22 October 2020
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Australia: Inflation in focus

Craig James
24 July 2020

Inflation data dominates in the coming week. At present the quarterly data on price changes doesn’t rank highly for investors with the pandemic impacting on wage growth and consumer demand. The drought has also eased on Australia’s East Coast, potentially keeping a lid on food prices.

On Monday

The week starts on Monday, when CommSec releases its quarterly State of the States report. The ranking of economic performance shows how states and territories fared in the early months of the virus crisis.

Also, on Monday, Reserve Bank Assistant Governor (Financial Markets) Christopher Kent speaks at the Kanga News webinar. And the latest Household Impacts of COVID-19 Survey is issued by the Bureau of Statistics (ABS), covering the period July 6-10, 2020.

On Tuesday

On Tuesday, the regular weekly survey on consumer confidence is issued by ANZ and Roy Morgan. The Commonwealth Bank (CBA) releases the weekly measure of credit and debit card spending. The ABS also provides a timely update on jobs and payrolls figures for the week ended July 11, 2020.

On Wednesday

On Wednesday, the ABS releases its key inflation measure in Australia - the Consumer Price Index (CPI). CBA Group economists estimate headline consumer prices may have fallen 2% in the June quarter to be down 0.5% on the year. But the underlying or ‘core’ measure (‘trimmed mean’) could lift by 0.2% to be up 1.5% from a year ago. 

On Thursday

On Thursday, building approvals data for June is released with the second of the June quarter inflation indicators – the International Trade Price indexes. The data covers measures of export and import prices.

On Friday

On Friday, the Reserve Bank releases the Financial Aggregates publication. The data includes private sector credit as well as money supply indicators. APRA releases the banking and credit card data on the same day.

Also, on Friday, the ABS issues the third of the inflation indicators: Producer Price Indexes. The data covers measures of business inflation, including manufacturing, agriculture, and services.

Overseas: US Federal Reserve meeting and US economic growth

A meeting of the US Federal Reserve Open Market Committee is one of the highlights in the coming week.

On Monday

The week kicks off in China on Monday when data on industrial profits is released.

In the US on Monday, June durable goods orders data are issued with the Dallas Federal Reserve manufacturing index for July. Better-than-expected durable goods orders in May signalled that business investment may not be as weak as initially feared. While orders are tipped to lift 6.5% in June, corporate profits remain weak.

On Tuesday

On Tuesday, a raft of events and indicators are scheduled in the US. The Federal Reserve begins a two-day meeting. The central bank is likely to retain its policy settings for now, but Chairman Jerome Powell’s press conference will be closely followed. The decision is handed down at 4am AEST time on Thursday.

In terms of US economic data on Tuesday, the Conference Board’s consumer confidence rating, the Richmond Federal Reserve manufacturing index and the S&P/Case-Shiller home price series are all released with weekly Johnson Redbook chain store sales figures.

On Wednesday

On Wednesday the usual weekly data on US mortgage applications from the Mortgage Bankers Association (MBA) is issued together with advance goods trade, wholesale inventories and pending home sales data.

On Thursday

On Thursday, the weekly data on jobless claims are issued with the advance economic growth (GDP) estimate for the June quarter. According to the latest Bloomberg survey, economists are forecasting a near 33 per cent annualised contraction in US GDP in the June quarter due to the virus lockdown.

On Friday

On Friday in China, the National Bureau of Statistics (NBS) purchasing managers’ indexes are expected to continue to expand in July. China’s industrial sectors are responding to policy support, but consumer spending and retail services activity remain generally below pre-pandemic levels due to virus flare ups and higher unemployment.

And on Friday in the US, personal income and spending figures for the month of June are issued together with the employment cost index for the June quarter and the Chicago purchasing managers’ index for July.

US corporate reporting season

US listed companies continue to report quarterly earnings results in the coming week. Companies expected to report over the week include:

Monday: Beyond Meat; Hasbro; Mylan.

Tuesday: 3M; Under Armour; Advanced Micro Devices; Amgen; McDonald’s; Unisys; Starbucks; Gilead Sciences; Visa; Pfizer.

Wednesday: Apache; Bunge; Boeing; Hyatt.

Thursday: Alphabet; Eli Lilly; Apple; Yum! Brands; Kraft Heinz; ConocoPhillips; Kellogg; Xerox; GoPro; Pinterest; UPS.

Friday: Philips 66; Merck; Exxon Mobil; Caterpillar; ColgatePalmolive; Chevron; Dominion Energy; Snap-On; Weyerhaeuser.  

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