It will be an enormous week for Australian economic data and by Friday we should have a clear idea of how the economy is placed.
We have Australian first quarter growth, early data for April and the important monthly Reserve Bank board meeting which will all dominate a full week of information about the health of the economy.
Offshore the data could be even more important – central bank meetings in the UK, and the European Central Bank which is widely expected to introduce new measures to try and stave off deflation in the eurozone.
And there’s also the monthly surveys of manufacturing, with the second out later this week, followed by reports for other countries over the next 24 hours. The first report on Chinese manufacturing showed a surprise rise for May.
Similar reports for the service sectors of the major economies will be issued later in the week.
And to top that off there’s the May employment data for the US on Friday night our time, which is now the most important set of monthy economic data for the global economy.
All in all it’s one of those rare weeks each year when the data flow has the capacity to move markets, especially the decision of the ECB on Thursday night, our time, and the US jobs report 24 hours later.
In Australia the RBA board meeting tomorrow will leave interest rates on hold for the ninth month in a row.
The central bank will again tell markets that sitting on rates will be the most appropriate policy for some time to come.
That’s especially so considering that since the last board meeting, the federal budget has clearly had a negative impact on confidence and consumer spending according to various anecdotes.
At the same time inflation remains benign and tentative signs of cooling in the housing market and APRA’s qualitative crackdown on high risk mortgages means the Reserve Bank has plenty of scope to continue with low rates.
Elsewhere, senior RBA officials Tony Richards (payments) and Luci Ellis (financial stability) are due to make speeches during the week.
On the data front, the March quarter GDP figures on Wednesday are expected to show that growth remains below trend with soft business investment, but support from dwelling construction, consumer spending and trade.
Also we have figures on wages, profits and business inventories today and the current account and government finances tomorrow.
They all feed into the national accounts which are out Wednesday morning with the March quarter GDP data.
The AMP’s chief economist Dr Shane Oliver estimates growth at 0.5% quarter on quarter, or 2.8% year on year.
April reports will include building approvals (we can expect to see a 3% bounce in building approvals, according to Dr Oliver, but further evidence of a slowing in house price growth). Both bits of data are out later today.
Retail sales for April are out tomorrow and are likely to be weak, with a possible decline according to Dr Oliver (after 11 months of gains), and there should be another trade surplus for April when the report is released on Thursday.
The Australian Industry Group’s survey for Australian manufacturing (out today) and a separate one for services (later in the week) will both provide a good indication of the impact of the federal budget on business confidence.
And we also have a private inflation measure out this week as well, and industry car sales figures for May midweek.
Corporate reports are sparse this week, although there should be a further announcement on the timing of the adjourned meeting of Westfield Retail Trust on the revamp proposed by Westfield Group.
In the US, we can expect the ISM manufacturing and services conditions indexes (due tonight and Wednesday night, our time, respectively) to post solid readings.
But the major report from the US this week will be the May jobs report on Friday night, our time.
The report is likely to show more new jobs – a further 220,000 new jobs is the market consensus, with unemployment rising to 6.4% as more people look for work.
Corporate results are few and far between in the US this week.
There are also a few pieces of data – trade, factory orders, construction orders and vehicle sales for May.
The Fed’s Beige Book for its next meeting later this month will be out Thursday night, our time.
And in Canada the Bank of Canada releases its interest rate decision for May on Wednesday night, our time.
And the Canadian employment data for May is out on Friday night, at the same time as the US report.
In Europe, the focus will be on the ECB meeting (Thursday night our time) which is expected to further ease policy again and announce more monetary stimulus.
Dr Oliver says this is likely to take the form of interest rate cuts but there is some chance it will also include a form of quantitative easing.
Rates could be cut to negative levels, which will bring all sorts of concerns.
There’s a flash report on May inflation (disinflation) on Tuesday night, our time, ahead of the ECB meeting which will underline the reason for the central bank’s expected actions.
As well there’s the start of month surveys of manufacturing and services which will show the eurozone economies are rebounding, but slowly.
The second estimate of eurozone first quarter GDP is out midweek and unemployment figures are out tomorrow night.
In Asia there are the HSBC/ Markit survey of manufacturing from China on Wednesday (the flash report last week showed a surprise rise) and from other economies including South Korea and Taiwan.
The survey for Thailand is not expected to be very good given the impact of the coup.
