Wages and jobs are back in focus this week in Australia as well as the local June 30 financial year reporting season which swings into top gear.
As well, the final round of China’s economic data dump for July is out later today and there are also important GDP releases for Japan, Germany and Italy this week.
In Australia Wednesday sees the release of June quarter wages data which the AMP’s Chief Economist, Dr Shane Oliver says is “expected to show that wages growth remains soft” at 0.5% quarter on quarter or 1.9% year on year, followed by the July labour force data a day later which he says is “expected to show a 10,000 gain in jobs and unemployment remaining around 5.6%.”
With the jobs report the focus will be on if the rebound in full time job creation continued last month, and if the strong rise in new jobs growth is also still happening.
The wage index will contain some of the impact of the lift in the minimum wage earlier in the eyar. If the reading is 1.9% year on year it will mean another quarter where wages have not grown faster than inflation (1.9% in the year to June)
Tomorrow’s minutes from the RBA’s last board meeting will confirm what we already know from previous statements and speeches from the bank and its senior officials – that monetary policy remains firmly on hold.
The minutes will show the rising value of the Aussie dollar will feature.
On top of this we will have two speeches this week from RBA Assistant Governors, Chris Kent who is the head of financial markets (and spoke last week) and Luci Ellis, head of the bank’s important economics department.
While their speeches will be watched for any additional clues on interest rates, it will be interesting to see what they say about the dollar and the performance of the Commonwealth Bank in its current money laundering scandal.
That was after their boss, RBA Governor Phillip Lowe lambasted the banks generally, telling the Federal House of Representatives Economics Committee in Melbourne on Friday: “The desire for short-term profit has meant not enough attention is being paid to risk management, trust has been strained, banks know that.”
“Banks should not be doing money laundering, and they should know who is operating the accounts that they open,” he said.
“If shortcomings are identified, then there needs to be accountability. That accountability needs to be both through the courts and internally within the organisation.
“It’s very serious. We have these laws for a reason. They need to be enforced and people need to be held to account,” he said.
Chris Kent speaks this morning, Luci Ellis on Thursday.
The June 30 profit reporting season continued (see separate story) with around 60 ASX 200 stocks due to report this week, plus a third quarter trading update from the ANZ tomorrow morning.
In the US, the minutes from the Fed’s last meeting (out Wednesday) will be examined for further clues as to when the Fed will announce the start of letting its balance sheet run down next month (basically quantitative tightening).
But watch for but signal that sub target inflation (July’s CPI was still under the 2% Fed target at 1.7%) means a degree of uncertainty around the timing of the next interest rate hike (which Dr Oliver says “we expect to be in December”).
On the data front the latest retail sales figures are likely to show a small rise while solid readings are expected for the home builders’ conditions index (both tomorrow), housing starts (on Wednesday) and industrial production (out Thursday) and the New York and Philadelphia manufacturing conditions indexes (out during the week).
The US June quarter reporting season winds down with around 25 major companies down to release figures, led by Walmart and Target, America’s two biggest retailers (See separate story).
In Asia the big data release are in China and Japan.
Dr Oliver says today release of Chinese economic activity data for July is expected to show a slight slowing after the acceleration seen in June with retail sales growth slowing to 10.8% year, industrial production slowing to 7.2% and fixed asset investment unchanged at 8.6%.
The recent rises in iron ore and copper prices are telling us that demand (both actual and speculative) is stepping up in China.
The government and steel industry are now trying to cool steel and iron roe prices (see commodities report) to try and curb what they claim are speculative activities
In Japan June quarter GDP data will be out later today and is expected to show a bounce in growth to 0.6% quarter on quarter or 2.5% year on year driven by consumer spending and investment. Japan’s July trade figures are out later in the week.
Europe sees the release of UK inflation figures, as well as employment and earnings figures (watch for the Brexit effect).
But retail sales will be mixed and boosted by higher inflation, not demand. German and Italian GDP for the second quarter, Euro area industrial production (all should be stronger).
