The week kicks-off on Monday with updates on retail trade, consumer prices and job advertisements. The retail spending data will garner most investor attention with the release of September quarter figures. Spending at shops and online is expected to have lifted by around 0.3% during the quarter. Sales were up by 0.4% in August - the strongest gain in six months – supported by the receipt of tax refunds.
On Tuesday, the Reserve Bank Board meets and hands down its interest rate decision at 2.30pm AEDT - prior to ‘the race that stops a nation’. Commonwealth Bank economists expect no change in interest rates, but is pencilling in an additional rate cut for February 4 2020. Also on Tuesday, the regular weekly measure of consumer confidence is issued by ANZ and Roy Morgan. AiGroup and CommBank/IHS Markit also release their services sector indexes. And the Federal Chamber of Automotive Industries provides VFACTS data on new vehicle sales for October. In September, 88,181 new vehicles were sold, down by 6.9% over the year. In the twelve months to September, sales totalled 1,083,570 units, down 8.2% on a year ago and the biggest annual decline in almost a decade.
On Thursday, there are two indicators to spark investor interest: international trade (exports and imports) and AiGroup’s Performance of Construction Index (October). Australia is expected to record a 21st successive monthly trade surplus in September. The rolling annual surplus was a record $58.59 billion in the year to August. Exports to China have hit new highs, with still-solid demand for iron ore, coal and LNG, despite the ongoing US-China trade dispute. The drought has weighed on farm exports.
On Friday, the Reserve Bank provides a quarterly update of its economic growth (GDP), inflation, unemployment and wage growth forecasts. The Statement of Monetary Policy also details the Bank’s assessment of current economic conditions with some topics of special interest highlighted. Also, on Friday the ABS issues new lending data. Mortgage rate cuts and rising home prices boosted investment lending by 5.7% in August and 4.2% in July – the largest increases in since September 2016.
Overseas: US and China trade data in focus
A bevy of US economic data releases lie ahead in the coming week including trade, job openings and a gauge of services sector activity. In China, data on trade and inflation are of most interest.
In the US on Monday, factory orders data is released for September. Orders are expected to have fallen by 0.5%. Construction-related orders were particularly weak, down by 26.9% over the year to August.
On Tuesday in China, the private-sector focused Caixin services gauge is due for October. In the US on Tuesday, international trade data is expected together with the number of job openings; the Institute of Supply Management’s (ISM) non-manufacturing index; and weekly chain store sales figures. US imports and exports with China have declined significantly since the trade war began 18 months ago, disrupting supply chains, increasing input costs and delaying business spending on machinery and equipment. China has been relegated to the third largest trading partner of the US so far in 2019, behind Mexico and Canada. The overall US trade deficit is expected to fall by US$0.9 billion to US$54 billion in September.
On Wednesday, the weekly reading on mortgage applications is issued along with September quarter updates on productivity and unit labour costs. US 30-year fixed mortgage rates are near the lowest levels since late 2016 at 4%, but a lack of US housing supply is preventing buyer purchase activity from lifting more meaningfully.
On Thursday, the usual weekly data on claims for unemployment insurance (jobless claims) are released, together with consumer credit data. US consumer credit rose by US$17.9 billion in August with non-revolving debt up by US$19.8 billion - the most in three years. Education loans surged ahead of the New Year at US universities.
On Friday in the US, the preliminary update on consumer confidence for November is provided by the University of Michigan. Sentiment remains elevated but eased in October on increased concerns about the economic outlook. On Friday in China, trade data is due. Chinese imports fell by 8.5% over the year to September, weighed down by sagging domestic demand and the ongoing US trade war.
On Saturday, Chinese inflation data is due along with new vehicle sales figures for October. Pork prices have surged by 69.3% over the year to September – due to a swine flu epidemic – and serving to lift headline consumer prices. But deflation is deepening in the industrial sector with producer prices down by 1.2% from a year ago. And new vehicle sales are expected to have fallen for a 16th consecutive month in October.
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