By Craig James

In Australia, the New Year kicks off on Monday with a gauge on activity in the manufacturing sector (PMI) to be issued alongside the CoreLogic measure of home prices.

The PMI currently sits at a reading of 52.5 – above 50, suggesting expansion. In fact the index has been above 50 for five months – the best run for over five years.

In contrast, home prices have been a bit more variable in recent months. In December, home prices may have edged ahead just 0.4 per cent. Sydney and Adelaide prices softened over the month while prices likely rose in other capital cities.

On Tuesday the ANZ/Roy Morgan consumer sentiment survey is released for the first time in a fortnight. This will be the first chance to see how Aussie consumers are viewing the New Year. The Reserve Bank believes that the questions to watch in the survey are those dealing with current household finances and whether it is a good time to buy a major household item.

On Wednesday there are three indicators to watch. The Reserve Bank releases its monthly Chart Pack – a collection of charts on economic indicators or trends that the Bank believes are worth monitoring. And the final figure for new vehicle sales in 2015 is set for release.

Also on Wednesday, Australian Industry Group (AIG) releases its gauge of services sector activity – the Performance of Services (PSI). The PSI has been more variable than the PMI – above 50 for six of 11 months in 2015 but below 50 for the past two months.

On Thursday the Bureau of Statistics is back to work, releasing data on International Trade (exports and imports) as well as building approvals – council approvals to build new homes.

The trade deficit hasn’t fazed investors or analysts for some time. But we estimate that the red ink continues to flow – that is, a trade deficit of $2.6 billion is expected in November after a $3.3 billion shortfall was reported for October.

Also on Thursday the ABS releases building approvals data for November. The CommBank Group tips a 2 per cent fall in approvals in the month after the 3.9 per cent increase reported in October. Over the past year a record 233,180 homes were approved for construction, and as a consequence, a record number of homes are currently under construction.

On Friday, the ABS issues the retail trade (sales) data for November. Now while most would like to know how Christmas sales fared, that data is still a little over a month away. Still the CommBank Business Sales index has reported that sales are healthy. And we expected that retail trade probably lifted by 0.3 per cent in November.

Also on Friday, AIG releases its Performance of Construction index.

Plenty to watch in both the US and China

While each future meeting of US Federal Reserve policymakers is a “live” meeting for an interest rate increase, much depends on the flow of economic data. And a key indicator – job growth – will be released on Friday.

Technically, the first indicator is not within the January 3-10 forecast window, but in China the official statistician kicks off the New Year on January 1 with release of the purchasing manager indexes (PMI) for both manufacturing and services. The services sector is the biggest sector of the economy and the current PMI gauge is healthy at 53.6.

On Monday the December private sector Caixin PMI for manufacturing is released in China.

Also on Monday, the various US purchasing manager indexes are released – the Markit and the ISM gauges – the latter being the index more closely monitored. The ISM gauge is tipped at a reading near 49.0 – just below the 50 line that separates expansion from contraction.

And also in the US on Monday is November data on construction spending with a 0.5 per cent increase expected.

On Tuesday, data on new automobile sales is released in the US while the ISM New York index is also released. Auto sales may have eased slightly to an 18.1 million annual rate in December.

On Wednesday the ADP survey of private sector employment is released together with the ISM services gauge, international trade (exports and imports) and factory orders. The ISM gauge may have been little changed at a reading of 56.0 in December.

The Challenger gauge of job layoffs is released on Thursday.

And on Friday, the monthly job report (non-farm payrolls) is released with wholesale sales and consumer credit. If job growth exceeds 250,000 and wages also spike higher, then the Federal Reserve will be under pressure to hike rates again.