The Experts

James
Craig James - CommSec
Economy Expert
+ About Craig James
About Craig James

Craig James is CommSec’s Chief Economist.

On leaving school Craig James joined the (then) Rural Bank, whilst undertaking university studies. He received his Bachelor of Commerce (Economics) at University of NSW in 1984 and then a Master of Commerce (Economics) at the same university in 1988.

He remained at the Rural Bank, which became the State Bank over time and then Colonial, working in branches, Corporate, Planning and Economic Research.

He became chief economist of Colonial Group in September 1987, before becoming chief economist at CommSec in August 2000 with the Commonwealth takeover of Colonial.

In 2002 Craig had a sea-change, joining the Australian Financial Review. He had always wanted to pursue a role in journalism and enjoyed the role as an economic commentator and analysts, finding that he could pursue a journalistic-type role as well as doing more electronic media work at CommSec and rejoined the group in 2003.

On taking the reigns of chief economist at Colonial, Craig endeavoured to style their research in a “user-friendly” way – something that set their research apart and still does today. The approach has been successful in their media work and in promoting Colonial, and then CommSec, to the general public. CommSec is the most quoted economic group in the mainstream media.

CommSec economic reports are a bit different in that they devise tools such as the ‘Mums and Dads’ share index and the iPod index, and undertake research on the weather and demographic changes to show how they affect the economy.

Craig currently does around 2-3 regular TV crosses a day, ad hoc radio and newspaper interviews and writes regular commentaries as well as presenting to staff, clients and external organisations.

Outside work, Craig's main interests are athletics (cross country in winter), weight training, reading widely across a range of newspapers, magazines and electronic media, and trying to keep up with the children.

Investor signposts: Inflation in focus

Friday, October 20, 2017

By Craig James

Inflation readings dominate in Australia in the coming week. The Consumer Price Index is issued on Wednesday with trade prices (exports and imports) on Thursday and business inflation – producer prices – to be released on Friday.
 
But the week kicks off on Monday with CommSec releasing its quarterly assessment of economic performance across the Australian states and territories – the State of States report.
 
Also on Monday, the Australian Bureau of Statistics (ABS) releases a host of Census results including employment, providing a check on the accuracy of the monthly labour market surveys.
 
On Tuesday, ANZ and Roy Morgan also release the weekly survey of consumer sentiment.


 
On Wednesday, the ABS releases the much-anticipated inflation report for the September quarter. The headline consumer price index is forecast to increase by 0.7% to be up 1.8% on the year due to increasing power and gas bills and housing and tobacco prices.


The key underlying or ‘core’ measure of prices (excluding volatile components such as energy and food prices) is forecast to rise by 0.5%. As a result, annual growth may struggle higher from 1.8% to 2%.
 
On Thursday, the ABS’ trade price indexes for the September quarter are released. Base metals posted hefty gains in the quarter with gold also higher. The general recovery in hard commodity prices continues to support Australia’s export-orientated sectors. In terms of import prices, there was a sharp 12% rise in crude oil prices in the quarter in response to OPEC production restraint.
 
The data on import and export prices provides an early guide to the terms of trade during the quarter. After a 6% fall in the June quarter, some rebound in the measure of income is tipped in the September quarter.
 
Also on Thursday the Reserve Bank Deputy Governor, Guy Debelle, delivers a speech entitled ‘Uncertainty’ at the Warren Hogan Memorial Lecture in Sydney.
 
On Friday, data on producer prices for the September quarter are released. Prices of manufactured goods and services in Australia have remained subdued this year, despite the pick-up in business conditions. Final product prices may have risen 0.5% in the quarter and 1.7% over the year.
 
Overseas: US inflation and economic growth in focus
 

There is a packed schedule of economic data releases in the coming week including data on US GDP growth, inflation and housing activity, as well as Chinese house price data.

The week kicks off on Monday with the release of China house prices data for September.

On Tuesday in the US is the closely-watched Richmond Federal Reserve manufacturing survey.
 
Also on Tuesday across the US, Japan and Europe “flash” readings on manufacturing activity are issued in the shape of the Markit Purchasing Managers indexes (PMIs).
 
