25 November 2020
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Australia: Reserve Bank and jobs in focus

Craig James
13 November 2020

In a huge week for Aussie investors, speeches from Reserve Bank Governor Philip Lowe will feature along with the Board’s November meeting minutes. Key data on jobs, wages and retail spending will also be scrutinised for signs of a post-lockdown recovery.

On Monday

The week kicks off on Monday when the Bureau of Statistics (ABS) issues its October “Household Impacts of COVID-19” survey. The Datium Insights weekly data on used car prices is also due, but all eyes will be on the address of Reserve Bank Governor Philip Lowe to the CEDA annual dinner at 7.40pm AEDT.

On Tuesday

On Tuesday, Commonwealth Bank (CBA) Group economists release the September Household Spending Intentions (HSI) report with weekly credit and debit card spending data. Other weekly data releases include the ANZ-Roy Morgan consumer sentiment gauge and the ABS weekly payroll jobs and wages data to October 31, 2020. Also, on Tuesday, Reserve Bank Assistant Governor (Financial Markets) Christopher Kent provides remarks at The Australian Securitisation Forum 2020 at 9.30am AEDT.

Later that morning the Reserve Bank Board issues minutes of the November 3 meeting that agreed on a suite of policy measures to ease financial conditions. Notable changes included a cut in the cash rate target to 0.1 per cent and a commitment to purchase $A100 billion of government bonds to reduce borrowing costs.

On Wednesday

On Wednesday, Reserve Bank Governor Lowe returns to the podium, participating in a panel discussion at The Australian’s Strategic Forum 2020 at 9am AEDT. Also, on Wednesday, the ABS Wage Price Index (WPI) is scheduled for the September quarter. CBA Group economists expect the WPI to lift 0.3% in the quarter to be up 1.5% on a year ago.

On Thursday

On Thursday, the ABS issues the all-important labour force survey for October. CBA Group economists estimate that around 50,000 jobs were lost in the month - due to Melbourne’s lockdown - after employment fell by 29,500 in September. The unemployment rate could lift from 6.9% to 7.4% in October.

On Friday

On Friday, the ABS issues preliminary October data on retail spending. The impact of the tapering of JobKeeper and government welfare payments on consumer spending will be closely monitored with a 0.5% decline tipped by CBA Group economists. And state accounts data for 2019/20 – including growth measures such as Gross State Product (GSP) – are released with the latest COVID-19 business indicators survey for November.

Overseas: Chinese and US retail spending feature with US housing data

In the coming week Chinese and US retail spending data are the highlights as investors continue to digest the US election outcome. Industrial activity data in China will also feature with US housing and manufacturing figures.

On Monday

The week kicks off on Monday in China with the release of the October monthly data on retail spending, industrial production and fixed asset investment. The recovery in retail spending is expected to continue, supported by an easing in the jobless rate to 5.3%, Sales may have lifted by 5% in October from a year ago. Industrial production is predicted to lift 6.7% on a year ago with investment up 1.6% over the 10 months to October when compared with a year ago. And the Chinese house price index is also issued.

On Monday in the US, the New York Empire manufacturing index may have lifted from 10.5 to 13.5 in November. And US Federal Reserve Vice Chairman Richard Clarida updates the US economic outlook.

On Tuesday

On Tuesday in the US, the weekly Johnson Redbook chain store sales figures are released with retail sales, import and export prices, industrial production, business inventories and the National Association Home Builders (NAHB) housing market index.

Retail spending will be the key focus of investors and economists. Strength was seen across a broad array of recreational goods and back-to-school categories in September (+1.9%). In October, a gain of 0.5% is expected by economists, but colder weather, soaring new COVID-19 cases and a potential delay to a US fiscal deal could all weigh on Thanksgiving and Christmas holiday season sales.

On Wednesday

On Wednesday in the US, weekly Mortgage Bankers Association mortgage applications figures are released. And housing starts could lift by 1.9% to an annual rate of 1.443 million in October. Building permits are tipped to increase 1.6% to an annual rate of 1.57 million.

On Thursday

On Thursday, the usual weekly data on claims for unemployment benefits (initial jobless claims) is issued with the Conference Board leading index data on existing home sales. In September, sales of previously owned US homes rose to the highest level in 14 years, supported by a desire for more space and record-low mortgage rates. Also, on Thursday, regional manufacturing gauges from the Federal Reserves of Philadelphia and Kansas City are both issued.

On Friday

In China on Friday, both 1 and 5-year Loan Prime rates are expected to remain unchanged at 3.85 per cent and 4.65 per cent, respectively.

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