Investor signposts: US Fed makes call on rates
By Craig James
A good helping of Australian economic data awaits investors over the coming week with lending data, surveys of consumer and business confidence and job data dominating.
In Australia, the week kicks off on Monday with the Reserve Bank releasing the January estimates of credit and debit card lending.
On Tuesday, most attention will be paid to the National Australia Bank business survey. In January, business conditions hit the highest levels in 9 years, while business confidence rose to 3-year highs.
Also on Tuesday, Roy Morgan and ANZ release the weekly consumer confidence reading. Confidence levels remain healthy, but volatile. Higher petrol prices, a lower Aussie dollar and softer share markets are weighing on sentiment together with some disappointment that rate cuts are now off the agenda.
Also on Tuesday, the Bureau of Statistics (ABS) issues the “Overseas Arrivals & Departures” publication for January, containing migration and tourist flows data. Tourists from China and the US are growing at double-digit annual rates.
On Wednesday, the monthly variant of consumer confidence – from Westpac and the Melbourne Institute – is released. The importance of the survey is that it will contain the survey results detailing the wisest places to put new savings.
On Wednesday, the ABS will also provide the seasonally adjusted and trend estimates of new vehicle sales for February. The interesting result from the industry data released on March 3 was that sales of sports utility vehicles overtook passenger car sales for the first time.
In addition on Wednesday, the ABS releases data on lending finance – new housing, lease, personal and business commitments. Total new commitments fell by 5.8 per cent in December after rising 9 per cent in November.
The highlight of the week is probably the monthly job data to be released on Thursday. In January, the unemployment rate fell from 5.8 per cent to 5.7 per cent despite the biggest lift in the employable population in eight years. We expect that employment rose by 18,500 in February while the jobless rate was probably steady at 5.7 per cent.
US Federal Reserve meeting. China activity data. Dutch election.
There are two highlights in the coming week. The first is the interest rate decision from the US Federal Reserve. And the second is the release of monthly Chinese activity data.
The week kicks off on Tuesday with Chinese data on production, retail sales and investment. The data covers January and February.
Also on Tuesday in the US is data on producer prices (business inflation) together with the NFIB business optimism index and the weekly data on chain store sales.
The US Federal Reserve kicks off a two-day meeting on Tuesday with the decision announced at 5am Sydney time on Thursday. With the economy in solid shape, another rate hike is on the cards.
On Wednesday in the US, data on retail sales and consumer prices are released. Economists tip a “normal” 0.2 per cent rise in core consumer prices (excludes food and energy) and a similar 0.2 per cent lift in retail sales. Traders will also watch for any potential surprises from the Netherlands election also on Wednesday.
On Thursday in the US, the usual weekly data on jobless claims is released alongside housing starts, the influential Philadelphia Federal Reserve survey and JOLTS job openings survey. Starts may have lifted 2 per cent in February after a 2.6 per cent fall in January. The Philly Fed index may have eased from highs in March.
And on Friday in the US, the industrial production data is released with the leading index and consumer sentiment survey. Economists tip a 0.3 per cent gain in production and 0.4 per cent rise in the leading index. Also G20 Finance Ministers meet in Germany on Friday.
Share markets, interest rates, exchange rates and commodities
The widespread perception is that the Netherlands holds the record for the world’s longest economic expansion. But according to OECD data, the record is already held by Australia. The claim that the Dutch held the record was based on data from private sector analysts, suggesting that the Netherlands expanded without a recession (defined as two consecutive quarters of contraction) from December quarter 1982 to September quarter 2008.
But the OECD data actually shows the Dutch economy contracted in the June and September quarters of 2003. The long expansion was actually December quarter 1981 to March quarter 2003 – 86 quarters. The quarterly OECD data goes back to 1960 and it is clearly an authoritative source of data.
Australia actually passed the Dutch record four years ago, in March quarter 2003. Australia has expanded for over 25 years without encountering a recession.
Published: Friday, March 10, 2017
New on Switzer
- Hold your breath. US vote could sink stocks! 24 Mar •
- Turnbull should be careful of compromise 24 Mar •
- Investor Signposts: The week ahead 24 Mar •
- Investing in Microcaps 23 Mar •
- Myth: BPA free is a safer alternative 23 Mar •
- Warren Chant 24 Mar •
- Shane Oliver 24 Mar •
- Rudi Filapek-Vandyck 24 Mar •