figures show? 

Employment rose for the ninth straight month, up by 28,400 in April after a revised 27,700 increase in jobs in March (previously reported as a 25,700 increase in jobs). Full-time jobs fell by 6,300, but part-time jobs rose by 34,700. Economists had tipped an increase in total jobs of around 15,000.

Annual job growth rose from 2.4% to a 10-month high of 2.6% (decade average 1.6%). Hours worked rose by 0.1% in the month to be up 1.9% over the year. In trend terms, hours worked rose 0.3% to be up 2.8% on the year.

The unemployment rate rose from 5.1% to 5.2% in seasonally adjusted terms. In trend terms the jobless rate was steady at 5.1%. Participation rate: The participation rate rose from 65.7% to a record high of 65.8%. In trend terms the 65.7% participation rate remained at record highs.

Unemployment across states in April: NSW 4.5% (March 4.3%); Victoria 4.9% (4.6%); Queensland 5.9% (6.1%); South Australia 6.1%(5.9%); Western Australia 6.1% (6.0%); Tasmania 6.8% (6.7%). In trend terms, Northern Territory 4.5% (4.5%); ACT 3.9% (3.8%).

State/Territory jobs: In seasonally adjusted terms, the largest increase in employment was in NSW (up 25,100 persons), followed by Western Australia (up 6,400 persons) and Queensland (up 5,400 persons). The only decrease was in Victoria (down 7,600 persons). 

The working age population rose by 25,900 in April to 20.54 million. Over the year the working age population rose by 362,400 or a 6-year high of 1.80%, but this is still down from the record 2.36% annual growth in December 2008. The monthly trend underemployment rate remained steady at 8.3%. The monthly underutilisation rate increased 0.1pts to 13.4%. The monthly seasonally adjusted underemployment rate increased 0.3pts to 8.5%. The monthly underutilisation rate increased 0.4 pts to 13.7%.

Domestic airfares

Business class airfares fell by 1% in May after declining by 6.6% in April – the biggest decrease in 4½ years. Business class airfares are down 9.2% on a year ago – falling at the fastest annual rate in six years. In smoothed terms, business class airfares fell by 1.4% in May to be down 7.6% on the year. Discount airfares are volatile month-to-month. In May, fares fell by 25.6% after lifting by 25.3% in April. Discount airfares are down 7.1% over the year to May. In smoothed terms, discount airfares fell by 2.3% in May to be down 3.9% on the year – the biggest fall in the annual growth rate in three years.  Restricted economy airfares fell by 0.5% in May, but were up by 6% on the year. In smoothed terms, restricted economy fares rose just 0.1% in May to be up by 5.5% on the year.

Why is the data important?

The Labour Force estimates are derived from a monthly survey conducted by the Bureau of Statistics. The population survey is based on a multi-stage area sample of private dwellings (currently about 22,800 houses, flats, etc.) and a sample of non-private dwellings (hotels, motels, etc.). The survey covers about 0.24% of the population of Australia and includes all people over 15 years of age, except defence personnel.

If more people are employed, then there is greater spending power in the economy. But at the same time companies may adjust the work hours of employees. If employees work less hours, and therefore get paid less, then spending power in the economy is reduced.

The Bureau of Infrastructure, Transport and Regional Economics (BITRE) releases data on domestic and international aviation each month. The data is useful in tracking consumer spending and airline performance as well as broader economic activity.

What are the implications?

CommSec doesn’t expect a change in interest rates for the next few months. If there were to be a change in rates, rate cuts are more likely than rate hikes. We’ll know more when the Reserve Bank Governor speaks on Tuesday.

More people in jobs, means more spending power in the economy. And this spending power is underpinned by rising wages. In fact, today, SEEK indicated that annual wage growth of the available positions had lifted to 4.1 per cent – well above the official wage growth result for private sector employees of 2.4 per cent.

