By Craig James

The week kicks off on Monday with ANZ publishing its series on job advertisements, while TD Securities and Melbourne Institute issue their monthly inflation gauge alongside the Performance of Manufacturing index from Australian Industry Group. In addition the Housing Industry Association will release new home sales data.

Job ads have been trending higher for 15 of the past 17 months and are now up almost 11% over the year. Interestingly last week the Reserve Bank Governor commented that the central bank was surprised at the improvement that has taken place across the labour market.

Turning to the inflation gauge, the headline index was up just 0.1% in June to be up 1.5% on a year ago. And annual growth of the underlying rate (trimmed mean) held steady at 1.3%. The bottom line being that inflation remains well contained.

On Tuesday retail trade figures and trade data are released by the Australian Bureau of Statistics (ABS).

Retail trade rose by 0.3% in May and was up a healthy 4.7% over the year (5-year average, 3.6%). Consumers are cautiously spending but no doubt the majority of activity is driven by the lift in housing activity. The trade data should confirm that Australia notched up its 15th consecutive monthly deficit.

The majority of economists expect no change to interest rates when the Reserve Bank meets on Tuesday although the accompanying statement will be looked at very closely to garner clues about future rate moves. It will be interesting to see if policymakers discuss the recent moves by a number of banks to lift interest rates on investor loans.

On Thursday, the July employment figures are due. There is no doubt that there has been a credible lift in employment over 2015 with over 120,000 jobs being added in the first six months of the year – marking the best start to a calendar year in seven years. There does seem to be a shift from part-time to full-time jobs, which makes sense given that over the past year business profitability has improved, and now employers are seemingly adding more full-time staff.

However employment growth hasn’t been enough to offset the lift in the work force. Given the better economic conditions, more people are looking for work and as a result the unemployment rate has held near 6.0%.

CommSec expects employment rose by 17,000 in July with the unemployment rate easing to 5.9%.

On Friday home loan data for June is released. In May, loans to build homes recorded the sharpest slide in more than five years, falling by 8.3%. The results provided an early indication of how the rest of the year may play out when it comes to the housing sector. Tighter lending regulations are taking some of the exuberance out of the property market and resulting in potential homebuyers being more circumspect about purchases. Another sharp slide would be concerning particularly amongst states outside of NSW and Victoria. Once again we will be keeping a close eye on the number of construction loans – a precursor to further housing supply.

There is a close correlation between home construction loans, building approvals and housing work – the latter driving the fortunes of residential developers and building material suppliers. In terms of owner-occupier loans we tip a 1% fall in June with the value of all loans up by 1%.

Also on Friday, the Reserve Bank releases its quarterly Statement on Monetary Policy. Little change in economic growth and inflation forecasts is expected, confirming that interest rates are on hold for the rest of the year.

Key Chinese and US data released over the week

The week kicks off on Saturday  (August 1) with China’s National Bureau of Statistics releasing Purchasing Managers index (PMI) gauges for both the services and manufacturing sectors. The private sector Caixin manufacturing PMI is released on Monday with the services index on Wednesday.

In the US the week kicks off on Monday with data on personal income and spending, construction spending, autosales and the ISM manufacturing index. A 0.4% lift in income is expected to have out-paced a 0.2% lift in spending.
And the manufacturing index was probably unchanged at 53.5 in July.

On Tuesday, data on factory orders is released together with the usual weekly data on chain store sales.

On Wednesday, the ADP data on private sector payrolls is issued together with the ISM services index and international trade (exports and imports).

On Thursday the usual weekly figures on jobless claims – new claims for unemployment insurance – are issued.

And the Challenger series on job layoffs is released the same day.

On Friday, the pivotal non-farm payrolls or monthly employment report is released. Economists expect that 218,000 jobs were created with the unemployment rate unchanged at 5.3%. A result in line with the forecast should keep the Federal Reserve on track to lift rates by the end of 2015.

On Saturday (August 8), Chinese trade data is released while data on producer and consumer prices is issued on Sunday.

Sharemarket, interest rates, currencies and commodities

The focus shifts from the US profit reporting season to the start of the equivalent Australian version. While a spattering of ASX 200 companies have already reported, in the coming week Suncorp issues its earnings result on Tuesday with BWP Trust on Wednesday, Rio Tinto and Downer EDI on Thursday and Flexigroup on Friday.