Wages here, central bank minutes here and in the US, a central bank rate rise in New Zealand, mid-month activity surveys for many economies; earnings here, in the US, Europe and Asia – there’s going to be quite a lot of noise from issues that will compete for attention this week.
And for Australian investors the looming reports from major miners BHP and Rio Tinto – due tomorrow and Wednesday – will create noise of their own, especially the size of the dividends (both will be lower than a year ago, according to many forecasts).
Before all that, remember there’s a partial public holiday in the US on Monday that will see Wall Street markets closed for shares and bonds. Commodity trading will be online.
The minutes from the last RBA Board meeting will be out tomorrow and will not reveal anything new given the recent release of the bank’s first Statement on Monetary Policy for the year and Governor Lowe’s two appearances before Senate and House of Representatives committees last week.
But the big data drop here this week will be Wednesday’s Wage Price Index for the December quarter and 2022.
Some economists reckon it will show a rise to an annual rate of 3.5% from 3.1% in the year to September. Some analysts say the quarterly rate will show no change from September’s 1% rise from the three months to June.
If that happens, watch out for a lot of confusion with the worrywarts claiming there’s a wages spiral underway and the more level-headed analysts pointing out there’s nothing of the kind.
The mid-month business conditions survey for February (out tomorrow) are likely to show continued softness with the composite index likely to remain around 48.5, according to the AMP’s Shane Oliver.
He also says the December quarter construction data (out Wednesday) “is likely to show a 0.6%qoq rise and December quarter business investment (Thursday) is likely to be up 0.8%qoq with investment intentions remaining reasonably solid.”
The construction and investment reports start the data releases ahead of the December quarter and 2022 national accounts and GDP figures release on March 1 (as is January’s monthly inflation indicator).
As well there’s a second big week of December 31 half year and yearly earnings results with BHP, Rio Tinto, Woolworths, Qantas and Pilbara Minerals expected to star.
In New Zealand will the country’s Reserve Bank push back an expected rate rise to allow time to see what the financial cost of the flooding in Auckland on January 27 and then the terrible damage done to most of the North Island from Cyclone Gabrielle last week. Nine people have so far died and the damages bill is likely to be well above the $A400 million estimate for the January event.
Repairing the damage from the two storms will add to already high building costs and inflation.
But Moody’s economists think the RBNZ won’t wait and will raise the official cash rate by 75 basis points to 5% while Dr Oliver thinks it will be a half a per cent rise.
Moody’s economists said at the weekend that, “with the (NZ) central bank likely to hike again in April before taking a breather, we expect cumulative monetary tightening will slow economic growth to just 0.2% in 2023.”
In the US the minutes from the Fed’s last meeting at the start of the month (out Wednesday) will repeat the message that inflation remains too high and more rate hikes are likely but that rates are getting close to the top. Which is what chair, Jay Powell suggested in remarks earlier this month.
Dr Oliver says that on the data the February business conditions surveys are likely to remain softish at around 47 and existing home sales to rise slightly (both tomorrow), personal spending to show a bounce in January with core private final consumption inflation to remain unchanged at annual rate of 4.4%, according to Dr Oliver.
Moody’s economists reckon the personal spending could be as high as 1.2% because of the surge in new jobs in January (which will offset another fall in hourly wages).
Elsewhere there’s Canadian inflation (out Tuesday) which is expected to fall further to an annual rate of 6.2%, business activity surveys for the Eurozone and Japanese inflation on Friday which is expected to show a headline reading of 4.2% (after wages rose 4.8%).
Japanese business conditions will be updated tomorrow.
