By Craig James

Wages back in focus

The week kicks off on Monday with the Bureau of Statistics (ABS) releasing broad data on lending – data on new finance commitments for housing, personal, business and the lease loans category. In May, new loans fell by 2.6% after rising by 3.6% lift in April. New loans are up 9.7% over the year.

On Tuesday, ANZ and Roy Morgan release the weekly consumer confidence survey, while Westpac and the Melbourne Institute release their monthly consumer confidence survey on Wednesday. The questions are effectively the same and the surveys cover the same time period. Confidence levels have improved.

Also on Tuesday, National Australia Bank releases its monthly business survey. In June, business confidence was at a 21-month high while business conditions were at an 8-month high. Clearly the rate cut in May has helped together with the Federal Government budget initiatives for small business.

On Wednesday, the June quarter wage cost index is released. We expect that wages grew by 0.7% in the quarter to lift the annual growth rate from 2.3% to 2.4%. The good news for businesses is that wage costs are contained. The bad news for retailers and other consumer-dependent firms is that wages are just covering prices at present. That means that consumers need to be careful with their purchases and businesses need to keep costs and margins down. The job market is improving but there is still a degree of spare capacity available.

Also on Wednesday the Reserve Bank releases the latest data on credit and debit card lending. In May the average credit card balance was 1.2% down over the year. Consumers are still winding back credit and are reluctant to take on additional debt. Currently around 60% of CBA credit-card holders pay off their cards in full in the 55-day interest free period.

On Thursday the ABS releases the average weekly earnings figures. The data is important because it shows wages in dollar terms as opposed to the wage cost index that measures growth of wages. The data is also available for industries.

There are also two speeches to watch over the week. On Wednesday the Deputy Governor of the RBA, Philip Lowe, delivers a speech in Perth. And on Friday, Assistant Governor, Economic at the RBA, Christopher Kent, delivers a talk covering “Recent Labour Market Developments”.  This talk should prove interesting as the Reserve Bank mulls whether the “speed limit” of the economy has changed.

Busy times in China

In the US, the Columbus Day holiday kicks off proceedings on Monday.

On Tuesday, wholesale inventories and trade data are released alongside non-farm productivity measures and weekly chain store sales figures. Economists tip a 0.3% rise in wholesale inventories.

On Wednesday, the monthly Federal Budget figures are released together with the weekly data on mortgage applications. Economists tip a US$117 billion budget deficit in July.

On Thursday the regular weekly data on claims for unemployment insurance is issued together with retail sales data. Economists tip a 0.4% lift in July retail sales, an improvement on the 0.3% slide in June. Excluding autos, sales may have risen by 0.5%.

And on Friday in the US, data on producer prices is released together with industrial production, business inventories and consumer sentiment. Economists tip a modest 0.1% rise in core producer prices (excludes food and energy), a 0.3% rise in production and modest improvement in consumer sentiment from 93.1 to 94.0.

In China, there are early economist forecasts for the Chinese monthly activity data, although they may shift in coming days. Broadly, retail sales in July are expected to be up 10.6% on a year ago with production up 6.6% and investment up 11.5% in the seven months to July on a year earlier.

Sharemarket, interest rates, currencies and commodities

The Australian profit-reporting season moves from second gear into third gear over the coming week.

On Monday, earnings are expected from Ansell, JB Hi-Fi and Bendigo & Adelaide Bank.  On Tuesday, Cochlear, Bradken and Transurban are expected to report earnings.

On Wednesday, amongst those scheduled to issue their profit results are Commonwealth Bank, REA Group, CSL, AGL Energy, Echo Entertainment, Computershare, Primary Health Care,, Dexus Property and OZ Minerals.

On Thursday, earnings are expected from Tabcorp, Telstra, Mirvac, Fairfax Media, and Goodman Group.