By Craig James

Another big week of economic events is in prospect in Australia and overseas. In Australia, the focus will be on the labour market. In China, the broader economic activity indicators are released. In the US, no doubt most interest will be on the US Federal Reserve interest rate decision.

In Australia, the week kicks off on Monday with the Reserve Bank release of the latest data on credit and debit card lending. The average credit card balance is holding just shy of 8½-year lows. 

Also on Monday, the Bureau of Statistics (ABS) will release tourist arrivals and lending finance figures – which includes housing, personal, business and lease loans. In September, lending showed a modest 1.9 per cent rise to $68.5 billion with the strength largely in commercial borrowings.

On Tuesday, the National Australia Bank business survey is released alongside the Australian Bureau of Statistics (ABS) quarterly data on house prices. The business survey covers key business indicators, a reading on business confidence as well as gauges on prices, wages and finance. The indicators of confidence and conditions have showed encouraging improvement over the past few months, with a particular focus on a lift in profitability. In terms of the home price index, the data is a bit dated (September quarter) but is another check on price pressures in the housing market.

Also on Tuesday, ANZ and Roy Morgan release the weekly consumer sentiment survey. While on Wednesday, the monthly Westpac consumer confidence index is released. 

The Westpac-Melbourne Institute survey will include the quarterly questions about where consumers believe are the wisest places to put new savings.

On Thursday, the ABS releases the monthly employment figures. Figures have been somewhat patchy in recent months, with the job market seemingly pausing for breath after out-sized increases in late 2015. However, there has been some encouraging signs in the past couple of months. Not only are job vacancies holding at 4-year highs, but hours worked is lifting at the fastest pace in five months. No doubt the focus will be on the shift between part-time and full-time employment. Overall, we expect that the number of jobs rose by around 15,000 in November. The participation rate may have held steady at 64.4 per cent, while the unemployment rate held close to recent 3½-year lows of 5.6 per cent. 

Also on Thursday, the ABS will release population data for the June quarter as well as the Finance & Wealth publication for the September quarter. Population growth has been hovering around a 1.4 per cent annual rate for the past year, with Victoria recording the strongest growth. And household wealth is at record highs.

Spotlight on US and Chinese data

So-called ‘top shelf’ economic indicators are released in China in the coming week. And in the US, the focus will on the Federal Reserve meeting while data on retail sales and consumer prices will also be of interest.

In the US, the monthly budget statement is released on Monday. While on Tuesday the National Federation of Independent Business releases its Business Optimism index alongside data on import and export prices.

On Tuesday, China releases its ‘top shelf’ indicators on Tuesday - namely retail sales, production and investment. Annual growth rates are slowing, but that is ‘normal’ for a maturing economy. Also, foreign investment, lending and money supply data is due early in the week.

On Wednesday, the Federal Reserve Open Market Committee (FOMC) meeting takes place to decide on interest rates. And given the recent lift in commodity prices, stronger US economy and resulting lift in inflation, it is widely expected that the Fed funds rate will lift from the target band of 0.25-0.50 per cent to 0.50-0.75 per cent.

Also on Wednesday, a bevy of new data is slated for release. US retail sales is issued, alongside figures for producer prices, industrial production, business inventories and the usual weekly data on home purchase and refinancing. The producer price index (business inflation) is expected to remain tame, while economists tip a solid 0.5 per cent increase in November retail sales after the 0.8 per cent lift in October. No doubt fluctuating petrol prices are having a significant influence on the results. Encouragingly, core sales (sales less autos and gasoline) are expected to have lifted by 0.5 per cent in November. 

On Thursday, the weekly figures on claims for unemployment insurance are released, together with the November data on consumer prices and current account data. Excluding food and energy, prices are expected to rise by only 0.2 per cent. At present, inflation remains well contained, however the Federal Reserve is likely to focus on the possibility of a lift in inflation over 2017. 

Also on Thursday, the NAHB housing market index is issued, alongside the “flash” Markit purchasing managers index, Empire State manufacturing index and the Philadelphia Federal Reserve business survey. Home builder sentiment remains upbeat, the manufacturing sector should continue to show healthy expansion, while healthy readings are expected for the regional surveys.

And on Friday, data on US housing starts and building permits is released. Housing starts may have fallen by around 7.5 per cent in November, after the outsized 25.5 per cent lift in October.

This week's Investor Signposts was written by CommSec economist, Savanth Sebastian

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