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Good morning, Australia

Monday, May 13, 2019

In US data, consumer prices rose by 0.3% in April with the annual rate up from 1.9% to 2% (forecast 2.1%). Excluding food and energy, prices rose by 0.1% with the annual rate up from 2.0% to 2.1% as expected. The budget was in surplus by US$160 billion in April (forecast US$165bn).

US share markets rebounded from lows on Friday. Despite new tariffs being imposed by the US on Chinese goods, investors are still optimistic about a trade deal eventually being secured. US President Trump said he was in "absolutely no rush" to secure a deal. Trade talks will continue in Beijing. Shares in ride-hailing firm Uber Technologies fell by 7.6% in its first day of trade. After being down 358 points, the Dow Jones ended higher by 114 points or 0.4%. The S&P500 index rose by 0.4%. And the Nasdaq index lifted by 6 points or 0.1%. Over the week the Dow lost 2.1%, the S&P 500 fell by 2.2% and the Nasdaq lost 3%.

US treasuries were mixed on Friday. Inflation data was a bit softer than forecast but most traders focussed on China-US trade talks. US 2-year yields were flat near 2.27% and US 10-year yields rose 2 points to 2.47%. Over the week US 2-year yields fell by 8 points and US 10-year yields fell by 7 points.

Bonjour Europe

European share markets were generally firmer on Friday. Shares in German industrial conglomerate ThyssenKrupp rose by 28.2% on news it will list its elevators business. The pan-European STOXX600 index rose by 0.3%. But while the UK FTSE fell 0.1%, the German Dax lifted by 0.7%. In London trade, shares of Rio Tinto rose by 0.9% and BHP rose by 0.5%.

Hello World!

Major currencies were mixed against the US dollar in US and European trade compared with the end of Asian trade. The Euro rose from near US$1.1215 to US$1.1250 and was around US$1.1233 in late US trade. The Aussie dollar rose from near US69.85 cents to US70.08 cents and was around US70 cents in late US trade. And the Japanese yen eased from 109.50 yen per US dollar to JPY110.03 and was around JPY109.94 in late US trade. This morning the Aussie is near US69.85 cents and Japanese yen near JPY109.70.

Global oil prices closed mixed on Friday. Investors awaited news on the China-US trade talks. The Brent crude price rose by US23 cents or 0.3% to US$70.62 a barrel. And the US Nymex fell by US4 cents or 0.1% to US$61.66 a barrel. Over the week Brent fell by 0.3% and Nymex fell by 0.5%.

Base metal prices were higher by up to 2.0% on Friday with tin up the most although copper only rose by 0.3%. And lead was the exception, down by 0.8%. Over the week metals were lower by 1.9- 4.2% with lead and zinc down the most. But aluminium was the exception, up by 0.4%.

The gold futures price rose by US$2.20 an ounce or 0.2% to $1,287.40 an ounce. But the spot gold price ended lower, near US$1,286 an ounce in late US trade. Over the week gold rose by US$6.10 or 0.5%. Iron ore was up 30 cents to US$95.45 a tonne. Over the week iron ore rose by US80 cents a tonne or 0.8%.

G’day Australia

In Australia lending data is released with overseas arrivals/departures and credit/debit card statistics. In China, foreign direct investment and vehicle sales data are released. In the US data on consumer inflation expectations is issued.

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Australia: Wage and jobs data in focus before Election Day

Friday, May 10, 2019

In the coming week, the economic data spotlight is firmly on wages (Wednesday) and the job market (Friday) – the last key indicators released before the election. In April, we expect that 20,000 jobs were created with the jobless rate stable at 5.0%.

On Monday

The week kicks off on Monday when the Australian Bureau of Statistics (ABS) releases March data on overseas arrivals and departures. Tourist arrivals rose by 0.9 per cent in February, the strongest gain in five months while departures fell by 3.3%, the biggest fall in almost two years. Net permanent and long-term arrivals stood at a 5-year high of 299,100 in the year to February, up 11.4% on the year.

Also, on Monday the ABS issues home loan data within the publication “Lending to households and businesses” while the Reserve Bank issues the credit and debit card statistics for March. The value of home loans rose by 2.6% in February with the share of first home buyers in the market at 6-year highs.

