By Craig James
Reserve Bank, population and jobs data
There are no ‘top shelf’ indicators in Australia in the coming week.
The week kicks off on Monday with the Business Sales Index (BSI) from Commonwealth Bank – a measure of economy-wide spending.
On Tuesday, minutes of the last Reserve Bank Board meeting are released. While the Reserve Bank seems happy with the current state of the economy and interest rate settings, investors are looking for further insights.
Also on Tuesday, the House Price Index is released by the Bureau of Statistics (ABS) while Reserve Bank Assistant Governor, Guy Debelle, delivers a speech together with Alex Heath, Head of the Economic Analysis Department.
On Wednesday, the Department of Employment releases the Vacancy Report. Just like job advertisements and broader job vacancies, the data acts as a leading indicator of the job market. In April, the internet vacancy index rose by 2.8% to be up 6% on a year ago.
On Thursday, the December quarter population data is released by the ABS together with the detailed job market data for May.
In the September quarter Australia’s population expanded by 313,200 people to 23,860,100 people. Overall, Australia’s population growth rate fell from 1.35% to 1.33% - a 10-year low.
In terms of the industry jobs data, employment fell by 3,200 over the three months to February after a gain of 71,900 in the previous three months.
Also on Thursday, Reserve Bank Assistant Governor, Guy Debelle, delivers a speech. As does Luci Ellis, Head of the Financial Stability Department.
US Federal Reserve chair takes the stand
In the coming week, Federal Reserve chair, Janet Yellen, testifies on the economy. And all eyes will be focussed on Thursday’s “Brexit” vote in the UK.
The week kicks off on Tuesday in the US with the Federal Reserve chair, Janet Yellen, delivering the "Semi-annual Monetary Policy Report" to the Senate Banking Committee. The hope is that the report and testimony from the Federal Reserve chair will clear up a lot of issues related to how the Fed believes the economy is faring, where rates are headed and even on issues like the “Brexit” vote.
On Wednesday, two of the week’s housing market indicators are released in the US – data on existing home sales and a measure of home prices by the Federal Housing Finance Agency (FHFA).
Economists tip a near 1% lift in existing home sales to a 5.5 million annual rate in May, after a 1.7% gain in April. Some believe a housing shortage exists, with only 4.7 months of stock on hand, below the 6-month figure regarded as balanced between demand and supply.
The FHFA data will provide further insights on the state of the housing market. In March, home prices were up 6.1% on a year ago, led by California.
On Thursday, the spotlight is on the UK. After months of speculation on the outcome, UK voters will finally get their chance to decide whether the country should stay in the European Union. The referendum could go either way. And no one knows what the broader implications will be. So investors will walk of eggshells awaiting the verdict.
In the US on Thursday, data on new home sales is released together with the leading index. New home sales soared by over 16% in April, but the outsized increase is expected to be followed by an outsized fall of around 11% in May.
Also on Thursday, “flash” readings on manufacturing activity are released is the US, Europe and Japan.
And on Friday, US data on durable goods orders (a key gauge of business investment) is released with consumer confidence. Durable goods orders are tipped to have eased by 0.8% in May after a healthy 3.4% gain in April.
Share market, interest rates, currencies and commodities
Last week, we looked at how global share markets and currencies have performed so far in 2015/16.
This week, it is the turn of commodity or raw material prices.
One closely-watched commodity price index is the Thomson Reuters CRB futures index. So far in 2015/16, the CRB futures index is down by just over 15% after being down almost 32% in mid-February.
At face value, the decline in the CRB futures index suggests general weakness in commodity prices. But that actually hasn’t been the case. In fact, the sugar price has soared by 55% with rice up 16% and gold up around 10%. Zinc, cotton and wool prices have been largely unchanged since June 30 last year.
On the downside, nickel has recorded one of the biggest declines, down around 26%, with copper down 22%, wheat down 21% and beef down around 11%. Other base metals have been better-behaved, with aluminium and lead down 3-4%.
The high profile commodities – oil and iron ore – have had a volatile twelve months. Oil fell from US$57 a barrel to US$26, before recovering to around $48. Iron ore fell from near US$59 a tonne to US$37, before also recovering to around $50. But overall, oil is still down around 18% over the year with iron ore down around 14%.
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