By Craig James

Employment dominates domestic data

In Australia, the week kicks off with job advertisements on Monday. To some degree the job advertisement figures have lost some of currency as a leading indicator of employment. More jobs are now posted on individual company websites, social media such as LinkedIn, Facebook and even Twitter, and job placement agencies. But the job ads data is still important in watching for turning points. In that context there have been encouraging signs with a sustainable lift in business hiring intentions. Jobs ads are up almost 11% on a year ago.

On Tuesday the National Australia Bank business survey is released. The business survey covers key business indicators, a reading on business confidence as well as gauges on prices, wages and finance. The indicators of confidence and conditions have showed encouraging improvement since the Budget, with a particular focus on a lift in profitability.

On Tuesday Reserve Bank Head of Financial Stability, Luci Ellis, delivers a talk on the property market. And on Wednesday both the Reserve Bank Deputy Governor Philip Lowe and Assistant Governor Guy Debelle deliver speeches.

On Wednesday the monthly Westpac/Melbourne Institute consumer confidence survey is released alongside housing finance data. The volatility in global share markets may have affected confidence levels. But for the most part the monthly confidence reading should mirror the more timely weekly survey released each Tuesday by ANZ/Roy Morgan.

The housing finance data are new commitments made by lenders for the purchase or building of homes and renovations. We expect that the number of loans made to owner-occupiers (those who want to live in the homes) rose by 1.5% in July. Clearly housing remains the growth driver for the broader economy.

On Thursday the ABS releases the monthly employment figures. Overall we expect that the number of jobs rose by around 10,000 in August, while the participation rate may have eased from 65.1% to 64.9%. As a result we expect that unemployment eased from the headline grabbing 6.3% to 6.1%.

Closing out the week on Friday, the Bureau of Statistics will release lending finance figures – includes housing, personal, business and lease loans. The June lending statistics show a mild rebound in June, largely driven by the strength in housing finance and in that context it is investor housing in particular that has driven the strength. Overall lending is only just shy of the seven-year highs reached two months ago.

Overseas: Chinese economic data in focus

In the US, the week kicks off on Tuesday with consumer credit figures, the NFIB small business index and employment trends index. Economists expect that consumers continue to warm to low borrowing costs with credit tipped to have expanded by US$18 billion in July after a lift of US$20.7 billion increase in June.

On Wednesday the usual weekly data on mortgage finance commitments is released with the JOLTS job openings index.

On Thursday wholesale inventories and sales data for July is released together with import and export price data. Economists expect that both wholesale sales and inventories expanded by 0.3% in July. Also on Thursday the weekly data on claims for unemployment insurance is issued.

Investor interest levels should pick up on Friday. Not only will producer price data be released, but also the preliminary reading on consumer sentiment. Producer prices or business inflation is expected to have contracted by 0.1% in August. Stripping out volatile items like food and energy prices may have risen by around 0.1%. Overall inflation remains well contained, and if the current sharemarket volatility dampens sentiment, the Federal Reserve certainly has time on its hand before needing to lift interest rates.

In China, the week kicks off on Tuesday when China releases its exports and imports data. Economists expect that exports fell at a 5% annual rate in August, while imports are tipped to slide by 6%. Overall the trade surplus is expected to have lifted from $43 billion to $51.1 billion in August.

On Thursday China’s National Bureau of Statistics issues inflation data for August – both consumer and producer prices. Inflation is well contained at present with producer prices still falling, not rising. Economists expect that producer prices fell 5.5% over the year to August while consumer prices grew 1.9% over the period.

On Sunday the monthly batch of Chinese economic indicators are released – retail sales, production and investment. There are signs that Chinese economic activity is gaining pace and investors would want to see further confirmation of that trend. Expect annual retail sales growth near 10.6% with production near 6.3% and investment near 11.2%. The risk is that the results print on the weaker side of expectations – especially given that China closed down heavy manufacturers and restricted transport in Beijing due to the World Athletic championships. We would expect activity levels to lift in coming months.