On Tuesday

On Tuesday, National Australia Bank issues its April business survey. In March the business conditions index rose from +4.2 points to +7.0 points, above the long-term average of +5.9 points. The business confidence index fell from +1.8 points to 0.4 points in March – a 5½-year low and below the long-term average of +5.8 points. The Roy Morgan-ANZ weekly measure of consumer sentiment is also released on Tuesday – a measure that has tracked a zig-zag course in recent months.

On Wednesday

On Wednesday the all-important wage price index (WPI) is released – the main measure of wages in Australia. Wage growth has been edging higher over the past year and we expect that this continued in the March quarter. Wages may have lifted 0.6% in the quarter to be up 2.4% on the year. Also, on Wednesday the May consumer sentiment index is released. The sentiment gauge rose by 1.7% in April following the budget, but a flat reading is expected ahead of the election.

On Thursday

On Thursday the April job market data is expected. In March employment rose for the eighth straight month (only one fall in 30 months), up by 25,700. The unemployment rate rose from 4.9% to 5.0% in seasonally adjusted terms. In trend terms the jobless rate remained steady at a 10-year low of 5.0%.

Overseas: Chinese activity data in the spotlight

In China, the key monthly business activity data is the highlight (released Wednesday). While in the US there are no stand-outs. Over the week five Federal Reserve presidents deliver speeches.

On Monday

The week begins on Monday in the US when data on consumer inflation expectations is released.

On Tuesday

On Tuesday in the US, the National Federation of Independent Business (NFIB) releases its business optimism gauge. In March the index edged up to a three-month high but readings are well down from mid-2018. Also, on Tuesday, data on export and import prices are released with the regular weekly reading on chain store sales.

On Wednesday

On Wednesday in the US, a bevy of data is released: retail sales, industrial production, and the Empire State manufacturing index, the National Association of Home Builders housing market index and capital flows data. The former two indicators are the ones to watch. Retail sales may have lifted just 0.1% in April after a 1.6% gain in March. Excluding autos though a more significant 0.8% increase in sales is expected. In terms of industrial production, a 0.2% increase is tipped for April after the 0.1% fall in March. On Wednesday in China, the monthly activity indicators are released – retail sales, production and investment. Each of the indicators was surprisingly strong in March.

On Thursday

Also, in China the house price index is scheduled for release on Thursday with lending indicators slated for Friday. On Thursday in the US data on housing starts & building permits is issued with the influential Philadelphia Federal Reserve manufacturing index and weekly figures on new claims for unemployment insurance. Starts were flat in March after a 12% fall in February. Economists tip a 6.5% lift in April starts.

On Friday

On Friday in the US the Conference Board releases the leading index for April. A 0.4% increase is expected in the month. Also, on Friday the University of Michigan releases the preliminary consumer sentiment index for May. The index is healthy, just off four-month highs.

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Good morning, Australia

Monday, May 06, 2019

How’dy USA

In US data, non-farm payrolls (employment) rose by 263,000 in April (forecast +189,000). The jobless rate fell from 3.8% to a 49- year low of 3.6%. Average hourly earnings rose by 0.2% with the annual rate stable at 3.2%. The ISM services index fell from 56.1 to 55.5 (forecast 57) with prices, orders and employment all lower. US President Donald Trump has tweeted that tariffs on a raft of Chinese imports will lift to 25% on Friday "The Trade Deal with China continues, but too slowly, as they attempt to renegotiate."

US share markets rose solidly on Friday. Investors were encouraged by data showing a strong rise in employment and modest wage growth. Earnings results supported share market gains. The Dow Jones rose by 197 points or 0.8%. The S&P500 index rose by 1.0%. And the Nasdaq index lifted 127 points or 1.6%. Over the week the Dow lost 0.15% but the S&P 500 and Nasdaq both gained 0.2%.