On Wednesday, there is a gamut of economic indicators released in the US with data on new home sales, durable goods orders and the Federal Housing Finance Agency (FHFA) measure of home prices.
 
Durable goods – a measure of business investment – may have lifted 1% in September reflecting solid momentum in the US manufacturing sector.
 
New home sales are expected to decline to 550,000 in September from 560,000 in August. The FHFA house price index has increased by 6.3% over the year to July, supported by low mortgage rates and strong jobs growth.
 
On Thursday, the usual weekly gauge on the job market – new claims for unemployment insurance (or jobless claims) – will be issued together with data on pending home sales.
 
On Friday, the first estimate of economic growth (GDP) is released for the September quarter. Growth is expected to moderate to 2.5% due to hurricane-related factors after 3.1% growth in the June quarter.
 
Also on Friday, the US Federal Reserve’s key measure of inflation – the core personal consumption deflator for the September quarter – will also be announced. The final estimate for US consumer sentiment in October will also be released on Friday.

Financial markets
 
The US earnings season is underway and more ‘household names’ will be reporting results over the coming week. On Monday Halliburton is due to report.
 
On Tuesday AT&T, Caterpillar, General Motors and McDonald’s report earnings. On Wednesday Coca Cola and Boeing are amongst those to issue results.
 
On Thursday Amazon, American Airlines, Expedia, Ford, Microsoft and Twitter will issue profit data. And on Friday, Chevron, Colgate-Palmolive, Exxon Mobil and Goodyear are amongst those that plan to issue earnings figures.

 

Investor signposts: Job market in focus

Friday, October 13, 2017

By Craig James
 
There are two events that stand out in Australia in the coming week. The first is the minutes of the last Reserve Bank Board meeting on Tuesday. And the second is the monthly job report on Thursday.
 
The week kicks off on Monday with the Australian Bureau of Statistics (ABS) releasing data on both lending finance and tourism flows.
 
Total new lending commitments (housing, personal, commercial and lease finance) fell from 7-month highs in July, down 3.8 %. Commitments had risen by 8.3 % in June. Commitments are still up 4.5 % over the year.
 
In terms of tourism, China has now passed New Zealand as our top source of tourists. China and Hong Kong together passed NZ in tourist numbers in September 2015.
 
On Tuesday, the Reserve Bank releases minutes of the Board meeting held on October 3. The key challenge will be to discern subtle changes in how the Board members view our economy.
 
Also on Tuesday the Reserve Bank Assistant Governor, Luci Ellis participates in a panel discussion at the 9th Annual Australian & New Zealand Investment Conference.
 
ANZ and Roy Morgan also release their weekly survey of consumer sentiment on Tuesday.

And rounding out a packed schedule on Tuesday, the ABS issues data on new vehicle sales. In the nine months to September vehicle sales were ahead of the record 2016 result for the same period.
 
On Thursday, the ABS issues the job market data for September. Employment has been very strong over the past six months with more than 54,000 jobs created in August alone. We expect that strength extended into September with 20,000 jobs created and unemployment falling from 5.6 % to 5.5 %.
 
Also on Thursday the Reserve Bank Assistant Governor (Financial System), Michele Bullock, delivers a speech at the Australian Shareholders Association conference in Sydney.
 
On Friday CommBank releases the Business Sales indicator, measuring economy-wide sales.
 
Overseas: US housing market in focus
 
There is a packed schedule of economic and political events in the coming week including data on US housing activity and production as well as key Chinese economic data. Investors will also focus on the National People’s Congress in China, due to get underway on Wednesday.
 
In the US, the week kicks off on Monday with the release of the New York Federal Reserve manufacturing survey – a key regional gauge of economic activity.

Also on Monday in China, the September data on producer and consumer prices will be released.
 
On Tuesday there is a gamut of economic indicators in the US. Most interest will be in industrial production figures. But there is also capital flows data, import and export prices and the NAHB housing market sentiment index. The usual weekly data on chain store sales is also scheduled. Economists expect that production lifted by 0.3% in September after slumping 0.9 % in August.
 
