By Craig James

The financial year is drawing to a close, but there are no ‘first tier’ indicators to either close out the year, or usher in the new financial year. In the coming week, most interest will be on the latest demographic information.

Census Data

In Australia, the week kicks off on Tuesday when the Australian Bureau of Statistics (ABS) releases the first data from the 2016 Census. Across Australia, housing conditions are decidedly mixed. So the latest figures will throw new light on the true state of underlying demand for homes. At the same time, the ABS will release the December quarter population figures – figures that you would expect would be newly calibrated with the latest Census data.

The NSW, Victorian and ACT economies are leading the way at present because population growth in each economy is either near, or above, the decade-average – lifting the demand for homes as well as economic and social infrastructure.

Other data of interest

On Tuesday, ANZ and Roy Morgan publish the usual weekly consumer confidence figures. Lower petrol prices may have lifted spirits in the past week. Consumer confidence is merely OK at present.

On Thursday, the ABS releases the quarterly job vacancies data – a key leading indicator of the job market. And just like the monthly job advertisements data, the job vacancies figures have, for some time, signalled an improvement in labour market conditions. It is clear that these positive signals are now being reflected in the official data on employment and hours worked.

Also released on Thursday is the “Finance and Wealth” publication from the ABS. The data includes estimates of household debt and financial wealth, as well as statistics such as foreign ownership of shares and bonds and cash holdings of superannuation funds. Wealth in Australia is at record highs.

And also on Thursday, the Housing Industry Association releases the latest data on new home sales. If the data shows that more homes are being sold, then this could reinvigorate the early stage of the housing pipeline such as new applications to build homes.

On Friday, the Reserve Bank releases the Financial Aggregates publication, a publication that includes data on private sector credit (effectively, data on outstanding loans across the economy).

Overseas: The 2017 year is almost half over

While in Australia the focus in the coming week is on how the 2017/18 year has finished, overseas the key interest is on reviewing the performance of the first half of the 2017 calendar year.

The week begins on Monday in the US with May data on new orders for durable goods – goods like cars and computers that have a ‘shelf’ life’ greater than three years. Economists tip a 0.5 per cent fall in orders after the 0.8 per cent fall in April orders.

In the US on Tuesday, the CaseShiller measure of home prices is released with consumer confidence data. The usual weekly data on chain store sales is also released. The influential Richmond Federal Reserve survey is also released on Tuesday, with service sector gauges for the Texas economy.

In the US on Wednesday, the usual weekly data on mortgage applications is released together with advance data on international trade and inventories in the retail and wholesale sales sectors. In addition the pending home sales index is released.

On Thursday in the US, the final estimate of economic growth for the March quarter is issued. Annual growth is artificially low at 1.2 per cent with the underlying rate of growth closer to 2 per cent. 

And on Friday in the US, the May data on personal income and spending is released with the main interest centred on the Federal Reserve’s preferred measure of inflation. The final estimate of consumer sentiment for June is also issued together with the influential Chicago purchasing managers index.

In China on Friday, the National Bureau of Statistics will release purchasing manager survey results for manufacturing and services sectors.

Over the week, it is also worth noting that the San Francisco Federal Reserve President John Williams will be in Australia delivering a range of speeches.

Financial markets

It may come as a surprise, but the Australian sharemarket is set to post its strongest financial year performance in three years. Total returns on shares – as measured by the All Ordinaries Accumulation index – have lifted by 11.7 per cent so far in 2016/17 after 2 per cent growth in 2015/16 and 5.7 per cent growth in 2014/15. The ASX 200 index has lifted 8.3 per cent with the All Ordinaries up 7.4 per cent. 

While the Aussie sharemarket has lifted over the past financial year, other markets have done far better. The US Dow Jones index has lifted by 19 per cent in 2016/17 while the UK has gained almost 15 per cent and the Japanese Nikkei has risen by around 29 per cent. The Australian sharemarket ranks 55th of 73 bourses over the past year. Greece has been notable amongst the gainers, up 53 per cent.

Commodity prices have been decidedly mixed over 2016/17. The CRB futures index has fallen 13 per cent over the year, with oil down 12 per cent, gold down 6 per cent and sugar down 36 per cent. But iron ore prices have lifted 2 per cent, thermal coal has rise by 42 per cent and base metal prices have generally firmed over the period with lead, zinc and copper up between 18-25 per cent.

The Aussie dollar is on course for its least volatile year against the US dollar in 27 years. The range has been just US6.25 cents (from US71.52c to US77.77c). Over the financial year, the Aussie has lifted 1.8 per cent, making it just one of 45 currencies to lift against the greenback.

In terms of the official cash rate, there was only one change – the quarter per cent cut in the cash rate in August. The 1.5 per cent cash rate is the lowest since records began in 1959. 

Longer-term rates have been more volatile over 2016/17. Ten-year bond yields fell to as low as 1.85 per cent in August but rose as high as 2.99 per cent in March before settling near 2.40 per cent in the past month.