Below trend growth to continue
Key events in Australia, New Zealand and China/India. What to Watch, week commencing 16 June
After a frenetic couple of weeks, it’s very quiet this coming week for data watchers, with the weekly ANZ Roy Morgan Consumer Confidence reading on Tuesday morning worth a look. After its pre- and post-Budget plunge, the past two weeks it rose 2.9% and was flat last week.
What will take interest, as always, will be the RBA Minutes of this month’s Board meeting. While the post meeting media release was little changed, the Minutes depiction of the evolving economic story will be of keen market interest. Their description of housing, the labour market, consumer confidence and the currency are particular watch points. That’s on Tuesday.
Before then on Monday, Chris Kent, RBA Assistant Governor (Economic) is speaking on the Labour Market Developments at a conference in Sydney (1.20 AEST). That will condition market thinking into the Minutes on Tuesday and comes after a mixed labour market report for May.
New Zealand has the Q1 GDP report in its sights for this Thursday. A substantial increase would make a lot of sense (amid strong employment and population gains for the quarter). However, our formal expectation has been restrained to “only” 1.1% (3.7% y/y), given the range of hard information that has come to hand. Our expenditure-based GDP measure, for what it’s worth, is at 1.5%. Construction activity is likely to feature large (at long last) complemented by decent expansion in the services sector, still. The June Monetary Policy Statement figured on a 1.1% increase in Q1 GDP.
The other big report for the week is Wednesday’s Q1 Balance of Payments, affectionately known locally as “the current account deficit”. Don’t get too excited by the $1.3b surplus we’re picking for Q1 itself – it’s seasonal. Nonetheless, it will reduce the year-to-March deficit to $6.3b (2.8% of GDP) from $7.5b (3.4% of GDP) for the year-to-December. This principally reflects the 40-year highs in the terms of trade during Q1.
Of course, dairy export prices have since been falling. We’ll get an update on these at Wednesday’s early morning GDT auction. We think prices have a bit further to fall yet, but are becoming a bit more cautious on the extent and timing of it, given how far prices have fallen to date, in quick succession.
As for the coming week’s monthly economic indicators, Monday’s May PSI will be worth some attention, after the news that the PMI slowed further in month. We’d be amazed if May’s ANZ jobs ads, due Friday morning, didn’t take a breather, having increased a seasonally adjusted 2.6% in April, for 15.2% y/y. For Friday afternoon’s ANZ-RM consumer confidence measure it will interesting to see if it continued to abate, the way it just started to do in May, with a move 127.6 from 133.5.
A quiet week in China with only the May Property Prices report due on Wednesday.
India has Wholesale price for May due on Monday, wholesale prices being the main price target of the RBA. Annual growth is tick up somewhat from 5.2% to 5.4%.
That’s within an improving trend for the past year or two with the WPI having been running as high as 10% over the past three years.
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