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Australia: Business investment and construction activity data in focus

Craig James
Friday, August 23, 2019

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On Monday

On Monday, investors will be able to respond to a speech by Reserve Governor Lowe (delivered Sunday 2.25am AEST).

On Tuesday

On Tuesday the weekly series of consumer confidence will be released by Roy Morgan and ANZ. Tax refunds, low mortgage rates and a bottoming of the property market are supporting consumer sentiment. Also, on Tuesday, the July Commonwealth Bank (CBA) Household Spending Intentions gauge is released. June readings showed weakness persists in the retail and motor vehicle sectors. But other sectors appear to be bottoming out with home buying intentions improving. The Reserve Bank Deputy Governor Guy Debelle is scheduled to speak at the Economic Society of Australia (ACT) lunch in Canberra at 12pm AEST.

On Wednesday

On Wednesday, the Australian Bureau of Statistics (ABS) provides an update on construction activity. In the year to March, construction work done was at record highs in New South Wales, South Australia and Tasmania. But CBA Group economists forecast a decline of 1.0% in construction activity in the June quarter.

On Thursday

On Thursday, the ABS issue’s the publication “Private New Capital Expenditure and Expected Expenditure” for the June quarter, including estimates of future investment. The second estimate of spending in 2019/20 was $99.1 billion, up 12.8% on the second estimate for 2018/19 - the strongest increase in 7 years. CBA Group economists expect that new investment (spending on buildings and equipment) was flat in the June quarter.

On Friday

On Friday, the ABS released the July data on building approvals – the consents granted by local councils to build new houses and apartments. Home building is easing in most states and territories. Also, on Friday, the Reserve Bank releases the estimates of private sector credit (effectively, loans outstanding). Annual housing credit growth was at historical lows of 3.5% in June. The Australian Prudential Regulation Authority (APRA) releases estimates on bank deposits, loans and credit card lending for July.

Overseas: US economic growth and Chinese manufacturing activity in focus

As the Northern Hemisphere summer draws to a close, US investors have plenty of data releases to digest, including the second estimate of June quarter economic (GDP) growth. Chinese industrial profits and the ‘official’ manufacturing and services gauges are also scheduled.

On Monday

The week begins on Monday in the US with the release of durable goods orders and business surveys from the Chicago and Dallas Federal Reserve. The strong US dollar, weak demand for exports, slowing global growth, soft Boeing aircraft orders and trade policy uncertainty are all weighing in US business investment.

On Tuesday

On Tuesday, the regular Redbook weekly reading on US chain store sales is released along with home prices, consumer confidence and manufacturing data from the influential Richmond Federal Reserve. On Tuesday in China, industrial profits data is scheduled. Falling corporate profits constrain firm’s capacity to expand production, investment and hiring. Falling producer prices are a headwind to the Chinese economy.

On Wednesday

On Wednesday, weekly mortgage applications figures from the US Mortgage Bankers Association are due.

On Thursday

On Thursday, the weekly figures on jobless claims are issued, along with US GDP growth, pending home sales, trade, wholesale inventories and corporate profits data. The second estimate of June quarter annualised GDP growth is forecast to be weaker at 1.9%, down from 2.1%. Consumer spending remains solid due to low unemployment and robust wages growth, but business investment contracted due to trade policy uncertainty.

On Friday

On Friday, personal income and spending data is issued along with the Chicago purchasing managers index and final consumer confidence reading from the University of Michigan. The personal income data includes pivotal inflation data – the core personal consumption expenditure deflator – the measure tracked by the Federal Reserve. The core PCE deflator may have lifted 0.2% in July to stay 1.6% higher on the year.

On Saturday

On Saturday in China, the National Bureau of Statistics releases the manufacturing and services purchasing manager indexes for August. Factory activity has contracted for five out of seven months so far in 2019 as the trade war with the US bites. That said, the services sectors contribution to GDP growth is over 50%, and non-manufacturing activity continues to expand, supported by tax cuts.

Financial Markets

The Australian corporate reporting season – the time when listed companies report earnings results – enters its final week. While subject to change, major companies expected to report include:

On Monday

On Monday: Fortescue Metals Group and Resolute Mining.

On Tuesday

On Tuesday: Adairs, AUB Group; Caltex Australia; CleanTeQ; Fleetwood; G8 Education; Japara Healthcare; Paladin Energy; Spark Infrastructure; Wesfarmers; Yowie.

On Wednesday

On Wednesday: Accent; Appen; Bega Cheese; Bravura Solutions; Eagle Health; Independence Group; Orocobre; OZ Minerals; Prime Media; Salmat.

On Thursday

On Thursday: Adelaide Brighton, Bellamy’s; Boral; Clinuvel Pharmaceuticals; Metro Mining; Ramsay Health; Regional Express; Village Roadshow; Virgin Australia; Woolworths.

On Friday

On Friday: Austal; Chant West; Freedom Foods; Harvey Norman; Kingsgate; Sandfire Resources; Slater & Gordon.

Published: Friday, August 23, 2019


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