News on the Covid-19 outbreak will continue to dominate in the coming week, especially with China due to release its first survey of manufacturing activity for February on Saturday.
That will be closely watched because it will be the first bit of data on China for February that will reflect the impact of the COVID-19 virus.
For that reason, there’s likely to be some over-reporting as investors attempt to assess whether the number of new cases has actually peaked as data is suggesting and how extensive the hit to economic activity will be.
Markit economists (who conduct a similar survey with Caixin business magazine) Friday cautioned about analysing the survey (from China’s National Bureau of Statistics).
“As with all manufacturing PMIs at times of supply shocks, we urge analysts to look at sub-indices relating to purchasing, output and new orders rather than the headline composite PMI index, as the latter is likely to be buoyed by longer delivery delays, giving a false reading of health,” Markit economists wrote at the weekend.
In other words, the survey (and the Markit one next Monday) could actually tell a far different story once the data is looked at more closely. But nevertheless, a big fall is expected from the January reading of 5t0.0, down from 50.2 in December.
Australian markets will be on edge later in the week and early next week for the data’s release.
Ahead of that, there’s a bit of data due for release.
There’s the construction and business investment data on Wednesday and Thursday respectively which will provide guidance to December quarter GDP data to be released on March 4.
The AMP’s Dr. Oliver says the December quarter construction data is expected to show a 1% decline with housing investment continuing to fall with business investment (Thursday) also likely to be soft.
“Business investment plans will also be watched closely but beyond a pick-up in mining investment is unlikely to show much improvement given ongoing softness in business investment,” he wrote at the weekend.
Credit data for January will be released on Friday will be watched for signs of rising property lending, but overall it’s likely to remain soft.
The Australian December half earnings reporting season ends this week with around 40 major companies due to report including Worley and BlueScope (today), Seek and Oil Search (tomorrow), Adelaide Brighton and Woolworths (Wednesday) and Rio and Afterpay (Thursday).
In the US, consumer confidence for February and continuing modest rises in home prices (all due Tuesday), gains in new home sales (Wednesday) and pending home sales (Thursday) and durable goods orders (also Thursday), another solid rise in personal spending and core private final consumption deflator inflation (Friday) edging up slightly to 1.7% year on year, according to Dr. Oliver.
The second reading of the US December quarter GDP will be released late this week with growth expected to be unchanged at an annual rate of 2.1%.
Eurozone economic confidence data for February (on Thursday) will be watched closely given the economic impact from coronavirus and core inflation (Friday) is likely to remain depressed at around 1.1%year on year.
Japanese labour market and industrial production data will be released on Friday, with unemployment likely to remain low and production likely to show a small gain.