On Wednesday in the US the September housing starts data is due with the weekly figures on mortgage applications. Economists expect that new housing starts eased from a 1.18 million annual rate in August to 1.175 million in September. And permits may have also eased by around 1.3% after surging 5.7% in August. The forward-looking permits are at 2-year highs and not far off record highs.
 
In China on Wednesday the National People’s Congress convenes. The Chinese Communist Party holds this meeting once every five years, resulting in key changes of the leadership team. Investors will watch over the 10-day event for any changes of economic policies.
On Thursday in China the September data on retail sales, investment and production are released. The last figures were softer-than-expected. But in the period since, the central bank has made efforts to boost activity.
 
Also on Thursday in the US the weekly data on new claims for unemployment insurance is issued together with the Philadelphia Federal Reserve index and the lead index.
 
On Friday in the US, data on existing home sales is released. Sales have fallen for four times in the past five months due in large part to a shortage of stock.
 
Financial markets

 
The US earnings season is underway and more “household names” will be reporting results over the coming week. On Tuesday Morgan Stanley is due to report with Goldman Sachs and IBM. On Wednesday Alcoa, American Express and eBay are amongst those to issue results. On Thursday Travelers, Atlassian and E*TRADE will issue profit data. And on Friday, General Electric, Baker Hughes and Procter & Gamble are amongst those that plan to issue earnings figures.

 

Investor signposts: business confidence survey out next week

Friday, October 06, 2017

A quiet week ahead?

Gauges of business and consumer sentiment are in focus in the week ahead together with measures of personal lending – home loans and credit card debt. In the US, inflation and retail sales data and minutes from the past Federal Reserve meeting are the events to watch.

The week kicks off on Tuesday with National Australia Bank releasing the September business survey. The business survey is one of the best gauges of economic activity released each month. Survey forms are sent to businesses; the businesses assess how they are faring and fill out the survey forms accordingly. And finally the survey responses are combined into indicators of business confidence and conditions.

In August the NAB business conditions index rose from +14.1 points to a 9½-year high of +15.2 points. The business confidence index fell from +11.7 points to +5.1 points. (long-term average +5.9 points).

Also on Tuesday the Reserve Bank Deputy Governor, Guy Debelle, speaks at the FX Global code of conduct seminar in Hong Kong.

Also on Tuesday ANZ and Roy Morgan release their weekly survey of consumer sentiment.

On Wednesday the Australian Bureau of Statistics (ABS) releases detailed data on building activity as well as the broader construction sector (includes engineering activity).

Also on Wednesday Westpac and the Melbourne Institute release the monthly series on consumer confidence. This data is more of a check on the more regular weekly series.

On Thursday the Reserve Bank releases August data on credit and debit card lending. In July the average credit card balance fell by $59.90 to a 9½-year low of $3,070.30. In smoothed terms (12-month average) the average balance was down by 0.2 per cent on a year ago. Interestingly usage of credit card limits stood at just 33.7 per cent in July – the lowest level in almost 19 years.

Also on Thursday the ABS releases the August data on housing finance. In July the number of loans (commitments) for budding home owners (owner-occupiers) rose by 2.9 per cent – the third consecutive month of gains. Loans to buy newly-erected dwellings rose by 1.9 per cent to 38-year highs. And the proportion of first-time buyers in the home loan market rose from 14.9 per cent to a 47-month high of 16.6 per cent in July (long-term average 19.4 per cent).

On Friday the Reserve Bank releases the six-monthly Financial Stability Review – an assessment of the health of our financial system. Expect to see detailed analysis of housing supply and demand and discussion of the growth of housing debt in relation to income growth. The topics are clearly more complicated than are being portrayed in the mainstream media and the state of play is far more positive.

Also on Friday the ABS continues with its 2015/16 series on consumer and housing data – this time with a focus on housing occupancy and costs. Understandably more people have chosen to take on greater housing debt at generational-low interest rates. As a result there has been upward pressure on prices in those centres that have been less responsive in building the homes required.

Overseas: Relatively quiet week ahead

Investors will have to wait until the second half of the coming week for the potentially “market-moving” economic events. Minutes of the last Federal Reserve meeting, retail sales and inflation data are the highlights.

