By Craig James

A flood of new economic indicators is expected over the coming week. In Australia, the latest data on home prices is the highlight.

The week kicks off in Australia on Tuesday, when the Reserve Bank releases the latest private sector credit figures (essentially data on outstanding loans). For 14 straight months, credit has grown by between 0.4-0.6% per month and it is reasonable to expect a similar result in December, keeping annual growth at 5.4%.

Also on Tuesday, weekly consumer sentiment data is expected. Consumers remain generally positive, especially on spending intentions. The interesting thing to watch is the indicator on inflation expectations which is at 4½-year highs.

On Wednesday, the Australian Bureau of Statistics (ABS) releases estimates of living costs (inflation) for different groups in the community such as wage earners and pensioners.

Also on Wednesday, CoreLogic will release the January estimates on home prices – the most comprehensive monthly report on the topic. In December, capital city home prices recorded a solid 1.4% gain. But on the data available so far in January, capital city home prices have only lifted by 0.4%. Melbourne prices have lifted 1.1% in January so far but Perth and Brisbane prices have fallen by around 0.5%. Sydney prices are up 0.3% in the month.

And the latest gauge on manufacturing activity – the Performance of Manufacturing index – is also released on Wednesday. The December reading was encouraging at 55.4 (any reading over 50 indicates expansion). Investors would hope for similar strength in January.

On Thursday, there are two indicators of note to be released by the ABS – international trade and building approvals.

In November, Australia’s trade balance improved by $2,362 million to a surplus of $1,243 million. It was the first monthly trade surplus in 33 months and largely reflected higher coal and iron ore prices. But higher coal and iron ore volumes and prices, as well as higher Liquefied Natural Gas (LNG) revenues, should support trade accounts in coming months.

Dwelling approvals have been volatile in recent months – up 7% in November after an 11.8% fall in October. Approvals have peaked, although they are only easing slowly in trend terms from peak levels.

On Friday, the Federal Chamber of Automotive Industries will release the January new car sales figures – one of the timeliest economic indicators. Car sales were at record levels for a calendar year in 2016.

Overseas: US interest rates and jobs are in focus

There are two stand-out events in the coming week: the interest rate decision from the US Federal Reserve and the release of monthly jobs data in the US.

The week kicks off on Monday with the release of US personal income and spending figures together with the pending home sales index. Economists tip healthy gains of 0.4% for both incomes and spending.

On Tuesday, the US Federal Reserve starts a two-day meeting (decision announced Thursday morning, Sydney time). The Fed is poised to lift rates – but not yet, given that inflation is contained. Most economists expect around three rate hikes this year, but the Fed may hold off a little longer. 

Also on Tuesday, the Case-Shiller measure of home prices is released alongside consumer confidence and the weekly data on chain store sales. Confidence is at 15-year highs while home prices are up a healthy 5.1% on a year ago.

On Wednesday, the ISM manufacturing activity gauge is released with the ADP National employment index and January auto sales data. Latest data shows solid manufacturing activity (index of 54.5). The ADP survey is also expected to see a lift in job growth from 153,000 in December to 168,000 in January.

On Thursday, the Challenger survey of job layoffs is released with the weekly data on claims for unemployment insurance. 

And on Friday, the all-important non-farm payrolls (employment) data is released with factory orders and the ISM survey of activity in the services sector. As per the last report, it is not just jobs in focus. Average earnings (wages) rose by 0.4% in December. If we see a similar sort of increase in January, policymakers may start worrying about potential inflationary pressures. And as a result the Fed may be more likely to lift interest rates.

In China, the National Bureau of Statistics releases its purchasing manager reports for manufacturing and services sectors on Wednesday. And the Caixin manufacturing survey is issued on Friday.

Sharemarkets, interest rates, exchange rates and commodities

The US earnings season is in full swing. And it is a case of so far, so good. FactSet report that 12% of the companies in the S&P 500 have reported results for the December quarter. And so far 61% of S&P 500 companies have beat the mean earnings per share, while 47% of S&P 500 companies have beat the mean sales estimate. The earnings growth rate is currently 3.5%, keeping the US on track to record the second consecutive annual growth of earnings in two years.

The Australian earnings season gets underway next week with Navitas and CYBG Plc to report on Tuesday. There will be much focus on whether companies are now experiencing better fortunes than was the case around mid-2016.