Other than property prices in Sydney and Melbourne, there was little in yesterday’s data releases about local inflation, manufacturing, job ads and property prices that would force the Reserve Bank’s hand on interest rates later today.
The RBA board’s decision will come at 2.30 this afternoon with a post-meeting statement from Governor Glenn Stevens.
Before that we will see retail trade and international trade data for June and for 2014-15 released. The former should see a small rise, the latter a small improvement in the size of the trade deficit.
But there is one figure that will cause the RBA and its staff economists pause for concern and that’s the pace of activity in the smaller companies in China’s huge manufacturing sector.
The final reading for July in the Caixin/Markit survey of manufacturing fell to 47.8%, a two year low.
The fall was a surprise, as was the official survey of manufacturing for July from the Chinese government last Saturday which showed an unexpected dip to a reading of 50 from 50.2 in June.
Both surveys tell us that our biggest export customer is still experiencing weak growth.
That is in contrast to Australia where the AIG survey of our manufacturing in July found a surge in activity with a final reading of 50.4, up 6.2 points and firmly in expansion. But it does remain well below the 52.3 reading in May of this year.
The monthly inflation survey from TD Securities showed no concerns either with a reading of 0.2% for the month and 1.6% for the year to July, well under the RBA’s range of 2% to 3% over time.
But the number of newspaper and online job advertisements eased for the first time in three months in July. The ANZ survey showed the number of job ads, seasonally adjusted, fell 0.4% to 146,121 month on month.
That was still up 9.3% over the year to July. Internet job ads fell 0.5%, but those in newspapers jumped 2.2% (from a very small base).
“The slower growth in job advertising supports our view that employment growth will slow in the second half of 2015 following unexpectedly strong outcomes since late 2014,” ANZ chief economist Warren Hogan said in yesterday’s statement.
House price growth though will remain a concern for the central bank, judging by the strong rise in July, according to the latest survey from CoreLogic RP Data, released yesterday.
That found a rise of 2.8% in the month across the country, with Melbourne prices surging by 4.9%, faster than Sydney’s 3.3% rise.
Price rises were more modest in Hobart, Brisbane, Darwin and Perth, and they fell in Adelaide.
Over the year, prices jumped 11.1% in the year to July across the country, with Sydney prices up 18.4% and Melbourne by 11.5%. That will continue to gnaw at the RBA, but it is waiting for the slowdown in lending prompted by pressure from key regulator, APRA.
One point though, CoreLogic says there was a noticeable slide in auction clearances in Sydney in July which could will bear monitoring.
