As we once again approach a monthly Reserve Bank board meeting, the Australian economy is not providing any guidance for the central bank, or individuals.
The RBA board meets next Tuesday in Perth. On Wednesday Governor Glenn Stevens speaks at a dinner in Perth.
Both his post-board meeting statement and the speech will be closely watched for signs of any change in the RBA’s current stance of waiting to see what happens in the economy.
Consumer and business confidence levels remain weak, but that is at odds with some of the July figures now emerging.
Complicating matters next week is the release of the June quarter economic growth figures on Wednesday with some early forecasts around the 0.9% (GDP contracted by 1.2% in the March quarter).
The Australian unemployment data is out next Thursday and some economists reckon the 5.1% rate will be pushed higher.
It wouldn’t surprise if there’s a change in market sentiment against an interest rate cut in a week’s time.
Retail sales for July showed a surprising rise of 0.5%, stronger than most forecasts, but industry spokespeople dismissed the rise as a one-off.
And official figures out yesterday confirmed the investment boom remains on track and if anything is accelerating.
Earlier in the week July figures on new home building were very weak, building approvals fell for private dwellings (the major part of approvals each month), house prices fell and RBA data showed home lending was running at close to all time lows in July.
But so far, there’s no single figure that points to a rate cut being a certainty next Tuesday.
So the next really important RBA meeting is the Melbourne Cup day meeting in November when the RBA will have the September quarter inflation data available to consider.
The new private investment figures from the Australian Bureau of Statistics were the most important figures released this week.
The report showed that firms planned to invest a record $149 billion for the year to June 2012, led by the mining sector which alone intended to invest a staggering $82 billion.
And June quarter investment was up a very sharp 4.9% to $33.8 billion.
The overall actual spend in 2010-11 looks like finishing down a bit on earlier estimates – a near 4% fall from the March survey estimate to a still very large $119.7 billion.
Spending on plant and machinery grew 2.2% in the June quarter, which will give the second quarter growth figures a nice boost next week.
The figures saw AMP’s chief economist, Dr Shane Oliver remind us that investment data "simply confirms what we already knew… i.e. that the mining investment boom is very strong and still gathering steam.
"Interestingly though while June quarter investment growth was stronger than expected capital spending plans for 2011-12 imply a slight downgrade from previous estimates from growth of around 38% to growth of around 36%.
"Within this mining investment growth is still estimated to be a very strong 70%, but investment intentions imply growth of just 6% in the manufacturing and "other" sectors.
"In other words the two speed economy remains alive and well."
But more importantly, first quarter investment spending was revised up sharply, as more data from flooded parts of Queensland became available.
Overall business investment grew 7.7% in the March quarter, compared with an initially reported 3.4%.
For that reason the 1.2% fall in GDP in the March quarter could be hauled back in revisions in next Wednesday’s national accounts.
And together a significant revision to the March quarter and a solid rise in the June quarter could change perceptions about the economy.
And planned manufacturing investment is much stronger than the headlines suggest.
Manufacturing is planning a 10.5% boost, to $13.1 billion of investment in the 2011-12 financial year.
That’s also 7.4% more than the $12.2 billion estimated to have been spent in 2010-11 and about the average of the past five years, which belies much of the recent talk in the media and from some sections of manufacturing.
The mining industry is close to 10% of the economy and will grow thanks to the huge investments in iron ore, coal and liquefied natural gas.
The mining industry’s $82.1 billion in investment plans in 2012 is 55% of the total, but appear to be plateauing while other industry’s capex intentions are growing.
Mining capex intentions were flat from the March to the June quarters, while total capex spending estimates were up 6.2%.
Retailing, which is certainly doing it tough, plans to invest $4.13 billion this year, down just $64 million on last year – all but steady after some rough months.
But July wasn’t as rough as many had forecast.
The Australian Bureau of Statistics said the 0.5% rise in retail sales in July came after a fall of 0.1% in June.
Spending grew by 1.2% in department stores in July and 1.1% at cafes and restaurants while food retailing rose 0.8%.
But clothing, footwear and personal accessories to
