For Australia, the coming week is all about interest rates, the federal budget and the timing of the election (see separate story), but offshore it’s all about the health of the US and global economies.
Global manufacturing and service sector activity reports this week will give us a good idea if the gathering slowdown is continuing or easing – especially across Europe where the Brexit confusion is starting to have a real impact.
The prime focus will be on the US March jobs figures (due Friday night, our time) which economists forecast to show a rebound in payroll growth to around 175,000 new jobs from the soft after the 20,000 gain reported for February.
Economists say the size of any revision to the very low February figures will also be watched closely. If there is no significant revision and another low reading for March will intensify claims the economy is fading.
US unemployment is forecast to remain at 3.8% and wages growth remaining at 3.4% year on year, according to the AMP’s Chief Economist, Dr. Shane Oliver.
Retail sales for February are also expected this week (the timing has been disrupted by the government shutdown in January).
The manufacturing conditions survey is expected to remain around a solid reading of 54 (50 marks the line between expansion and contraction). The non-manufacturing (services) survey on Wednesday night, our time, is expected to show a reading a very strong 58.
US durable goods orders tomorrow. US car sales data for last month today and tomorrow is forecast to show another weak sales outcome for the third month in a row.
Data out on Friday confirms the US economy has made a soft start to the year. The Fed’s favoured inflation gauge, the core personal consumption expenditure index, rose just 1.8% in January, below the Fed’s 2% target and if repeated in coming months will see pressure rise for a rate cut.
At the same time, the same data showed consumer spending rose an weak 0.1% in January after falling 0.6% in December – that’s despite wage growth running at an annual 2.8% to 3.4%.
On Thursday, December quarter GDP cut to 2.2% and 2.9% for the full year, not exactly a booming number for the first year of a large corporate tax cut that gave shares and earnings a first-half push, and then ran out of puff very quickly.
In the Eurozone core inflation tonight, our time is likely to have remained stuck around 1% year on year in March and unemployment for February (also tonight) is likely to be unchanged at 7.8%.
Any fall in inflation to below 1% will see more pressure on the European Central Bank to abandon any thoughts of ending its quantitative easing and low-interest rate regimes.
In Japan, the March quarter Tankan business conditions survey today is forecast to show some deterioration in conditions and expectations, as official data on production and exports are showing.
Data on household spending and wages growth will be released on Friday and will confirm that the economy remains trapped in a slow growth slow lane.
In China, the Caixin PMI for manufacturing due today and the services survey on Wednesday, with both expected to show a stabilisation or slight improvement in response to recent stimulus measures.
Yesterday’s official factory activity survey in China unexpectedly showed growth for the first time in four months in March.
The official (Government) Purchasing Managers’ Index rose to 50.5 reading in March from February’s three-year low of 49.2, the first expansion in four months, according to data released by China’s National Bureau of Statistics (NBS) on Sunday.
The survey showed factory output hit its fastest pace in six months last month, reversing a brief contraction in the previous month. It rose to 52.7 from February’s 49.5, the highest level seen since September last year.
