A short week in Australia, but it will still be a big week for the economy with employment data for May to be released Thursday and expected to show a sharp rise.
The unemployment rate is tipped to return to 5.7%, which is where it was in March before the surprise fall in May to 5.4%.
Economists reckon the Australian Bureau of Statistic’s return to a larger sample for the survey will produce a correction to the fall in April, and a rise as well on top of that change.
That will get the chat show hosts and other commentators yapping on about recession and high unemployment rates.
In reality it will merely be maintaining the trend established from late last year of a slow loss of jobs and a rise in the number of unemployed.
The AMP’s Dr Shane Oliver said on Friday that "We expect a fall in employment of 20,000 and unemployment to rise to 5.7%".
America’s jobless numbers slowed at the weekend to 345,000: that was a surprise (there were an extra 82,000 job losses added to April and March totals) as the market had been expecting just over 520,000 in losses.
That initially cheered markets, which then fretted as they wondered if it was an aberration (a bit like the way our April fall in the unemployment rate was regarded).
Sluggish wages growth, no real growth in working hours and a separate report showing the biggest ever drop in consumer credit from the Federal Reserve (down $US15.7 billion in April), also worried those bulls wanting to push markets higher.
The Fed said "Consumer credit decreased at an annual rate of 7-1/2 percent in April 2009. Revolving credit decreased at an annual rate of 11 percent, and non-revolving credit decreased at an annual rate of 5-1/4 percent."
Not only was it the sharpest fall in the history of the statistical series, but the level of consumer credit is now back to 2007 levels.
US consumer credit outstandings are now $US89 billion below the level of 2008.
No wonder there’s still gloom about the true level of consumer spending with analysts expecting to see another set of poor retail sales figures in the coming week in the US.
As a precursor to our May employment data, the ANZ Bank releases its job ads series figures for May later this morning.
There are signs the slump in newspaper job ads is slowing, but the fall in online postings continues.
We will also get the latest National Australia Bank monthly business survey later this morning, while tomorrow we get the latest reading on consumer confidence from the Westpac-Melbourne Institute.
The separate Roy Morgan survey of consumer confidence last week found sentiment still solidly above 100 and the Morgan survey of unemployed showed that by its reckoning Australia’s unemployment rate was 7.4% in May (825,000), up 26,000 or 0.3% since April and 168,000 up on May 2008.
That’s 2% above the official 5.4% rate for April.
Also in Australia we will see housing finance figures for April on Wednesday which will reveal more about the rising level of activity for first home buyers and builders.
$1.391 billion was approved for loans for home construction in March, the highest ever and level of first home buyer activity ever recorded.
Thursday also sees the OZ Minerals shareholder vote on the China Minmetals deal that will see the company left with the Prominent Hill mine and around $300 million in cash.
The board was due to meet over the weekend to discuss a counter proposal. It did and rejected the new proposal, opting to stay with the Minmetals offer.
And the Reserve Bank of New Zealand is likely to cut rates by another 0.25% to 2.25% after Thursday’s meeting.
Offshore the focus will be on the flow of monthly Chinese economic data for May from today.
Production, inflation, exports, imports and production and investment figures will be released or leaked to local media over the next three days or so.
Exports are likely to have remained weak (as well as imports).
This will keep industrial production around April’s growth rate of 7.3% year-on-year, according to Dr Oliver of the AMP.
Figures for retail trade (around 14% annual) and fixed asset (running at more than 28%) investment is likely to remain strong and loan growth is expected to remain around 30% year on year.
Chinese consumer and producer prices will again be negative.
Higher petrol and diesel prices started on June 1 and will be in this month’s figures.
US data for retail sales and consumer sentiment will also be released this week, along with the Fed’s latest Beige Book of anecdotal evidence on the economy from the bank’s 12 reporting districts across the US.
The size of the US trade deficit (and the export performance) will be known Wednesday (US time) and import prices and export prices for May will be released.
Higher oil prices last month (up 30% in the month) could cause a large rise in imports, given the recession.
Away from the economy, the big influence will be the names of the first round of banks allowed to repay bailout funds.
The move could feed hopes that the banking system is stabilizing further, even though a 37th US bank (a small regional lender in Illinois) failed Friday night.
The Washington Post reported on the weekend that the amount of TARP money to be repaid could total more than $US50 billion, or more than double early estimates.
General Motors and Citigroup will lose their place in the blue-chip Dow industrial average from tonight. Cisco and insurer Travelers are the new members.
Oil rose above $US70 a barrel Friday, but retreated back to finish above $US68 a barrel.
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