US treasuries were firmer on Friday (yields lower). While jobs rose more than expected in April, wage growth remained tame. And a gauge of activity in the services sector fell in April. US 2-year yields fell by 1 point to 2.34% and US 10-year yields fell 2 points to 2.53%. Over the week US 2-year yields rose by 5 points and US 10- year yields rose by 3 points.

Bonjour Europe

European share markets were firmer on Friday in response to the strong US jobs data. The pan-European STOXX600 index rose by 0.4%. The UK FTSE also rose by 0.4%. The German Dax lifted 0.6%. In London trade, shares of Rio Tinto rose by 1.1% and BHP rose by 0.9%.

Hello World!

Major currencies were firmer against the US dollar in US and European trade compared with the end of Asian trade. The Euro rose from US$1.1140 to near US$1.1205 and was around US$1.1200 in late US trade. The Aussie dollar rose from US69.87 cents to US70.24 cents and was around these levels in late US trade. And the Japanese yen rose from 111.60 yen per US dollar to JPY111.05 and was around these levels in late US trade. After the tweet from Donald Trump the euro has fallen this morning to US$1.1170, Aussie is US69.65c and yen is JPY110.60.

Global oil prices rose slightly on Friday. The solid US jobs data provided encouragement on oil demand. But the number of oil rigs in operation in the US rose from 805 to 807 in the past week. The Brent crude price rose by US10 cents or 0.1% to US$70.85 a barrel. And the US Nymex rose by US13 cents or 0.2% to US$61.94 a barrel. Over the week Brent fell by 1.8% and Nymex fell by 2.1%.

Base metal prices were higher by up to 2.0% on Friday with lead up the most although tin only rose by 0.3%. And aluminium was the exception, down by 1.5%. Over the week metals were lower with tin down the most (down 3.1%) and zinc down the least (down 0.6%).

The gold futures price rose by US$9.30 an ounce or 0.7% to $1,281.30 an ounce. But the spot gold price ended lower, near US$1,279 an ounce in late US trade. Over the week gold fell by US$7.10 or 0.6%. Iron ore was up 5 cents to US$94.65 a tonne. Over the week iron ore rose by US$1.85 a tonne or 2%.

G’day Australia

In Australia data on job ads will be released with the Melbourne Institute inflation gauge. In China the Caixin services sector gauge is released.

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Good morning, Australia

Monday, April 29, 2019

How’dy USA

In US data, the economy grew at a 3.2% annual pace in the March quarter, up from 2.2% growth in the December quarter (forecast +2.0%). The core personal consumption deflator - the Federal Reserve's preferred measure of inflation - grew at a 1.3% annual pace (forecast 1.6%). Consumer sentiment fell from 98.4 to 97.2 in April (forecast 97.0).

US share markets rose on Friday. The solid economic growth results boosted interest in stocks together with earnings results. Shares in Ford rose 10.7% and Amazon gained 2.5%. On the negative side, Intel fell 9% and Exxon Mobil fell by 2%. Shares in Walt Disney rose 2% on strong box office figures for 'Avengers: Endgame'. The Dow Jones rose by 81 points or 0.3%. The S&P500 index lifted by 0.5% to record highs. And the Nasdaq index gained almost 28 points or 0.3% to record highs. Over the week the Dow lost 0.1% but the S&P 500 rose by 1.2% and the Nasdaq rose by 1.9%

US treasuries were firmer on Friday (yields lower). Economic growth was firmer than expected but with inflation weaker than expected. US 2-year yields fell by 4 points to 2.29% and US 10- year yields fell 3 points to 2.50%. Over the week US 2-year yields fell by 6 points with US 10-year yields down 10 points. 

Bonjour Europe

European share markets generally rose on Friday. Banks, autos and healthcare rose. Investors were encouraged by earnings results from French drug maker Sanofi and French aero engine maker Safran. Also, US economic data boosted sentiment. The pan European STOXX600 index rose by 0.2%. The German Dax rose by 0.3% but the UK FTSE fell by 0.1% in response to a lower oil price. In London trade, shares of Rio Tinto rose by less than 0.1% while BHP rose by 0.1%.

