A big week for the Australian economy with economic growth data and interest rates to the fore – offshore it’s the August jobs report in the US that everyone will be looking to, along the latest moves from President Donald Trump’s trade wars with Canada and China.
Global surveys of manufacturing and services activities will be released during the week starting from today. The first report from China last Friday was upbeat.
In Australia second quarter GDP numbers are out midweek and there’s another meeting of the Reserve Bank board that won’t change interest rates.
As well there will be more July data on retail sales and trade, as well as a couple of reports on parts of the June quarter to complete the national accounts for their release on Wednesday.
First up the Reserve Bank will leave rates on hold when it meets on tomorrow (Tuesday) which will mean no change for a record 25 months in a row.
The AMP’s Chief Economist, Dr Shane Oliver doesn’t see a rate rise any time soon.
“If growth and inflation picks up as the RBA expects then a rate hike is likely at some point down the track but with downside risks around consumer spending, the housing cycle turning down in terms of construction and prices in Sydney and Melbourne and wages growth and inflation likely to remain lower for longer we don’t see a rate hike until 2020 at the earliest and still can’t rule out the next move being a cut particularly as falling home prices impact,” he wrote at the weekend.
Tomorrow night also sees RBA Governor Lowe making remarks at a RBA board dinner in Perth with local business leaders.
June quarter data for business indicators, public demand and the current account will also be released today and tomorrow ahead of the national accounts.
The market expects growth quarter on quarter of 0.7% for an annual rate of 2.8% for the year to June (the 2017-18 financial year).
Dr Oliver says GDP will be “helped by a rebound in consumer spending and growth in housing construction and public spending, but soft business investment, only a small contribution from net exports and a slight detraction from inventories.”
Other data out this week includes the August house price report from CoreLogic while July retail sales to show a gain of 0.2% month on month (both due Today).
July’s trade data on Thursday is expected to show another surplus while the housing finance data on Friday will show continuing softness in lending to investors after the weak data for housing approvals last Thursday.
Car sales figures are out towards the end of the week, and there will be a few stragglers reporting June 30 results today and tomorrow.
In the US August jobs data on Friday will again be watched closely for continued strength and the long-awaited pick up in wages growth.
Market expectations are for payrolls to rise 190,000 (But Dr Oliver cautions that August is known in the US for initially seeing a soft result which is subsequently revised up), a fall in unemployment to 3.8% and a rise in wages growth to 2.8% year on year from 2.7%, which will just leave wages at the top of their range for this year.
Meanwhile, the manufacturing and non-manufacturing surveys for August (due Tuesday and Thursday) are likely to remain strong and the trade deficit (Thursday) is expected to worsen after preliminary figures last week showed a big rise.
Car sales figures will be out tomorrow in the US – watch for sigs of the market being hurt by tariffs.
In China, more surveys of manufacturing and services will be released this week after the official survey of manufacturing on Friday showed a rise for the first time in three months.
The final estimate of EU second quarter GDP growth will be issued later in the week.
