The first week of every month always produces a plethora of data releases, meetings and statements.
This first week of the June quarter is no different. Worldwide health checks on manufacturing are out today and services midweek while the important monthly US jobs and unemployment figures are it at week’s end, and between them a lot of data reports.
Besides the jobs report the big event in the US and globally will be Friday’s first official summit between China’s president Xi Jinping and his US counterpart Donald Trump next week in Florida.
The leaders of the world’s first- and second-largest economies will meet at Mr Trump’s Florida retreat, Mar-a-Lago on April 6 and 7 – no doubt a hacker’s golf challenge will be arranged for TV.
In Australia, the Reserve Bank will leave its key interest rate on hold at 1.5% for the eighth month in a row when its board meets tomorrow.
As the RBA has acknowledged in the February Statement on Monetary Policy and the post board meeting statement in February and March, plus speeches and other comments from Governor Phil Lowe, the economic outlook here and offshore has improved markedly from the end of 2016.
So a rate cut won’t because local economic growth has bounced back after its September quarter slump and property (housing) remains a big regulatory concern.
As well, as the AMP’s Chief Economist, Dr Shane Oliver wrote at the weekend, the RBA thinks underlying inflation has bottomed and will gradually rising later this year and into 2018, while at the same time the Sydney and Melbourne property markets remain uncomfortably hot posing financial stability risks.
But Dr Oliver says “it’s way too early to be thinking about rate hikes as underlying inflation risks staying below target for longer, the $A is too high, unemployment and underemployment at over 14% combined are way too high and out of cycle bank mortgage rate hikes have delivered a de facto monetary tightening any way."
“The RBA has to set interest rates for the average of Australia so raising interest rates just to slow the hot Sydney and Melbourne property markets would be complete madness at a time when growth is still fragile and underlying inflation well below target.
“The best way to deal with the hot Sydney and Melbourne property markets and excessive growth in property investor lending into those markets is through tightening macro prudential standards, which APRA has again moved to do (on Friday),” Dr Oliver wrote at the weekend.
On the data front in Australia, today sees the release of data for retail sales and building approvals for February, as well as house prices in March from CoreLogic.
The February trade data is out tomorrow and another surplus is expected. The AIG’s business conditions PMIs will also be released today for manufacturing, mid week for services.
The car industry’s sales data for March and the first quarter will be issued later in the week.
On the corporate front there are the various takeover situations – Downer – Spotless, Fairfax Media, Mantra, Ardent Leisure and Myer to watch. Education group, Navitas has an investor day tomorrow and Scentre, the local shopping centre giant and Lowy family spin off, holds its AGM on Wednesday.
In the US, the manufacturing and non-manufacturing activity surveys are out tonight, our time and Wednesday night and both are expected to have remained strong.
Friday sees the March jobs and employment data and Dr Oliver says “solid payroll growth of 175,000 with unemployment unchanged at 4.7%”. But he sees wages growth unchanged at 2.8% year on year.
US trade data (Tuesday night, our time) is likely to show a reduced deficit for February.
Wednesday night, our time sees the minutes from the last Fed meeting and Dr Oliver says they are likely to do nothing to alter expectations for another 2 or 3 Fed rate hikes this year.
Europe also sees the release of the manufacturing and services activity reports which will show the eurozone and EU economies doing much better than though a few months ago.
France also sees the second televised debate of the presidential election campaign.
In Asia, besides the manufacturing and service sector activity reports this week, the Bank of Japan quarterly Tankan business survey is out later today and is likely to show a further improvement in business confidence, and investment plans.