Hello World!

Major currencies were mixed against the US dollar in US and European trade compared with the Asia close. The Euro broadly held between US$1.1125 and US$1.1175 and was near US$1.1150 in late US trade. The Aussie dollar broadly held from US70.20 cents and US70.60 cents and was near US70.40 cents in late US trade. And the Japanese yen lifted from 111.89 yen per US dollar to JPY111.42 and was around JPY111.50 in late US trade.

Global oil prices fell by around 3% on Friday to 3-week lows. Investors booked profits after US President Trump again put pressure on OPEC nations to lower the oil price. But supporting prices was data showing that the number of oil rigs in operation in the US fell by 20 to 805 in the past week. The Brent crude fell by US$2.20 or 3.0% to US$72.15 a barrel and US Nymex fell by US$1.91 or 2.9% to US$63.30 a barrel. Over the week Brent rose by 0.3% but Nymex fell by 1.1%.

Base metal prices were firmer on Friday, lifting up to 1.1% with lead up the most. The exception was aluminium, down 1.1%. Over the week metals fell by between 1.0-1.9%, except lead (+1%) and zinc (+0.7%).

The gold futures price rose by US$8.70 an ounce or 0.7% to $1,288.40 an ounce. The spot gold price was near US$1,286 an ounce in late US trade. Over the week gold rose by US$16.40 or 1.3%. Iron ore rose by US20 cents or 0.2% to US$92.80 a tonne. Over the week iron ore rose by US$1.00 or 1.1%.

G’day Australia

In Australia the CommSec State of the States report is released. In the US, personal income and spending data is released with the Dallas Federal Reserve manufacturing index.

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Australia: Inflation data in focus

Thursday, April 18, 2019

On Wednesday

The week kicks off on Wednesday when Australian Bureau of Statistics releases the CPI data together with detailed jobs data for March. Also, the weekly consumer sentiment index is issued by ANZ and Roy Morgan. And the Department of Employment releases March data on skilled job vacancies. Furthermore, the latest figures show an easing of skilled job vacancies. But the question is (and this applies also to the ANZ job advertisement series) is whether the vacancies series are picking up the trend to list jobs on LinkedIn and individual company websites rather than job search websites.

But the spotlight on Wednesday, is firmly on the CPI data for the March quarter. The key inflation figures are only released once a quarter, rather than each month as they are in a raft of advanced economies. So, the data takes on special importance – especially as current and prospective inflation guides Reserve Bank policymaking.

The ‘headline’ CPI is tipped to lift by just 0.2% in the March quarter, dragging the annual rate down from 1.8% to 1.5%. A key factor keeping inflation low is petrol – fuel prices fell by around 9% in the March quarter, taking around 0.2 percentage points off the quarterly CPI growth.

In the March quarter there are seasonal increases in education fees, alcohol & tobacco (higher excise tax) and pharmaceutical product prices (changes to the safety net threshold for Pharmaceutical Benefits Scheme and Medicare Benefits Scheme). And there is a seasonal fall in the cost of overseas holiday travel & accommodation.

Also, on Wednesday, the underlying CPI measures are expected to have lifted by around 0.4% in the March quarter with the annual growth rate easing from 1.8% to 1.7%.

On Thursday

Both the Producer Price Indexes (business inflation) and International Trade Price Indexes (export & import prices) publications are released.

Overseas: US housing market in focus

A raft of data covering the US housing market is released in the coming week. Investors will also be focussed on the personal income/spending data on Friday.

On Monday

The week begins on Monday in the US when the Chicago Federal Reserve releases the March reading of the national activity index. The index has fallen in four of the past five months. Also, on Monday in the US, data on existing home sales is released for March. In February, sales soared by 11.8% to an 11-month high so analysts expect some correction in the April results, perhaps down around 6%.