In the US, the week kicks off on Tuesday in the US with regular weekly data on chain store sales from Redbook.

On Wednesday the group that sets US interest rates – the Federal Reserve Open Market Committee (FOMC) – releases minutes of the meeting held on September 19/20. Many investors are still uncertain whether the Federal Reserve will lift rates in December. The views and forecasts will be closely dissected by investors.

Also on Wednesday in the US the weekly data on mortgage applications will be released.

On Thursday in the US, the September data on business inflation – the Producer Price Index (PPI) – will be issued. Only a small 0.1 per cent lift in “core” prices is expected, leaving the annual growth rate at 2 per cent.

Also on Thursday is the regular weekly check on conditions in the job market – the data on new claims for unemployment insurance.

On Friday in the US, data on retail sales and consumer prices for September are released together with the early estimate of consumer sentiment for October. Economists expect sales rose by 0.4 per cent after falling by 0.2 per cent in August. And “core” consumer prices may have lifted 0.2 per cent in the month, causing annual growth to lift from 1.7 per cent to 1.8 per cent.

Also on Friday in China is the September international trade figures (exports and imports). Import growth continues to outpace exports at present, suggesting firm domestic economic activity.

Financial markets

Over the past 20 years, October has been the second best month for the Australian sharemarket, falling on just six occasions, second only to December. In fact there has been only one decline in the past seven years in October, rising on average 3.2 per cent over the period. The problem is, when the market does fall, it tends to fall heavily, as evidenced in 1987, 1997 and 2008.

 

Investor signposts: Rate hikes ahead?

Friday, September 29, 2017

 

Investor signposts: Healthy smattering of data

Friday, September 22, 2017

 

Investor signposts: Reserve Bank dominates the agenda

Friday, September 15, 2017

By Craig James

If it wasn’t for the Reserve Bank, it would be a sparsely-populated Australian economic calendar. There are two speeches from Reserve Bank officials and two key reports from the central bank.

The week kicks off on Monday with the Australian Bureau of Statistics (ABS) releasing the August data on new vehicle sales. The industry body – Federal Chamber of Automotive Industries – has already released the raw data on sales. And this showed that sales were at a record high for an August month. With car affordability at record highs, it makes sense that we are buying more cars. The ABS will recast the data in seasonally adjusted terms.

On Tuesday, the Reserve Bank issues minutes of the last Board meeting held on September 5. The report is useful in getting fresh insights on the economy – especially the reports of Reserve Bank liaison with business and retailers.

Also on Tuesday the ABS releases the June quarter report on the residential property sector. The data includes price indicators but there are also statistics on the number of homes in Australia and home sales (transfers). From the figures it is also possible to obtain metrics such as the number of people per home.

And the weekly data on consumer confidence is also scheduled for release on Tuesday. Consumer sentiment is soft but that hasn’t stopped people from buying – spending growth is around “normal” levels.

On Wednesday, Commonwealth Bank releases the Business Sales Indicator – a measure of economy-wide spending derived by looking at credit card and debit card transactions by CBA merchants.

Also on Wednesday, the Reserve Bank Assistant Governor (Economic), Luci Ellis, speaks at the Australian Business Economists (ABE) conference.

On Thursday the ABS releases the detailed labour market figures for August. As well as providing key demographic and geographic estimates, the August data contains the quarterly estimates of employment by industry sector and profession. The services sectors have been leading the way in job creation.

And also on Thursday the Reserve Bank releases its quarterly Bulletin, containing topical articles on the economy and financial markets.

Also on Thursday the Reserve Bank Governor is scheduled to deliver an address in Perth to the American Chamber of Commerce. The title for the speech is intriguing: “The Next Chapter”. But there are no further details as yet.

Overseas: the US Federal Reserve Open Market Committee (FOMC) meets

A highlight of the offshore diary in the coming week is the latest policy decision from the US Federal Reserve. There are also some housing indicators to watch. And in China, the only data of note covers home prices.

In fact, the Chinese data on home prices kicks off the week on Monday. Home prices are starting to flatten and the annual growth rate eased to 9.7% in August.

In the US, the week kicks off on Monday with the July data on capital flows and foreign buying of equity and bond securities.

