AU Data
- Tuesday 11.30 NAB Business Confidence previous -20
- Wednesday 10.30 Westpac Consumer Sentiment previous -2.2%
- Wednesday 11.30 Home Loans previous 1.3% m/m
- Thursday 11.00 MI Inflation Expectations previous 2.7%
- Thursday 11.30 Employment Change previous -1.2k
- Thursday 11.30 Unemployment Rate previous 4.5%
- Thursday 11.30 NAB Quarterly Business Confidence previous -7
Federal authorities responded to the deteriorating domestic and global outlook last week, the RBA with a 100 basis point rate cut and the Government with a $42b economic stimulus package. The RBA also downgraded its 2009 GDP growth forecast from 1.75% to 0.5% in its quarterly Statement on Monetary Policy. Overall the economic data released last week showed some signs of stabilising; the Australian Industry Group’s Manufacturing Index (36.6), Services Index (41.0) and Construction Index (34.1) all improved from the previous month but still languish sub-50 that separates contraction from expansion. Sentiment towards the AUD was also improved on news that China is starting to rebuild depleted stocks of raw materials that have been drastically run down in the last 6 months and with the IMF forecasting Asian growth of 5% in 2009, perhaps Australia will indeed weather this crisis better than most.
NZ Data
- Thursday 08.30 Business NZ Manufacturing Index previous 42.5
- Thursday 08.45 Food Price Index previous -0.2% m/m
- Friday 08.45 Core Retail Sales previous 0.3% m/m
New Zealand’s Q4 2008 Unemployment Rate rose to 4.6%, which is the highest since December 2003 and looks set to worsen in coming months as the global credit crunch and sharp economic downturn continue to hurt export dependent industries. The RBNZ has slashed official interest rates by 475 basis points, to a record low of 3.5%, since July 2008 and further cuts are expected; at least another 50 basis point cut at the next meeting on March 12 has already been discounted. The Manufacturing Index and Retail Sales will be watched this week for any signs of stabilisation in response to this sharply easier monetary policy.
US Data
- Wednesday 02.00 IBD/TIPP Economic Optimism previous 45.5
- Wednesday 02.00 Wholesale Inventories previous -0.6% m/m
- Thursday 00.30 Trade Balance previous -40.4b
- Thursday 06.00 Federal Budget Balance previous -83.6b
- Friday 00.30 Core Retail Sales previous -3.1% m/m
- Friday 00.30 Unemployment Claims previous 626k
- Friday 02.00 Business Inventories previous -0.7% m/m
- Saturday 01.55 Preliminary UoM Consumer Sentiment previous 61.2
- Saturday 01.55 Preliminary UoM Inflation Expectations previous 2.2%
Last week saw the index of previously owned homes rise 6.3% to 87.7 in December, which is the first increase in 4 months and an indication that slumping prices may be starting to boost demand. However the overhang of empty homes is huge, with 19 million houses standing empty at the end of 2008 as banks seized properties faster than they could sell them. Elsewhere, both the ISM Manufacturing (35.6 from 32.9) and Non-manufacturing (42.9 from 40.1) Indices improved from the previous month but while levels are below 50 (denoting contraction) jobs will be under threat, and business and consumer confidence will remain fragile. Unemployment (7.6%) climbed in January to the highest level since 1992 and Non-farm Payrolls fell by 598k, which is the biggest drop since December 1974. This week Retail Sales will be watched for any signs of life in consumer spending.
JPN Data
- Tuesday 10.50 Monetary Base previous 1.8% y/y
- Tuesday 12.30 Average Cash Earnings previous -0.7% y/y
- Friday 16.00 Leading Indicators previous 81.3%
Average Hourly Earnings reported last week fell 1.4% in December as the economy slipped deeper into recession. Overtime, which acts as a barometer of strength in corporate activity, fell 11.2% year-on-year. This is the largest drop since April 1993, the 5th straight monthly decline and reflects the unprecedented slump in worldwide demand. The BOJ announced a plan to buy $11 billion in stocks held by Japanese banks and revives a scheme from earlier this decade to head off a domestic banking crisis that has seen bank equity holdings tumble by 30% in less than 12 months. Machinery and Tool Orders will focus attention this week as the market looks for any green shoots of recovery.
Interest rate outlook
| Country |
Current rate |
Last change |
Date of change |
Next meeting |
| AUS (RBA) |
3.25% |
-100bps |
03/02/09 |
3rd March |
| NZ (RBNZ) |
3.25% |
-150bps |
29/1/09 |
12th March |
| US (FED) |
0-0.25% |
-75bps |
16/12/08 |
17th March |
| JPN (BOJ) |
0.10% |
-20bps |
19/12/08 |
19th February |