On Tuesday

The regular US weekly data on chain store sales is scheduled along with the monthly data on house prices, new home sales and the influential Richmond Federal Reserve manufacturing index. Also, Tuesday saw the house price data is issued by the Federal Housing Finance Agency. In January, prices rose by 0.6% – the strongest reading in 11 months. And just like existing home sales, new home sales may have slipped in March after a solid 4.9% gain in February.

On Wednesday

The only data of note in the US is the regular weekly reading on new mortgage applications. As would be expected, applications (especially refinancing) fluctuate in line with changes in average fixed 30-year mortgage rates. Applications soared in March as yields fell but have lending has eased in April.

On Thursday

Figures for durable goods orders are released with the Kansas Fed manufacturing index and the usual weekly data on claims for unemployment insurance. Durable or long-lasting goods are those goods expected to last three years or more – goods like cars and aircraft. New orders fell by 1.6% in February but rose 0.1% if transport goods are excluded. Analysts tip a 0.4% lift in March orders.

On Friday

The first (“advance”) estimate of US economic growth for the March quarter is expected. Economic growth slowed from 3.4% to 2.2% in the December quarter. Apart from economic growth, investors will also be focussed on inflation readings – namely the core personal consumption expenditure deflator. This is the inflation measure favoured by Federal Reserve policymakers. Also, on Friday, US data on wholesale inventories is issued with the second (final) reading of consumer sentiment for the month of April. The index on the outlook for consumer finances is at 14-year highs.

Financial markets

On Monday

Haliburton, Kimberley-Clark

On Tuesday

Coca Cola, Harley Davidson, Jet Blue, Lockheed Martin, Procter & Gamble, Texas Instruments, Twitter, Verizon.

On Wednesday

AT&T, Boeing, Caterpillar, Domino’s Pizza, Goodyear, Novartis, Advanced Micro, Facebook, Wynn Resorts, Microsoft, Tesla, Visa. 

On Thursday

3M, American Airlines, Comcast; Nokia, Amazon, Intel, Ford.

On Friday

Chevron, Exxon Mobil, Colgate-Palmolive, Sony.

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Good morning, Australia

Monday, April 15, 2019

How’dy USA

In US economic data, export prices rose 0.6% in March (forecast +1.1%) with import prices also up 0.6% (forecast +0.4%). Consumer sentiment eased from 98.4 to 96.9 in April (forecast 98).

US share markets were firmer on Friday. Investors were encouraged by earnings from JP Morgan Chase (shares up by 4.7%). Financials rose 1.9%. Shares in Walt Disney rose 11.5% to an all-time high after reporting pricing on its upcoming streaming service. Chevron (-4.9%) said it would buy Anadarko Petroleum (+32%) for $33 billion in cash and stock. The Dow Jones index rose by 269 points or 1.0%. The S&P500 index rose by 0.7% and is nearing record highs. And the Nasdaq index rose by 37 points or 0.5%. Over the week the Dow fell 0.1% with the S&P 500 up 0.5% and the Nasdaq rose by 0.6%.

US treasuries were weaker on Friday (yields higher). Investor risk appetite grew with stocks and commodities favoured over safe haven government bonds. US 2-year yields rose by 4 points to 2.39% and US 10-year yields rose by 6 points to 2.56%. Over the week US 2-year yields rose by 6 points and US 10-year yields rose by 5 points.

Bonjour Europe

European share markets rose on Friday. Autos rose 2%, with banks up 1.9% and basic resources up 1.2%. The pan-European STOXX600 index rose by 0.2%. The German Dax rose by 0.5% and the UK FTSE was higher by 0.3%. And in London trade, shares of Rio Tinto rose by 1.2% while BHP rose by 0.6%. 

Hello World!

Major currencies were firmer against the US dollar in US and European trade compared with the Asia close. The Euro rose from near US$1.1280 to US$1.1325 and was near US$1.1300 in late US trade. The Aussie dollar rose from near US71.20 cents to near US71.90 cents and was near US71.70 cents in late US trade. And the Japanese yen eased from 111.75 yen per US dollar to near JPY112.10 and was around JPY112.00 in late US trade.