Also issued on Monday is the September sentiment gauge on the home building sector from the National Association of Home Builders (NAHB). The qualitative housing market index is not far off the best levels in 12 years.

The Federal Reserve begins its two-day meeting on Tuesday with the decision announced at 4am Sydney time on Thursday morning. While no interest rate increase is expected, the policymakers are expected to release details of the plan to reduce the central bank’s $4.5 trillion stock of bond and other assets.

Also on Tuesday, two of the key measures of inflation are released in the US – the August data on import and export prices. Import prices are tipped to have lifted 0.2% in the month.

The usual weekly data on chain store sales is also issued on Tuesday.

On Wednesday the existing home sales data for August is issued (a small 1% lift in sales is expected) as well as the weekly data on housing finance.

On Thursday the influential Philadelphia Federal Reserve survey results are released together with the leading index and the Federal Housing Finance Agency measure of home prices. Home prices are up 6.5 per cent over the year to June.

The normal weekly data on claims for unemployment insurance is issued on Thursday.

And on Friday, Markit releases ‘flash’ estimates on manufacturing and services sector activity in the US and Europe.

 

Investor signposts: Business conditions and jobs to dominate

Thursday, September 07, 2017

By Craig James

There are fewer ‘top shelf’ economic indicators in Australia in the coming week but it is still a busy schedule. Main interest is in the NAB business conditions survey and the latest jobs report.

The week kicks off on Monday with the Australian Bureau of Statistics (ABS) releasing the July data on lending finance commitments. As well as containing figures on new home loans, the data covers personal, commercial and lease loans.

A busy agenda is set down for Tuesday. The ABS releases the publication “Overseas Arrivals and Departures”. And not only is data on tourism flows included in the publication but also longer-term migration figures.

Also on Tuesday, NAB issues its August business survey. This is one of the best indicators to be released each month as it is a summary of how businesses across the nation are actually doing and feeling. Business conditions are near decade highs.

Other data out on Tuesday includes the July data on credit and debit card lending issued by the Reserve Bank as well as weekly consumer confidence data.

Aussie consumers had been a touch downbeat but there is a growing realisation that overall economic conditions are still pretty good. Interest rates remain near generational lows but the Aussie dollar is firmer – encouraging travelling and spending.

On Wednesday, the monthly survey of consumer confidence is released from the Melbourne Institute and Westpac. This data is now more a check on the timelier weekly survey data. But of interest in the September survey are the responses to the question “where are the wisest places to put new saving”.

Also on Wednesday, the ABS are hoping to provide two publications: “Household Expenditure Survey” and “Household Income and Wealth”. These publications had been due for release in late August. But the data is keenly awaited by a raft of businesses.

On Thursday the ABS releases the August labour market indicators (employment and unemployment
). Based on a raft of positive indicators, employment should have lifted by another 20,000 people in the month with the jobless rate steady at 5.6%.

Also on Thursday, the ABS releases the Modellers Database – data which provides some additional insights into the economy’s performance.

Overseas: Pivotal US and Chinese indicators

In the coming week investors will get the latest information on how the two biggest global economies – the US and China – are travelling. Both countries issue estimates on retail spending and industrial production.

In the US, the week kicks off on Tuesday with the release of the Business Optimism index for August from the National Federation of Independent Business, a leading small business association. The Business Optimism index is near 12-year highs.

Also on Tuesday is the JOLTS survey – job openings and labour turnover survey – a forward-looking gauge on the job market. Job openings stand at a  record high – the question is whether there are enough possible applicants to fill all the positions.

The usual weekly data on chain store sales is also issued on Tuesday.

On Wednesday in the US the August data on business inflation – the producer price index – is released with the monthly budget figures and weekly data on housing finance. The core PPI measure (excludes food and energy) is tipped to rise 0.1% in August after July’s surprise 0.1% fall.

On Thursday in the US the consumer variant on inflation – the consumer price index – is released together with the usual weekly data on jobless claims (new claims for unemployment insurance). While not the Federal Reserve’s preferred measure of inflation, trends in the CPI are still closely watched. The core CPI measure is tipped to rise 0.2% in August to stand up just 1.6% on a year ago.

