AU Data
- Mon 09.30 AIG Construction Index previous 39.5
- Mon 11.30 ANZ Job Advertisements previous -1.7% m/m
- Tue 11.30 NAB Business Confidence previous 10
- Wed 11.00 Westpac Consumer Sentiment previous 3.7%
- Wed 11.30 Home Loans previous 1.1% m/m expectation -1.0% m/m
- Wed 11.30 Retail Sales previous -1.4% m/m expectation 0.6% m/m
- Thu 11.00 MI Inflation Expectations previous 3.5%
- Thu 11.30 Employment Change previous 32.2K expectation -14.7k
- Thu 11.30 Unemployment Rate previous 5.8% expectation 5.9%
The Australian Industry Group’s (AIG) Manufacturing Index (51.7) jumped to its highest level in 17 months and broke through the 50 threshold separating contraction from growth. Both production and new orders surged above 50, with firms crediting government stimulus measures for part of the improvement as infrastructure, investment and household spending were all recipients of state sponsored initiatives. The AIG Service Index (48.0) was less impressive, recording its 16th month of contraction in the last 17, with some uncertainty as to how the sector will survive the possible double hit of rising interest rates and winding down of fiscal stimulus. The overall positive tone was boosted by the Q2 GDP data that showed the economy grew by 0.6% q/q, boosted by household spending and business investment that outweighed weakness in building and international trade. The RBA left official rates at 3% and gave no new clues as to the timing of the inevitable next move up from these historically low levels. The market is still pricing in at least one rise before year-end. This week Retail Sales, Consumer Confidence and Unemployment will focus attention.
NZ Data
- Thu 07.00 Official Cash Rate previous 2.5% expectation 2.5%
- Thu 07.00 RBNZ Rate Statement
- Thu 07.00 RBNZ Monetary Policy Statement
- Thu 08.45 Overseas Trade Index previous -3.0% q/q expectation -3.1% q/q
- Fri 08.45 Food Price Index previous 0.6%
NBNZ Business Confidence (34.2%) rose for the 6th straight month in August as respondents became more optimistic that the economy will improve over the next 12 months. The own-business outlook (26%) also jumped to a near 5-year high, with more companies expecting their own business to grow in the next year. Perhaps in another sign of improving confidence, Commodity Prices (+4.3% m/m) rose for a 6th straight month, posting the largest gain since November 2007, as aluminium, pelts, lumber, wool and dairy all advanced. Despite rising commodity prices, inflation expectations remain subdued and the RBNZ is not expected to raise official rates at its monthly meeting this week.
US Data
- Mon All day Bank Holiday
- Wed 05.00 Consumer Credit previous -10.3B m/m expectation -3.8b
- Thu 04.00 Beige Book
- Thu 22.30 Trade Balance previous -27.0B expectation -26.8b
- Thu 22.30 Unemployment Claims previous 570K expectation 555k
- Fri 01.00 Crude Oil Inventories previous -0.4B
- Fri 22.30 Import Prices previous -0.7% m/m expectation 1.0% m/m
- Fri 23.55 Prelim UoM Consumer Sentiment previous 65.7 expectation 67.1
- Fri 23.55 Prelim UoM Inflation Expectations previous 2.8%
- Sat 00.00 Wholesale Inventories previous -1.7% m/m expectation -1.0% m/m
- Sat 04.00 Federal Budget Balance previous -180.7B expectation -172.3b
As has been the trend in recent months, equity markets took the positives from the Non-farm Payrolls data and rose 1% on Friday. The headline number showed Payrolls falling 216k, slightly beating market expectations and falling at the slowest pace since August 2008; however both June and July payroll losses were revised up by 49k. The Unemployment Rate (9.7%) was worse than the consensus and has now climbed to its highest level since June 1983. Unemployment is not forecast to peak until well into 2010 and will inevitably drag down consumer spending that drives 70% of US GDP. Elsewhere data was supportive of a stabilising economy with the ISM Manufacturing PMI (52.9) crossing into expansion for the first time in 19 months and Factory Orders (+1.3%) continuing recent improvement. However, the ISM Non-manufacturing Index (48.4) continues to show that service industries that make up 90% of the economy are still contracting, albeit at a declining pace.
JP
N Data
- Tue 09.50 Bank Lending previous 2.1% y/y
- Tue 09.50 Current Account previous 1.80T expectation 1.41t
- Tue 09.50 M2 Money Stock previous 2.7% y/y expectation 2.7% y/y
- Tue 15.00 Economy Watchers Sentiment previous 42.4 expectation 43.1
- Wed 15.00 Leading Indicators previous 79.9% expectation 81.9%
- Wed 16.00 Prelim Machine Tool Orders previous 72.3% y/y
- Thu 09.50 Core Machinery Orders previous 9.7% m/m expectation -3.0% m/m
- Thu 09.50 Corporate Goods Price Index previous -8.5% y/y expectation -8.3% y/y
- Fri 09.50 Final GDP previous 0.9% q/q expectation 0.9% q/q
- Fri 09.50 Final GDP Price Index previous 0.5% y/y expectation 0.5% y/y
- Fri 15.00 Household Confidence previous 39.4 expectation 41.1
Preliminary Industrial Output (+1.9% m/m) grew for a 5th straight month in July as global stimulus initiatives boosted export demand. At least for the near-term, companies are optimistic about future output forecasting rises of 2.4% and 3.2% in August and September respectively. Further evidence of an improving global outlook was seen in the Manufacturing PMI (53.6) that recorded its highest level since November 2006 with demand from China rather the US providing the driver for the improvement in exports. However, doubts do remain as to the sustainability of the recovery to hold up as government stimulus packages around the world are reined back in over the next 12 months. Capital Spending by Japanese companies remains subdued, although the pace of decline slowed in Q2 from 25.3% y/y to 21.7% y/y. This is the 9th quarter of decline as companies grapple with weak domestic demand, falling profits, excess capacity and uncertain growth prospects in major export markets. The incoming government of the DPJ certainly faces a challenging task to sustain the recovery from the country’s worst recession in 50 years and to fund election promises to boost growth by using subsidies to increase household incomes.
Interest rate outlook
| Country |
Current rate |
Last change |
Date of change |
Next meeting |
| AUS (RBA) |
3.00% |
-25bps |
07/04/09 |
1st Sep |
| NZ (RBNZ) |
2.50% |
-50bps |
30/04/09 |
10th Sep |
| US (FED) |
0-0.25% |
-75bps |
16/12/08 |
23rd Sep |
| JPN (BOJ) |
0.10% |
-20bps |
19/12/08 |
17th Sep |