By Craig James 

A new month beckons and that means another Reserve Bank meeting is on the cards. And in the US, it is time again for another batch of jobs data. The Reserve Bank Board meets on Tuesday and US jobs data is on Friday.

In Australia, the week kicks off on Monday with the monthly inflation gauge issued alongside the Performance of Manufacturing index, home prices and new home sales data. The home price data should show Australian prices rising by 0.7% in July to be up 6.2% over the year. But investors will also be interested in whether the manufacturing sector is continuing to expand and whether inflationary pressures remain contained.

On Tuesday, the Reserve Bank Board meets with another rate cut on the cards. If the RBA does cut it is from a position of strength. The economy is growing faster than “normal” and unemployment is low, but inflation is well below the Reserve Bank’s 2-3% target band. The only tool at the disposal of the RBA to lift inflation is interest rates. A rate cut may not succeed in lifting growth but the RBA can’t give up.

Also on Tuesday, data on building approvals and international trade are released together with weekly consumer sentiment.

On Wednesday, new car sales figures are released and it is likely that data will show annualised sales at fresh record highs.

Also on Wednesday, the Australian Bureau of Statistics (ABS) issues the “Selected Living Cost Indexes” publication, providing different estimates of the cost of living for different demographic groups.

On Thursday, the ABS will issue data on tourist arrivals and retail trade. Tourist arrivals are at record highs.

Retail spending only inched 0.2% higher in May, a figure likely impacted by election uncertainty. And this uncertainty may have also influenced the June result although cold weather probably boosted seasonal purchases. We expect that retail trade rose by 0.4% in June to leave spending 3.2% up on the year. For the June quarter, 0.4% real growth is expected, with spending up 2.1% on the year.

On Friday, the Reserve Bank will update forecasts in its quarterly Statement on Monetary Policy.

US jobs data hogs the limelight

Most investors will be focussed on the US jobs figures (Friday). But there is also key Chinese data to digest. 

The week kicks off on Monday in the US with the release of construction spending data together with the ISM manufacturing index. Economists expect that construction spending bounced 0.5 per cent higher in June after easing by 0.8% in May. And the ISM manufacturing gauge may have been little changed from the June reading of 53.2. Any reading above 50 indicates expansion in the manufacturing sector.

In China on Monday, the National Bureau of Statistics releases purchasing manager surveys for both the manufacturing and services sectors. The private sector Caixin purchasing manager index for manufacturing is also issued on Monday while the services sector variant is issued on Wednesday. 

On Tuesday in the US, data of personal incomes and consumption (spending) is issued. In addition the data includes the Federal Reserve’s preferred measure of inflation – the private consumption deflator. If inflation remains tame, the Federal Reserve can take its time lifting interest rates.

Also on Tuesday, data on auto sales is released together with the usual weekly figures on chain store sales.

On Wednesday in the US, the ADP national employment report is released with the ISM gauge on the services sector and weekly figures on housing finance. The ADP series is the fore-runner to the “official” jobs report and expected to show a 168,000 gain in private sector jobs in July.

On Thursday, the Challenger series on job layoffs is issued together with data on factory orders (and revised durable goods orders) and the usual weekly data on claims for unemployment insurance.

On Friday, arguably the most important of the week’s economic data is released – the non-farm payrolls or monthly employment report. After seemingly disappointing in May with only a modest 11,000 lift in jobs, employment rebounded in June, up by 287,000. Over the past two years employment has lifted on average by just over 222,000 a month. In July, economists expect that payrolls rose by 180,000 with the unemployment rate holding at the seemingly “full employment rate” of 4.9%. As always the interest will be in whether the tight job market shows up in higher wages.

Share market, interest rates, currencies & commodities 

The US earnings season winds down over the coming week. In contrast, the Australian equivalent of earnings season gets underway in earnest.

On Wednesday, earnings results are expected from Rio Tinto, Seven Group Holdings and Genworth Mortgage.

On Thursday, the results in focus are those from Tabcorp, BWP Trust, Suncorp and Downer EDI.

And on Friday, profit results include those from Virgin Australia.