And on Friday in the US, data on retail sales and industrial production are set for release together with the first consumer sentiment survey for September. Both production and retail sales may have lifted 0.4% in August. While solid readings, if they are not accompanied by signs of higher inflation, then the Federal Reserve has no compelling need to lift rates. In turn, this keeps the US dollar down and Aussie dollar close to US80 cents.

In China, the monthly download of economic indicators is set down for Thursday – retail sales, production and investment. Much interest is in retail spending – up by a lofty 10.4% in the year to July.

Financial markets

 

If there is one trend that highlights the improving health of the global economy it is the rise and rise of base metal prices. Zinc is at decade highs, up 33% on the year. Copper is up 49%, aluminium is up 32% and lead and nickel are up around 20%.

Metals are being supported by fundamentally firmer demand and lower supplies, together with special influences like the fear of tighter environmental regulations in China.

 

Investor signposts: Top shelf economic data ahead

Friday, September 01, 2017

By Craig James

The week kicks off on Monday with the Australian Bureau of Statistics (ABS) releasing the June quarter Business Indicators publication – a publication that includes data on profits, sales, inventories and wages. Solid profit growth has been achieved by Australian businesses over the past year.
 
Also out on Monday is data on job advertisements from ANZ. While job seekers have more choices on where to look for work, online and newspaper job ads are still regarded as key leading indicators for the job market.
 
On Tuesday, the ABS issues the broader trade data for the June quarter – the balance of payments and foreign debt
figures. The current account may have stayed in deficit in the June quarter but only by $7 billion or 1.7%.
 
Also on Tuesday, the ABS releases the government finance data. The spending figures (consumption and investment) are a key input into the following day’s economic growth estimates.
 
Other data out on Tuesday include the August new car sales figures and weekly consumer confidence data.
 
Aussie consumers may be downbeat at present but new car sales are at record highs and annual growth of retail trade is tracking in line with longer-term trends.
 
And almost as an afterthought, the Reserve Bank Board also meets on Tuesday. At the recent appearance before the House Of Representatives Economics Committee, the Reserve Bank Governor said that he thought the next move in rates would be up, but not for a while.
 
“The current market pricing implies a greater probability of a rate rise than a rate reduction. It also implies that the next move in interest rates is a long way out. I think that they're both reasonable assumptions—that the next rate move will be up rather than down—but it will not be for some time. That's the market pricing; I don't want to dissuade anyone from that particular view. It's likely to be some time.”
 
On Wednesday, the June quarter National Accounts are released. The main interest is in the economic growth figures (the change in Gross Domestic Product) but the data also includes other estimates such as household spending. The economy probably grew by 0.5% in the quarter and 1.5% over the year.
 
On Thursday the ABS releases data on both international trade (exports and imports) and retail trade for the month of July.
 
Australia is now paying its way in the world with higher volumes of coal and iron ore boosting exports, together with gas shipments and increased foreign demand for Australia’s high-quality food products. In July the trade surplus may have stood at $900 million.
 
And retail spending has been healthy in recent months despite weaker consumer sentiment. Sales may have edged 0.3% higher in July.
 
On Friday the July data on home loans is released. Based on data from the Bankers Association, the total value of loans may have edged 0.1% higher in July but owner-occupier loans may have lifted by 3%, presumably with first home buyers leading the way.
 
Overseas: Chinese trade and inflation data
 
There are few standouts in the US and Chinese economic data to be released in the coming week. But Chinese trade and inflation figures and the survey of the US services sector activity are of main interest.
 
In the US, the week kicks off on Tuesday with the release of the ISM New York index, the Employment Trends index and data on factory orders. The usual data on chain store sales will also be released on Tuesday.
 
On Wednesday in the US the July trade figures are released with the August ISM purchasing manager’s survey for the services sector as well as the usual weekly figures on housing finance. Economists expect that the ISM index rose from 53.9 to 54.6 in August. Any reading above 50 indicates expansion of the services sector.
On Thursday revised June quarter figures on labour costs and productivity in the US are due, together with the usual weekly data on jobless claims (new claims for unemployment insurance).
 
