Australia, New Zealand and China Update
There are some more meaty reports due on the economy this week, commencing with the ANZ Job Ads report for June (L: -5.6%), a last partial look into labour demand ahead of Thursday’s labour force report.
- Australia: Labour force and Business Survey and Consumer Confidence reports the major watch points
- NZ: QSBO due; two RBNZ Wheeler speeches but they’re private, BNZ PMI due
- China: June CPI/PPI and trade reports; Yuan lending and aggregate financing reports due either later this week or next
- US: NFIB small business index, FOMC minutes, four Fed speakers too
- Europe: Light; German industrial production, ECB Bulletin (comments on LTROs?)
- UK: Industrial production and BoE MPC
There are some more meaty reports due on the economy this week, commencing with the ANZ Job Ads report for June (L: -5.6%), a last partial look into labour demand ahead of Thursday’s labour force report. The AiG PCI Construction index (L: 46.7) for June is also being released first thing Monday.
Going straight to the big release for the week, Thursday’s June Labour Force report, we expect an unemployment rate of 5.9-6.0%, up from 5.8% in May, a rate that was perilously close to being rounded to 5.9%. Our 0.1% increase in the rate puts it just north of the point where it’s rounded up to 6.0%. With labour demand indicators having been more volatile of late and employers seemingly more reticent to hire, we look for a flat outcome for employment and an unchanged participation rate that together delivers a 6.0% unemployment rate. Our forecasts are a little more bearish than the market (L: -4.8K; E: +12.0K) and unemployment (L: 5.8%; E: 5.9%).
We’ve said it on many occasions; we’ll say it again. For the monthly labour force report, it’s the unemployment rate that’s a better guide to the evolving trend in the labour market.
On Tuesday we get first up the weekly ANZ-Roy Morgan Weekly Consumer Confidence reading, confidence stuck at low levels the previous week. That’s followed by the NAB Business Survey for June at its 11.30 time slot; in May, Business Confidence was +7 (about average), while Business Conditions was -1 (below average).
Wednesday sees the June monthly Westpac-Melbourne Institute Consumer Sentiment index for this month where we look for little change from last month’s below-average reading (L: 93.2; +0.2%). Housing finance approvals for May complete end the week (L: flat; E: -0.5%; NAB -1.3%).
Tuesday morning’s NZIER Quarterly Survey of Business Opinion will be the big focus of New Zealand’s upcoming data week. We suspect it will hold up reasonably well, especially in that it doesn’t much cover the rural sector, which has been the main source of other business surveys softening of late, as the terms of trade come off their peak. The QSBO’s capacity indicators will cross-check against the RBNZ’s views on excess demand. However, the survey’s direct inflation indicators might well be restrained for the meantime, still, by the high NZD.
As for the many monthly data reports this week; Monday’s QVNZ housing report will help judge the degree of slowdown in the market; Tuesday’s Crown Accounts will be checked to see if tax revenue growth is catching up to the force of the economy’s nominal expansion; Wednesday’s ECT data for June we reckon expanded 0.4% – even after May’s whopping 1.7% – providing the warm start to winter doesn’t impinge dramatically; Thursday’s BNZ PMI will probably get more attention than normal, given it slowed all the way down to 52.7 in May; while for Friday’s Food Price Index we are looking for a seasonal lift of 1.5% for June, as part of the 0.5% increase we see for the Q2 CPI (for 1.9% y/y, from 1.5%).
Also note that Governor Wheeler is speaking on Tuesday and Wednesday mornings (as well as Assistant Governor, John McDermott, Wednesday morning). Being described as “Not Public” these speeches are unlikely to involve a published or reportable speech. They would seem just part of the Bank’s broader drive to communicate more, rather vehicles to get a message out. All the same, keep an eye out around these times, just in case any stories/rumours do the rounds.
A light week for China with the start of the June month economy reports, this week seeing the release of CPI/PPI on Wednesday where the market expects an unchanged CPI at +2.5%.
China’s trade surplus is projected to increase in June to just under $37b from $35.9bn in May with a pick-up in annual export growth from 7.0% to 10.5% more than matching the expected annual growth in imports of 6.0%, up from -1.6% to May.
New Yuan lending, Aggregate financing and money supply reports for June are due either in the second half of this week or the following week. Steady-to-somewhat higher volumes of lending are predicted.
Also included are notes on major US, Eurozone, UK, Japan and Canada releases.