AU Data
- Monday 10.30 Housing Industry Australia New Home Sales previous 8.3%
- Tuesday 11.30 Private Sector Credit previous 0.6% m/m
- Wednesday 09.30 AIG Manufacturing Index previous 31.7
- Wednesday 11.30 Building Approvals previous -3.7% m/m
- Wednesday 11.30 Retail Sales previous 0.2% m/m
- Wednesday 16.30 Commodity Prices previous 19.1% y/y
- Thursday 11.30 Trade Balance previous 0.97b
- Friday 09.30 AIG Services Index previous 32.2
Release of the Conference Board’s Leading Index (-0.6% m/m) for February confirmed the strongly held view that Australia will inevitably be dragged into recession. The privately collated index has fallen for 5 straight months now and gauges economic activity in the next 3-6 months; with unemployment set to rise from the current 5.2%, any forecasts of a significant turnaround in activity are being pushed further and further out into Q4 2009 if not Q1 2010. The RBA, in its semi-annual review of the financial system, remains optimistic that Australian banks are well capitalised, profitable and in a good position to weather an inevitable increase in bad debts. The banks have maintained their high credit ratings and have been able to pass on much of the 400 basis of monetary policy easing to customers that has helped to boost household incomes and make homes more affordable. The RBA also recognised that the government’s guarantee of both deposits and bank wholesale funding has greatly assisted in maintaining confidence and capital raising capacity in the financial system. This week New Home Sales, Building Approvals and Retail Sales will watched closely for signs of stabilisation in these important employment sectors.
NZ Data
- Monday 08.45 Building Consents previous -13.1% m/m
- Tuesday 13.00 NBNZ Business Confidence previous -41.2
- Thursday 13.00 ANZ Commodity Prices previous -4.6% m/m
New Zealand’s economy contracted by its biggest amount in 16 years in Q4 2008, falling to a seasonally adjusted 0.9% that followed a revised 0.5% drop in Q3 2008. Household consumption was flat during the quarter after three consecutive decreases, export volume fell 3.3% and housing investment was down 14%. Not surprisingly, Q1 2009 Consumer Confidence (96.0 from Q4 101.30) weakened again as consumers remained cautious amid a deepening recession and rising unemployment. Interest rates have been cut to an all-time low of 3% and new income tax cuts come into effect on April 1 as central policy makers attempt to stimulate the struggling economy. The current and impending monetary and fiscal stimulus will inevitably take time to feed through into the real economy and time will be the only healer of shaken confidence, so little is expected by the market from this week’s building and business confidence data.
US Data
- Wednesday 00.00 S&P/Case Schiller Composite-20 House Price Index previous -18.5% y/y
- Wednesday 00.45 Chicago Purchasing Managers Index previous 34.2
- Wednesday 01.00 Conference Board Consumer Confidence previous 25.0
- Wednesday 22.30 Challenger Job Cuts previous 158.4% y/y
- Wednesday 23.15 ADP Non-farm Payrolls -697k
- Thursday 01.00 ISM Manufacturing Purchasing Managers Index previous 35.8
- Thursday 01.00 Pending Home Sales previous -7.7% m/m
- Thursday 01.00 Construction Spending previous -3.3% m/m
- Thursday 01.00 ISM Manufacturing Prices previous 29.0
- Friday 01.00 Factory Orders previous -1.9% m/m
- Friday 23.30 Non-farm Payrolls previous -651k
- Friday 23.30 Unemployment Rate previous 8.1%
- Saturday 01.00 ISM Non-manufacturing Purchasing Managers Index previous 41.6
Last week’s data releases gave hope that some stability at least is returning to the general economy. Existing Home Sales unexpectedly climbed in February by an annualised 5.1% m/m, the House Price Index rose 1.7% m/m in January, New Home Sales rose to an annualised 337k in February from 309k the previous month and the Richmond Fed March Manufacturing Index registered -20, which is a significant improvement from -51 the previous month. On the negative side, jobless claims remain at very high levels as the number of people collecting jobless benefits rose to a record 5.56m, indicating more Americans are spending longer periods out of work. The Obama administration also released details of its ‘toxic assets’ relief package, which was generally received well by the market (the Dow Jones industrial average closing up nearly 500 points on the day), though one notable Nobel prize-winning commentator (Paul Krugman) dubbed the package a “cash-for-trash” proposal. A full diary of data again this week culminates on Friday with Non-farm Payrolls and Unemployment, and with expectations running at very pessimistic levels, scope does exist for a surprise to the upside.
JP
N Data
- Monday 10.50 Preliminary Industrial Production previous -10.2% m/m
- Tuesday 10.15 Manufacturing Purchasing Managers Index previous 31.6
- Tuesday 10.30 Household Spending previous -5.9% y/y
- Tuesday 10.30 Unemployment Rate previous 4.1%
- Tuesday 12.30 Average Cash Earnings previous -1.3% y/y
- Tuesday 16.00 Housing Starts previous -18.7% y/y
- Wednesday 10.50 Tankan Manufacturing Index previous -24
- Wednesday 10.50 Tankan Non-manufacturing Index previous -9
- Thursday 10.50 Monetary Base previous 6.4% y/y
Japanese Consumer Price inflation stalled in February (core CPI 0.0% y/y) putting the country on the brink of a widely expected return to deflation triggered by a slide in oil prices and a deepening recession. As both domestic (February Retail Sales -5.8% y/y) and external demand (exports -49.4% y/y) falter, Japan may be the slowest of the major economies to recover from recession and pressure on the Government is growing to announce more stimulus in addition to the Y88.5t scheduled to be approved this week by parliament and applied during the fiscal year starting April 1.
Interest rate outlook
| Country |
Current rate |
Last change |
Date of change |
Next meeting |
| AUS (RBA) |
3.25% |
-100bps |
03/02/09 |
7th April |
| NZ (RBNZ) |
3.00% |
-50bps |
12/03/09 |
30th April |
| US (FED) |
0-0.25% |
-75bps |
16/12/08 |
29th April |
| JPN (BOJ) |
0.10% |
-20bps |
19/12/08 |
7th April |