Global oil prices rose on Friday. Investors were encouraged by better-than-expected Chinese export data. And investors believe that sanctions on Venezuela and Iran and conflict in Libya will continue to restrict global oil supplies. But the number of US oil rigs in operation rose by 2 last week to 833, potentially leading to higher supplies in the future. Brent crude rose by US72 cents or 1.0% to US$71.55 a barrel and US Nymex rose by US31 cents or 0.5% to US$63.89 a barrel. Over the week Brent rose 1.7% and Nymex rose by 1.3%.

Base metal prices were higher by up to 3.1% with zinc doing the best. But aluminium rose just 0.2% and lead fell 0.1%. Over the week metals fell by between 0.4-2.9% with nickel down the least and lead down the most. But copper rose by 1.2% with zinc up 1.7%.

The gold futures price rose by US$1.90 an ounce or 0.1% to $1,295.20 an ounce. The spot gold price was near US$1,290 an ounce in late US trade. Over the week gold fell by US40 cents. Iron ore rose by US80 cents or 0.8% to US$95.80 a tonne. Over the week iron ore rose by US$3.00 or 3.2%.

G’day Australia

In Australia no major data is scheduled. In the US, the Empire State index is expected with capital flows data.

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Australia: Reserve Bank and jobs data ahead of Easter holidays

Friday, April 12, 2019

On Tuesday

The week kicks off on Tuesday when the weekly consumer sentiment index is issued from ANZ and Roy Morgan. The survey will be closely monitored in the lead up to the Federal election in May. Also, the Reserve Bank will release minutes of the April 2 monetary policy meeting. Furthermore, the Board changed the last sentence of their April Statement for the first time since Governor Philip Lowe was appointed in September 2016, giving members greater flexibility to support slowing domestic demand. The Statement said, “The Board will continue to monitor developments and set monetary policy to support sustainable growth in the economy and achieve the inflation target over time”.

On Thursday

The March employment report is released. Leading indicators of jobs growth have been mixed. That said, on average, 23,700 job have been added on a monthly basis over the 12 months to February. The national unemployment rate fell to 4.9%, a rate that hasn’t been bettered in a decade. CBA group economists’ forecast 20,000 jobs to be added, but the unemployment rate is expected to edge up to 5% with the participation rate at 65.6%. Also, on Thursday, the Commonwealth Bank issues the Business Sales Indicator for March.

Overseas: China economic growth data in focus

The much-anticipated Chinese economic growth and monthly activity data are released on Wednesday. In the US, consumer and manufacturing surveys, together with retail and international trade data are of most interest. 

On Monday

The week begins on Monday in the US when the New York Empire State Manufacturing Index is issued with capital flows data. In China, money supply and lending data are scheduled.

On Tuesday

The regular US weekly data on chain store sales is scheduled along with the monthly readings on industrial production and homebuilding sentiment. Factory output is tipped to lift by 0.3% in March. The National Association of Home Builders’ index is tipped to lift by 1 point to 63 points in April.  

On Wednesday

Attention turns to China when the March quarter economic (GDP) growth data is released. The annual growth rate is expected to decelerate to 6.3%, down from 6.4% in the December quarter. Also, on Wednesday, in the US, the Federal Reserve's Beige Book is released. In the March report, 10 of 12 districts reported growing economic activity, while the remaining two saw flat growth. At the same time, the Beige Book reported that “Labour markets remained tight for all skill levels, including notable worker shortages for positions relating to information technology, manufacturing, trucking, restaurants, and construction”. Wednesday also saw the US international trade balance is reported. The US trade deficit in goods and services fell to US$51.1 billion in January, down US$8.8 billion compared to December due to a 14% drop in imports from China ahead of potential tariff increases on March 1 (which didn’t materialise).

On Thursday

Figures for retail sales, the leading index and the usual weekly data on claims for unemployment insurance are all issued. The influential Philadelphia Federal Reserve manufacturing index is also released. Retail sales are tipped to rebound by 0.8% in March after cold winter weather and the US government shutdown constrained consumer spending in February. 