And on Friday in the US, data on wholesale sales and inventories is scheduled for release, together with consumer credit figures.
 
In China, the indicators to watch are the Caixin purchasing managers for services (Tuesday), the August trade data (Friday) and the August inflation data – producer and consumer prices (Saturday).
 
Financial markets
 
The month of September hasn’t proved a positive time for sharemarket investors over time. The All Ordinaries has fallen in September in four of the past six years. And shares have fallen 0.8% on average in September over the past 70 years versus a 0.6% average increase over all months of the year.

 

Investor Signposts: Economic data springs into gear

Friday, August 25, 2017

By Craig James

Every change in seasons is ushered in with a barrage of economic data. So with the profit reporting season coming to an end, now it is time for the Spring economic data reporting season. Business investment and home prices are the highlights in Australia in the coming week.

The week kicks off on Tuesday with the usual weekly consumer confidence survey. Also the Australian Bureau of Statistics (ABS) releases detailed dollar estimates of consumer spending – pivotal figures for a raft of businesses.

On Wednesday, the ABS issues preliminary construction work done figures for the June quarter. Also, the ABS releases the volatile building approvals data - the collated information of approvals by local councils to build new homes and commercial buildings. The construction data covers residential, commercial and engineering construction, but it is the residential building figures which act as an input to the national accounts – that is, it assists in calculating economic growth for the June quarter.

In the March quarter, construction work fell by 0.7 per cent, driven by a 4.7 per cent slump in residential work. However, engineering work lifted by 2.2 per cent. At present, building sector inflation is growing at the fastest pace in eight years, but that is being driven by outsized gains in activity last year and it is likely that inflation will moderate in line with home prices over the coming year.

On Thursday, investors and traders will have a lot to focus on with a number of indicators scheduled for release. Arguably the most important release from the ABS will be the March quarter estimates on business investment. This data is also an input into the calculation of economic growth. But also insightful are the estimates of planned investment for the coming year.

In the March quarter, investment rose by 0.3 per cent, and despite the improvement in the global economic outlook and lift in business conditions, we expect that investment fell by 2 per cent in June. The Reserve Bank will be interested in estimates of non-mining investment as well as future investment plans.

Also on Thursday, the Reserve Bank releases data on private sector credit – or loans outstanding. And at the same time, the Housing Industry Association issues estimates of new home sales.

Private sector credit surprisingly rose by 0.6 per cent growth in June, with annual credit growth rising further from recent 3-year lows. What was most encouraging about the June result was the 0.9 per cent surge in business lending. Policymakers will be hoping the lift in lending translates to a lift in investment over the coming year.

On Friday, CoreLogic releases the latest data on home prices together with Commonwealth Bank/Markit Manufacturing gauge.

On current indications, Australian home prices may have posted another solid rise in August, up by around 0.7 per cent. The daily data indicates that Sydney and Melbourne prices have lifted by 0.8 per cent so far in August with Adelaide prices up by 1.3 per cent.

US housing indicators to watch

The key economic data release on international markets in the coming week is the US non-farm payrolls or jobs data to be issued on Friday. Key purchasing manager surveys in the US and China are also in the spotlight.

In the US, the week kicks off on Monday with the release of data on wholesale inventories as well as the release of the Dallas Federal Reserve manufacturing gauge. 

On Tuesday, the CaseShiller home price series is released alongside the Conference Board Consumer Confidence index. Home prices are up 5.7 per cent over the year, driven by a lack of inventory of homes for sale. 

On Wednesday the ADP national employment report is scheduled, covering private sector jobs. The report is the forerunner to Friday’s jobs report and analysts are tipping a 180,000 lift in private sector jobs. 

On the same day the second (preliminary) estimate of US economic growth for the June quarter is released. “Advance” data suggested the economy grew at a healthy 2.6 per cent annualised pace in the June quarter.

On Thursday, the influential Chicago purchasing managers index is released together with data on personal income and spending as well as the Federal Reserve’s preferred inflation measure – the core PCE deflator.

And on Friday, the US non-farm payrolls data is issued. It is clear that the job market is in good shape with jobs up 209,000 in July and the jobless rate at 4.3 per cent. Economists are tipping more job creation of 185,000 in August. Stronger-than-expected job gains together with higher wages would lift speculation about a December rate hike.

