With the spectre of Covid Delta increasingly weighing on global economic and market activity, there’s a busy week of economic releases ahead.
In the US and UK, August inflation numbers will be issued and the latter could see fodder for a rate rise. Also being issued this week, US and Chinese retail sales and industrial production data (and for the EU as well) as well as employment data in the UK, China and Australia.
After manufacturing and service sector activity surveys showed global economic growth slowed to the slowest pace this year since January, the coming week’s data will help fill out the global economic picture and tell us more about the way Covid Delta is putting a lid on activity everywhere.
From the manufacturing perspective, production performance will be tracked in the week ahead via industrial output data for the US, China and the Eurozone, with hints sought as to how factories are coping with record supply disruptions.
For household consumption (the main engine of the rebound from 2020’s slump) retail sales data for the US and China will be examined for insights into the extent to which the further spread of the Covid Delta is slowing demand and spending.
And in the wake of the weak August US jobs report, the UK and Australia will also update employment data for last month, while China will produce a small report on its jobless performance.
In Australia, August jobs data due for release on Thursday is expected to show a big hit from the lockdowns.
The AMP’s Dr Shane Oliver says that while hours worked will bear the brunt of the impact, “we expect a 250,000 decline in employment due mostly to NSW and unemployment to spike to 5.5%, with a decline in participation to 65.4% (from 66%) partly muting the rise in unemployment.”
The National Australia bank, ANZ and Westpac are in the same ballpark for the impact of the lockdowns – we have already seen big falls in payrolls on NSW and Victoria in the past six to 8 weeks.
Economists at Moody’s are a bit more optimistic – they see Australia’s unemployment rising to 5% in August from 4.6% in July.
“Extended shutdowns across various states are expected to have weighed heavily on labour force participation rates and reduced job openings, particularly in contact-sensitive services,” Moody’s wrote at the weekend.
Elsewhere in Australia both business confidence and conditions will see sharp falls in the monthly survey from the National Australia Bank tomorrow, while consumer confidence in the Westpac/Melbourne Institute monthly survey on Wednesday will be subdued.
Home price data for the June quarter tomorrow from the Australian Bureau of Statistics is expected to show a 6% gain based on private sector dwelling price data already released.
And a speech by RBA Governor Philip Lowe tomorrow will see him explain last week’s decision to extend its bond buying spending until February, 2022. It will be the first time he has spoken in public since the lockdowns worsened.
In New Zealand June quarter GDP data will be released this Thursday with modest growth expected.
Moody’s economists wrote at the weekend:
“New Zealand’s June quarter GDP will be the highlight on the economic calendar. New Zealand’s economy is likely to have grown 0.7% in quarterly terms in the June quarter, following a 1.4% expansion in the prior quarter, consolidating gains from improving household consumption and a fast-recovering labour market.”
In the US, the focus will be back on consumer inflation and retail sales for August.
The August CPI (tomorrow) is forecast to show monthly inflation easing from its recent highs but still high to worry the worriers in markets as supply constraints impact and keep annual core inflation around 3.3% year on year.
High car prices and the recent storms, fires, drought and heavy rain will impact food and vegetable prices, according to some forecasts.
In other data, the AMP’s Shane Oliver says we can expect a fall in the US August retail sales data on Thursday.
This he said will be “reflecting the Delta outbreak” but he sees a modest gain in industrial production on Wednesday and stronger September readings for the regional manufacturing surveys (Wednesday and Thursday) and consumer sentiment (Friday).
Tomorrow sees Chinese August data for industrial production, retail sales and investment likely slow further due to Covid Delta restrictions.
Economists say crude steel production will be closely watched to see if there is any further sign a fall due to government ordered cuts in output t curb emissions.
Euro zone and US releases will see Euro zone industrial production rise by a modest half a per cent the trade surplus is expected to grow, thanks to surging exports from Germany.
Eurozone and UK data on inflation will also be released – the latter seems to be heading towards a rate rise because of the continuing high-cost pressures.
