AU Data
- Mon 09.30 AIG Manufacturing Index 30.1 Act 37.5
- Mon Tentative HIA New Homes Sales 4.2%
- Mon 10.30 MI Inflation Gauge 0.0% m/m
- Mon 11.30 Retail Sales 2.2% m/m
- Mon 11.30 Company Operating Profit -6.5% q/q
- Mon 16.30 Commodity Prices -15.0% y/y
- Tues 11.30 Biulding Approvals 3.5%
- Tues 11.30 Current Account -6.5b
- Tues 14.30 RBA Interest Rate Decision 3.0% 3.0%
- Wed 9.30 AIG Services Index 39.8
- Wed 11.30 GDP -0.5% q/q
- Thurs 11.30 Trade Balance 2.50b
- Fri 11.30 AIG Construction Index 36.5
Last week saw Private Capital Expenditure fall for the first time in 6 quarters as companies cut workers, reduced production and put capital spending in hold. Spending on plant and equipment tumbled 10.8% and investment in buildings and structures fell 4.7%. The total decline of 8.9% was the largest since the series began in 1987. In a separate report, Construction Work Done fell by 3.7% in Q1 2009, which was the biggest decline in more than 8 years. Residential construction led the way, falling 6% q/q. The figures will increase the pressure on government departments to bring infrastructure projects on-line quickly to bridge the gap left by the slump in private expenditure. Retail Sales and the RBA rate decision will be the focus for this week, with no change in official rates expected this time.
NZ Data
- Mon All Day Bank Holiday
- Thurs 13.00 ANZ Commodity Prices 2.5%
NZ Business Confidence bounced back into positive territory in May. This measure of sentiment saw 1.9% of respondents expecting the economy to improve over the next 12 months compared to a net 14.5% expecting it to worsen the previous month. Building Consents also showed some signs of recovery as activity surged 11% m/m in April. Building activity is expected to benefit from a return to population growth as fewer Kiwis leave and inward migration increases. The Annual Budget was generally well received by the market, as promised income tax cuts for 2010 and 2011 were deferred. S&P improved the outlook on the foreign-currency rating from negative to stable despite the cash deficit widening to a record NZ$ 12.52 billion in the financial year to June 2011. A holiday shortened week and thin data diary will see markets focus squarely on international releases.
US Data
- Mon 22.30 Core PCE Price Index 0.2% m/m 0.2%
- Mon 22.30 Personal Spending -0.2% m/m -0.2%
- Tues 00.00 ISM Manufacturing PMI 40.1 42.2
- Tues 00.00 Construction Spending 0.3% -1.7%
- Tues 00.00 ISM Manufacturing Prices 32 35.1
- Wed 00.00 Pending Home Sales 3.2%m/m 0.3%
- Wed All Day Total Vehicle Sales 9.5m 9.3m
- Wed 21.30 Challenger Jobs Cuts 47.0% y/y
- Wed 22.15 ADP Non-Farm Employment Change -491k -540k
- Thurs 00.00 ISM Non-Manufacturing PMI 43.7 45.1
- Thurs 00.00 Factory Orders -0.9% 0.1%
- Thurs 22.30 Revised Non-Farm Productivity 0.8% q/q 1.2%
- Fri 22.30 Non-Farm Employment Change -539K -549k
- Fri 22.30 Unemployment Rate 8.9% 9.2%
As with the previous week, housing market data continues to show weakness. Two measures of house prices, the independent S&P/CS House Price Index (-18.7% y/y) and official House Price Index (-1.1% m/m) both came in worse than market expectations. However, low prices and financing costs do appear to be putting a floor under home sales. Existing Home Sales (+2.9% m/m) and New Home Sales (+0.3% m/m) are both showing signs of stabilising after 4 years of declines. Despite conflicting signals from manufacturing releases, Richmond Manufacturing Index 4 (previous -9) being positive and Chicago PMI 34.9 (previous 40.1) negative, two measures of consumer sentiment showed signs of improvement; CB Consumer Confidence (54.9) and UoM Consumer Sentiment (68.7) both improved from the previous month and with consumer expenditure contributing 60% to GDP this trend will need to continue to help drag the economy into any sort of growth later this year. This week, Friday’s Non-farm Payrolls and Unemployment will dominate market attention.
JP
N Data
- Mon 11.30 Average Cash Earnings -3.9% y/y
- Tues 09.50 Monetary Base 8.2% y/y 8.0%
- Thurs 09.50 Capital Spending -17.3%
Last week saw Manufacturing PMI (46.6) and Preliminary Industrial Production (+5.2% m/m) provide some justification to the BOJ view that the economy probably bottomed in Q1 2009. Improved industrial performance is clearly export driven as the domestic market continues see weak activity and deflating prices. Retail Sales (-2.9% y/y), Household Spending (-1.3% y/y) and Housing Starts (-32.4% y/y) all failed to impress and with Tokyo CPI falling 0.7% y/y it is still domestic deflation that will concern authorities for the foreseeable future. Capital Spending will be the highlight for domestic data, allowing the market to focus on overseas releases for any further signs of a recovery in the key export markets.
Interest rate outlook
| Country |
Current rate |
Last change |
Date of change |
Next meeting |
| AUS (RBA) |
3.00% |
-25bps |
07/04/09 |
2nd June |
| NZ (RBNZ) |
2.50% |
-50bps |
30/04/09 |
11th June |
| US (FED) |
0-0.25% |
-75bps |
16/12/08 |
24th June |
| JPN (BOJ) |
0.10% |
-20bps |
19/12/08 |
15th June |