On Friday

Leading US housing market indicators, such as housing starts and building permits data, are expected to rebound in March, supported by falling mortgage rates and a still-solid jobs market.

Financial Markets

The US earnings (profit-reporting) season moves up a gear in the coming week. Companies expected to report earnings, include:

On Monday

Citigroup & Goldman Sachs.

On Tuesday

Bank of America, BlackRock, Charles Schwab, IBM, Johnson & Johnson, Netflix and UnitedHealth Group.

On Wednesday

Alcoa, Bank of New York Mellon, Morgan Stanley and PepsiCo.

On Thursday

American Express, Schlumberger and Travelers.

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Good Morning, Australia

Monday, April 08, 2019

How’dy USA

In US economic data, non-farm payrolls (employment) rose by 196,000 in March (forecasts +180,000). The jobless rate was unchanged at 3.8% as expected. Average hourly earnings rose by 0.1% (forecast +0.3%) and annual wage growth fell from 3.4% to 3.2%. Consumer credit rose by US$15.19 billion in February (forecast +US$17 billion).

US share markets were firmer on Friday. Firm jobs data eased fears of an economic slowdown. Oil stocks rose as oil prices lifted. US-China trade talks will continue in the coming week by video-link. A number of US banks will release earnings figures in the coming week. The Dow Jones index rose by 40 points or 0.2%. The S&P500 index rose for the seventh straight day, up by 0.5%. And the Nasdaq index rose by 47 points or 0.6%. Over the week the Dow rose 1.9% with the S&P 500 up 2.1% and the Nasdaq rose by 2.7%. 

US treasuries were mixed on Friday. While job growth remained solid, wage growth eased in April. US 2-year yields rose by 1 point to 2.34% and US 10-year yields fell by 1 point to 2.50%. Over the week US 2-year yields rose by 8 points and US 10-year yields rose by 9 points.

Bonjour Europe

European share markets rose on Friday. Firm US jobs data provided encouragement to investors together with a 0.7% lift in German industrial output in February. Oil & gas stocks rose but banks and telecom fell. The pan-European STOXX600 index rose by 0.1%. The German Dax rose by 0.2% and the UK FTSE was higher by 0.6%. And in London trade, shares of Rio Tinto rose by 1.7% while BHP rose by 1.6%.

Hello World!

Major currencies were generally softer against the US dollar in US and European trade compared with the Asia close. The Euro fell from near US$1.1240 to US$1.1210 and was near US$1.1220 in late US trade. The Aussie dollar fell from near US71.30 cents to near US70.90 cents and was near US71.10 cents in late US trade. And the Japanese yen held between 111.60 yen per US dollar and JPY111.80 and was near JPY111.73 in late US trade.

Global oil prices rose on Friday to 5-month highs. Stronger-than expected US job figures eased demand concerns. The prospect of military action in Libya could also crimp crude supplies in the short term. But the number of US oil rigs in operation rose by 15 last week to 831. Brent crude rose by US94 cents or 1.4% to US$70.34 a barrel and US Nymex rose by US98 cents or 1.6% to US$63.08 a barrel. Over the week Brent rose 2.9% and Nymex rose by 4.9%.

Base metal prices were lower by up to 0.7% with nickel and tin down the most. But zinc bucked the trend, up 0.4%. Over the week metals fell by between 0.6-1.8% with zinc down the least and lead down the most. But nickel rose by 0.7%.

The gold futures price rose by US$1.30 an ounce or 0.1% to $1,295.60 an ounce. The spot gold price was near US$1,291 an ounce in late US trade. Over the week gold fell by US$2.90 or 0.2%. Iron ore fell by US10 cents or 0.1% to US$92.80 a tonne. Over the week iron ore rose by US$5.75 or 6.6%.

G’day Australia

In Australia no major data is scheduled. In the US, data on factory orders is expected.

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