Also on Thursday and Friday, the surveys of purchasing managers come into focus. The surveys are released across the globe with much interest in results for China and the US. In China, the official manufacturing purchasing manager’s index stands at 51.4 with services at 54.5. The US manufacturing sector appears in better shape, currently standing at 56.3. Any reading above 50 indicates expansion of activity.

 

Investor Signposts: Reporting season hits top speed

Friday, August 18, 2017

By Craig James 

To say there is a quiet week in prospect for economic data borders on an under-statement – certainly a very, very quiet week lies ahead in Australia. 

In Australia the week kicks off on Monday, when the Commonwealth Bank releases the business sales indicator – a measure of economy-wide spending derived by looking at credit and debit card transactions across Commonwealth Bank terminals.

On Tuesday, the usual weekly consumer confidence survey data is issued by ANZ and Roy Morgan. Consumers aren’t feeling confident at present because wage growth has slowed and some high-profile living costs like electricity and gas bills have gone up. Interestingly, while consumers are a little downbeat, the latest data shows that people are still spending. In fact, real retail trade in the June quarter posted the biggest increase in eight years.

Over Tuesday and Wednesday, the Australian Bureau of Statistics also releases some additional Census data covering topics such as families with school children and social security.

On Thursday, the ABS provides more detailed data on the job market in July including regional and demographic group estimates. Recent data shows rising workforce participation for senior Australians while younger Australians prefer more education over getting a job.

Also on Thursday, the Housing Industry Association releases its State and National Outlooks report (Winter 2017). The Reserve Bank is watching the housing market very closely at present, so any new estimates on where building is headed will be scrutinised.

US housing indicators to watch

In the coming week, US housing market indicators dominate the schedule of economic data to be released.

The week kicks off in the US on Monday, with the release of national activity index for July.

In the US on Tuesday, the monthly home price index for June will be released by the Federal Housing Financial Agency. Currently, home prices are up by a healthy 6.9 per cent compared with a year earlier.

Also on Tuesday the influential Richmond Federal Reserve index is released together with the usual weekly data on chain store sales.

On Wednesday, the Markit “flash” survey results for manufacturing and services sectors will be released in the US, Europe and Japan. The data is designed as an “update” on how the key sectors of the economy are travelling.

Also on Wednesday in the US is the release of the July new home sales as well as the usual weekly data on mortgage finance – both loans for new home purchases as well as refinancing of existing home loans. In July, new home sales may have lifted from a 610,000 annual rate to 616,000.

On Thursday, the weekly figures on claims for unemployment insurance are released together with the existing home sales data and the Kansas City Federal Reserve manufacturing index. Economists expect that existing home sales edged up from a 5.52 million annual rate to 5.53 million in July. 

On Friday, the July data on durable goods orders is slated for release. “Durable goods” are those with a life of more than three years, including items like cars and aircraft. The data is seen as a measure of business investment. In June, durable goods orders rose by an out-sized 6.4 per cent, so a 4 per cent downward correction is tipped in July.

The coming week is largely devoid of speeches by Federal Reserve officials although Dallas President Robert Kaplan fronts the lectern on Wednesday. The Jackson Hole symposium of world policymakers begins on Thursday. 

Sharemarket, interest rates, currencies and commodities

The Australian earnings season hits top speed in the coming week. Among companies reporting results:

Monday: Beach, Energy; Bellamy, Fortescue, Goodman Group, BlueScope Steel and NIB Holdings.

Tuesday: BHP, Ingenia, Monadelphous, Inghams Group, Oil Search, Seven Group and Sydney Airport.

Wednesday: A2 Milk, APA Group, Charter Hall, Coca Cola Amatil, Insurance Australia Group, Woolworths, Worley Parsons, Qube, Star Entertainment, Tassal Group and Vocus Group.

Thursday: Alumina, Flight Centre, OZ Minerals, Perpetual, Reject Shop, Scentre Group, Santos, MYOB, South32, Sims Metal.

Friday: Medibank Private, Qantas, Breville, Costa Group.

 

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