Australian Markets Weekly: 11 July 2016

SA economy making progress; NAB survey, Employment and BoE this week

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SA economy making progress; NAB survey, Employment and BoE this week

  • South Australia’s economy seems to have been improving a little in recent months – even before the Federal government’s recent significant defence spending announcements. This is helpful for the national economy too as SA has been underperforming for some time. [NAB released an update of last week’s SA budget last week (email Alex.Stanley@nab.com.au for a copy), while NAB Group Economics will release its latest review of Australian states next week.]
  • We also draw clients’ attention to very significant sample rotation impacts that may significantly impact on Australian employment and unemployment data over coming months beginning with the June data to be released on Thursday. NAB is looking for a considerably weaker than market outcome for employment (-17K v market +10K) as the very strong October 2015 cohort rotates out of the survey (the unemployment rate may tick 0.1 percentage points higher). A similar effect is likely in July as the strong November cohort drops out, while the effect does not reverse until the September data is published in October.
  • The main other Australia event is tomorrow’s June NAB Business Survey, though Cleveland Fed President Loretta Mester is speaking twice in Sydney this week: at a banking conference tomorrow and at an economists’ lunch event on Wednesday. Offshore, the focus will be on whether the Bank of England cuts rates this week and then on a raft of Chinese indicators to be released on Friday including Q2 GDP data. There are 12 Fed speakers scheduled for this week.

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