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Investor signposts: Business conditions and jobs to dominate

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By Craig James

There are fewer ‘top shelf’ economic indicators in Australia in the coming week but it is still a busy schedule. Main interest is in the NAB business conditions survey and the latest jobs report.

The week kicks off on Monday with the Australian Bureau of Statistics (ABS) releasing the July data on lending finance commitments. As well as containing figures on new home loans, the data covers personal, commercial and lease loans.

A busy agenda is set down for Tuesday. The ABS releases the publication “Overseas Arrivals and Departures”. And not only is data on tourism flows included in the publication but also longer-term migration figures.

Also on Tuesday, NAB issues its August business survey. This is one of the best indicators to be released each month as it is a summary of how businesses across the nation are actually doing and feeling. Business conditions are near decade highs.

Other data out on Tuesday includes the July data on credit and debit card lending issued by the Reserve Bank as well as weekly consumer confidence data.

Aussie consumers had been a touch downbeat but there is a growing realisation that overall economic conditions are still pretty good. Interest rates remain near generational lows but the Aussie dollar is firmer – encouraging travelling and spending.

On Wednesday, the monthly survey of consumer confidence is released from the Melbourne Institute and Westpac. This data is now more a check on the timelier weekly survey data. But of interest in the September survey are the responses to the question “where are the wisest places to put new saving”.

Also on Wednesday, the ABS are hoping to provide two publications: “Household Expenditure Survey” and “Household Income and Wealth”. These publications had been due for release in late August. But the data is keenly awaited by a raft of businesses.

On Thursday the ABS releases the August labour market indicators (employment and unemployment
). Based on a raft of positive indicators, employment should have lifted by another 20,000 people in the month with the jobless rate steady at 5.6%.

Also on Thursday, the ABS releases the Modellers Database – data which provides some additional insights into the economy’s performance.

Overseas: Pivotal US and Chinese indicators

In the coming week investors will get the latest information on how the two biggest global economies – the US and China – are travelling. Both countries issue estimates on retail spending and industrial production.

In the US, the week kicks off on Tuesday with the release of the Business Optimism index for August from the National Federation of Independent Business, a leading small business association. The Business Optimism index is near 12-year highs.

Also on Tuesday is the JOLTS survey – job openings and labour turnover survey – a forward-looking gauge on the job market. Job openings stand at a  record high – the question is whether there are enough possible applicants to fill all the positions.

The usual weekly data on chain store sales is also issued on Tuesday.

On Wednesday in the US the August data on business inflation – the producer price index – is released with the monthly budget figures and weekly data on housing finance. The core PPI measure (excludes food and energy) is tipped to rise 0.1% in August after July’s surprise 0.1% fall.

On Thursday in the US the consumer variant on inflation – the consumer price index – is released together with the usual weekly data on jobless claims (new claims for unemployment insurance). While not the Federal Reserve’s preferred measure of inflation, trends in the CPI are still closely watched. The core CPI measure is tipped to rise 0.2% in August to stand up just 1.6% on a year ago.

And on Friday in the US, data on retail sales and industrial production are set for release together with the first consumer sentiment survey for September. Both production and retail sales may have lifted 0.4% in August. While solid readings, if they are not accompanied by signs of higher inflation, then the Federal Reserve has no compelling need to lift rates. In turn, this keeps the US dollar down and Aussie dollar close to US80 cents.

In China, the monthly download of economic indicators is set down for Thursday – retail sales, production and investment. Much interest is in retail spending – up by a lofty 10.4% in the year to July.

Financial markets

 

If there is one trend that highlights the improving health of the global economy it is the rise and rise of base metal prices. Zinc is at decade highs, up 33% on the year. Copper is up 49%, aluminium is up 32% and lead and nickel are up around 20%.

Metals are being supported by fundamentally firmer demand and lower supplies, together with special influences like the fear of tighter environmental regulations in China.

Published: Thursday, September 07, 2017


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