By Craig James

After a hiatus over the past week, the domestic economic data releases are back in focus. More than half-a-dozen key releases are scheduled and around a dozen events will dominate attention overseas.

In Australia, the week kicks off on Tuesday with the release of the building approvals publication from the Bureau of Statistics (ABS). In March, dwelling approvals fell by 13.4 per cent – marking the largest decline in almost 1½-years. But don’t read much into the slide in dwelling approvals. The data tends to be volatile on a monthly basis and the trend data is probably more interesting. In trend terms, approvals rose by 0.8 per cent – the first increase in ten months. For the record we expect approvals to rebound by 5 per cent in April.

Also on Tuesday the weekly consumer confidence data from ANZ and Roy Morgan is released. Confidence levels have risen for three out of the past four weeks. However it is clear that Aussie consumers are just feeling OK. The latest job figures are likely to be offset by the media discussion on the budget measures, with consumers wondering what the bank levy means for them.

On Wednesday, the Reserve Bank releases data on private sector credit (broadly, outstanding loans). Annual credit growth is holding near 5 per cent – essentially remaining near 3-year lows.

On Thursday, investors and traders will have a lot to focus on with a number of ‘top tier’ 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 December quarter, investment fell by 2.7 per cent, but hopefully the improvement in the global economic outlook and lift in business conditions results in a rebound in investment. The Reserve Bank will be interested in estimates of non-mining investment.

In addition, the ABS will release the monthly retail trade data on Thursday. No doubt the latest figures will garner plenty of interest given the slowdown in retail activity in the past couple of months. The Commonwealth Bank Business Sales index indicated that sales were flat in trend terms over May. For the record we expect that retail sales rebounded by 0.4 per cent in seasonally adjusted terms in April.

Also on Thursday, CoreLogic releases its estimates of home prices for May, while the Australian Industry Group while release the Performance of Manufacturing index. By all accounts home prices are starting to show more sedate growth, given the tighter lending restrictions adopted by the banks. The CoreLogic daily home price index indicates that home prices have fallen by around 1 per cent in May.

On Friday the Housing Industry Association releases figures on new home sales.

Overseas: US jobs data pivotal to rate outlook

After a holiday weekend, a big slate of US economic data awaits investors on Tuesday. And gauges of manufacturing and services activity are due for release in China.

The week begins on Tuesday with US data on personal income and spending, consumer confidence and the CaseShiller measure of home prices. Both personal income and spending are expected to post firm 0.4 per cent gains for April. At the same time, data will probably show home prices rising at a near 6 per cent annual rate while consumer confidence may have eased further from 16-year highs due to increased political uncertainty.

In the US on Wednesday, the Federal Reserve releases the Beige Book – a summary of economic conditions across Federal Reserve districts. Fed policymakers regard the survey results as a valuable input to their rate setting decisions.

Also in the US on Wednesday the usual weekly data on mortgage applications is released together with data on pending home sales and the influential Chicago purchasing managers index.

In China on Wednesday, the National Bureau of Statistics will release the results of purchasing manager surveys covering both the manufacturing and services sectors. As is the case in the US, the services sector is in the strongest shape of the two sectors.

On Thursday the private sector Chinese Caixin survey of the manufacturing sector is released with the services sector survey on June 5.

On Thursday in the US the usual weekly data on claims for unemployment insurance is released together with the ISM manufacturing index, construction spending, the ADP National Employment index, new vehicle sales data and the Challenger job layoffs series.

And on Friday in the US, the pivotal employment report (Non-farm Payrolls) is released with international trade figures and the ISM-New York index. Economists expect that 183,000 jobs were created in May, down from 211,000 jobs in April. But analysts forecast a modest lift in the jobless rate to 4.5 per cent while earnings may have only lifted by 0.2 per cent. Overall these results could temper Federal Reserve policymakers from lifting rates again in June.

Financial markets

There has been more volatility over the last couple of weeks but it is important to keep in mind that most indices have recorded healthy growth over the first five months of the year. So far over 2017, the ASX 200 index has risen by around 1.7 per cent, while the Japanese market has risen by 2.6 per cent and the UK market is up 4.8 per cent. However, the clear outperformer have been the US market. The Dow Jones has risen by 6 per cent in 2017, while the broader S&P 500 is up by 7 per cent. The clear winner is the technology heavy NASDAQ which has gained a staggering 14 per cent.

Please note: This week’s report was written by Savanth Sebastian, Senior Economist.