Oil, oil and more oil will be the focus this week for local and international markets, especially in the US where there’s a strong feeling the economy is doing as badly as many consumers think, not as some of the official figures might suggest.
After our big week last week with the national accounts for March, and important figures for April for retail sales, building approvals and international trade, there will be just one important set of figures released on Thursday.
The monthly jobs and unemployment numbers are out Thursday and will be watched closely for abny evidence of the slowdown starting to bite the labour market. Before that the consumer confidence survey for June from Westpac and the Melbourne Institute will be out Wednesday and is expected to show no change in the 15 year low.
There might even be another fall, along the lines suggested last Friday by the Morgan group’s consumer confidence survey.
The jobs figures though might just show the first inkling of the impact from the domestic slowdown engineered by the Reserve Bank. Forecasters are looking for a small drop in the number of new jobs created and perhaps no change in the unemployment rate of 4.2%.
That was up from 4.1% and was due to a rise in the participation rate to a record 65.4% as more people looked for work.
No change though won’t mean higher interest rates: the surge in world oil prices will make the Reserve Bank reticent to do anything if it persists.
The National Australian Bank’s monthly business confidence survey will be out later today and will be closely watched also to see if there’s any recovery in sentiment. Judging by the one-sided, resource sector sourced, trading strength in the stockmarket lately, it is doubtful.
If anything, business confidence is a bit weaker as more companies look at the impact higher oil prices are having, and will have on demand for their products.
Confidence in the US was severely shaken last week by the double whammy of that oil price surge and the larger than expected rise in the unemployment rate, even though the number of jobs lost was lower than forecast.
Inflation and recession are now the double fears: this week the former will be stoked with the release of the latest data on import prices and inflation.
With home prices still falling, 11 million US home owners under water on their mortgages, and over 1 million homes actually foreclosed, this week sees the start of the monthly reporting cycle from the stricken sector.
So we will see figures for pending home sales, the trade balance, import prices, retail sales, consumer sentiment and inflation, along with the Fed’s Beige Book of anecdotal evidence.
Given current worries about inflation in the face of the surge in oil prices, May US inflation data is likely to be watched very closely, particularly for any signs that higher oil prices are starting to push up underlying inflation.
So it will be another tough Friday with the May CPI figures to be released that day. A surge in inflation above the headline 3.9% will not do sentiment any good: but a rise above the current core rate of around 2.2% to 2.4% will terrify investors, like the May jobs figures did on Friday.
In the region, The Bank of Japan is expected to leave interest rates on hold when it meets later in the week and Chinese economic data will also be released and is likely to show some moderation in inflation, even though growth remains strong.
But another rate cut is likely in Canada, even though the number of new jobs created in May rose in that country, according to figures released on Friday.
Polls by Reuters and Bloomberg show that US economists think the CPI rose by 0.5% for the month compared to 0.2% and see the core inflation reading rising 0.2%, against the 0.1% rise in April.
After solid sales figures from huge discount chains like Wal-Mart and Costco last week and a bullish Wal-Mart AGM on Friday, this week’s retail sales figures for last month would have been a bit passé. But Friday’s jobs figures mean they will assume a great deal more importance.
With so many teenagers and young students unable to get jobs so far, it looks as though the retailing sector (where many do get summer jobs) is not in a hiring mood. In fact they seem to be a in a bit of a firing mood with jobs lost in May.
And the Federal Reserve’s so-called Beige Book on Wednesday will provide an anecdotal assessment of economic health by region. The report is part of Fed’s decisions on interest rates and will be used at the two day meeting on June 24-25.
Pending home sales were out overnight and showed a surprise 6.3% rise in may, something that gave some investors heart.
TUESDAY:
Australian Bureau of Statistics figures on international trade for May; housing finance figures for April; Business surveys: NAB Monthly business confidence for May, Manpower-Melbourne Institute employment report, Oliver jobs index for May and ANZ job ads series for May.
WEDNESDAY:
ABS lending figures for April; mineral and petroleum exploration figures for the March quarter; Westpac/Melbourne Institute consumer confidence survey for June
THURSDAY:
ABS labour force and unemployment rate for May; BHP CEO, Marius Kloppers addresses Sydney investment conference.
FRIDAY:
Reserve Bank Governor, Glenn Stevens speaks on the Australian economy at a lunch in Sydney.
