Investor Signposts: The week ahead
By Craig James
In Australia there is a healthy offering of new economic data in the coming week. Overseas, the highlight in China are trade and inflation figures. Similarly in the US, inflation will be in the spotlight with retail sales.
In Australia, the week kicks off on Monday with data on housing finance (new home loans). The tighter lending standards adopted by the banking sector are likely to result in loans for owner-occupiers (those who want to live in the homes) easing by 0.7 per cent in February. And the total value of all new loans may have fallen by 1.2 per cent in the month.
On Tuesday, Roy Morgan and ANZ release the results of the weekly consumer confidence survey. Home prices and company tax cuts are hogging the radar screen at present.
National Australia Bank also releases the March business survey results on Tuesday. The NAB business conditions index eased from a 9-year high of +16.3 points to +9.3 points in February. And the business confidence index eased from a 3-year high of +9.7 points to +6.9 points.
On Wednesday, the Westpac/Melbourne monthly survey of consumer confidence is issued together with data on dwelling starts from the Bureau of Statistics (ABS).
Also on Wednesday, the ABS releases data on lending finance – the broader data on new lending across the economy – including business, personal, housing and lease loans. Investor housing is one of the key drivers at present. Also, the Reserve Bank releases February data on credit card and debit card transactions. Plastic cards are being used more often, especially for smaller transactions.
On Thursday, the monthly employment report is released. The labour market data has been resilient despite the weaker result last month. Importantly, the weakness last month was largely driven by part-time jobs. We expect that the below-average growth will give way to above-average growth in March and we are tipping job growth of around 25,000 in the month. The jobless rate should remain near 5.9 per cent.
Also on Friday, the Reserve Bank releases its bi-annual Financial Stability Review. While primarily designed to check the health of the financial system, a big focus in Thursday’s report will be comments on the home building markets in various capital cities, notably Brisbane and Melbourne.
China inflation and trade; US inflation
Chinese and US economic data compete for top billing in the coming week. The highlight is probably Chinese trade data on Thursday and the US retail sales and inflation data both due on Friday.
On Monday, the week kicks off in the US with the Employment Trends report.
On Tuesday, the NFIB Business Optimism index is issued – a gauge of small business sentiment. And on the same day the JOLTS report of job openings is released – a forward-looking indicator on the strength of the job market. The usual weekly data on chain store sales is also issued on Tuesday.
On Wednesday, Chinese data on producer prices and consumer prices are released. Business inflation is no longer going backwards, and the latest result should show that producer prices are up 7.6 per cent over the year – just off the fastest growth in eight years. In contrast, data should show consumer prices are lifting at a more sedate pace with 1.0 per cent annual growth of prices expected in March.
Also on Wednesday in the US, data on export and import prices are to be released together with the monthly budget statement. The usual weekly data on mortgage finance is also issued.
On Thursday in the US, the weekly data on claims for unemployment insurance is released together with data on producer prices and the preliminary University of Michigan consumer confidence reading for April. Excluding food and energy prices, overall producer prices may have lifted by 0.2 per cent in March, keeping annual growth near 1.5 per cent.
In China on Thursday, March trade data is issued in China. Data from previous months has been complicated by the timing of the Lunar New Year holidays. A US$10 billion trade surplus is tipped for March.
On Friday, two key US indicators are slated for release; US consumer prices and retail sales. The Federal Reserve is keeping a close eye on inflation especially with regards to the timing for future rate hikes. For the record, the headline inflation reading may have actually edged up only 0.1 per cent in March, leaving headline growth near 2.7 per cent. But the more important core inflation measure (excludes food and energy) is likely to have risen by 0.2 per cent in the month to be up 2.2 per cent over the year.
In terms of spending, economists expect that US retail sales rose by 0.3 per cent in March with a similar increase expected when auto sales are excluded.
Also on Friday, data on US business inventories is released with a 0.3 per cent increase expected.
The US first quarter earnings season gets underway in the coming week. Alcoa is slated to release earnings on Monday. And on Thursday, Citigroup, JP Morgan Chase and Wells Fargo are expected to report. Thomson Reuters tips 10.1 per cent annual growth in earnings by S&P 500 companies over the season.
Please note: This week’s report was written by Savanth Sebastian, Senior Economist.
This report is approved and distributed in Australia by Commonwealth Securities Limited ABN 60 067 254 399, AFSL 238814 (CommSec) a wholly owned but non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124, AFSL 234945 (the Bank). The Bank and its subsidiaries have effected or may effect transactions for their own account in any investments or related investments referred to in this report. This report is not a recommendation to buy, sell or hold any securities, property, real estate or financial products, and has been prepared without taking account of the objectives, financial or taxation situation or needs of any particular individual. For this reason, any individual should, before acting on the information in this report, consider the appropriateness of the information, having regard to the individual's objectives, financial or taxation situation and needs and, if necessary, seek appropriate professional advice. Past performance is not a reliable indicator of future performance. This report is produced by Commonwealth Research based on information available at the time of publishing. We believe that the information in this correspondence is correct and any opinions, conclusions or recommendations are reasonably held or made as at the time of its compilation, but no warranty is made as to accuracy, reliability or completeness. To the extent permitted by law, neither the Bank nor any of its subsidiaries accept liability to any person for loss or damage arising from the use of this report.
Published: Friday, April 07, 2017
New on Switzer
- Can Scott sell us a good Budget story that we'll buy? 28 Apr •
- Turnbull gets the barnacle scraper out 28 Apr •
- Investor Signposts: RBA in focus 28 Apr •
- Defence Housing Australia: Property Investment Program 28 Apr •
- 5 things you need to know today 28 Apr •
- When pills become part of the long-term problem 27 Apr •
- Ian Malouf 28 Apr •
- Paul Moore 28 Apr •
- Michael McCarthy 28 Apr •