Australia, New Zealand and China

Key events in Australia, New Zealand and China. What to Watch, week commencing 30 June


  • Australia: RBA to hold cash steady again, but will there be more hints of the economy’s fading response to low rates. Data-wise, retail sales the main focus; also RBA credit, international trade, building approvals, plus more
  • NZ: ANZ Business Survey, credit growth, weekly dairy auction and ANZ commodity prices
  • China: Official Manufacturing PMI to tick up a little; non-manufacturing PMI also due along with follow-up HSBC PMIs
  • US: ISM Manufacturing Tuesday and payrolls on Thursday (Friday July 4 holiday)
  • Europe: CPI, unemployment, final PMIs, retail sales and ECB meeting
  • UK: Consumer/ housing credit, house prices, PMIs due


It’s a big week for data event risk with Thursday’s retail sales report for May a major focus. Retail sales growth has slowed in recent months and with consumer sentiment taking a hit in the lead up to and after the Budget, a soft outcome is overdue. We also note that the NAB Business Survey for Retail in April/May weakened materially.

We tip -0.5%, notably softer than the +0.1% consensus. Some of this forecast decline may well be payback statistical “noise” too, with sales have risen continuously for 12 months increasing the odds of a monthly decline.

Ahead of the ABS release, the NAB Online Retail Sales index (May) is being released on Wednesday.

The other more market sensitive releases start Monday with RBA credit for May where we look for continued moderate growth (a repeat of April’s 0.5%). House prices took a breather in May, likely interrupting upward momentum in housing credit. HIA new home sales for May are also out Monday. In April they rose another 2.9%; that release is a good barometer of core detached housing demand and we would not be surprised to see some decline in May.

The TD-MI CPI gauge for June is also being released on Monday (L: 0.3%/2.9%; trimmed mean 0.2%/2.9%).

Tuesday is RBA Board day. No change is odds on again but we’ll be looking for any further confirmation that the Board is less confident the current stance of monetary policy is accommodative enough to rebalance the economy. In this connection, the June Minutes noted that it was difficult to judge whether the effects of low rates supporting demand would be sufficient to offset the expected substantial decline in mining investment and planned fiscal consolidation. The resilient $A is a continuing growth headwind, an irritation for the RBA, but beyond its control.

Tuesday’s data starts with the AiG Manufacturing PMI, weekly ANZ-Roy Morgan Consumer Confidence, and June RP Data-Rismark house prices that will likely rise by close to 0.5% based on the first three weeks of sales. The RBA Commodity Price Index is released in the afternoon where we’d look for some incremental decline based on easing iron ore, steaming coal, and gold prices.

Along with retail sales on Wednesday comes the May international trade report. No doubt the resource export volume story remains compelling through Q2, with even stronger iron ore shipments. Port Hedland iron ore shipments ramped up further to 36mt in May from 34.8mt in April but are being nullified by lower prices.

That further 3% iron ore shipment gain came in May though with a hefty 11% drop in iron ore spot prices. (Iron ore export prices are a combination of spot and contract prices and thus less volatile.) While export values should be around flat to slightly negative, a 1% drop in imports should see last month’s modest $0.1bn deficit return to balance.

Building approvals (Thursday) from month to month contain a high degree of statistical noise depending on the ebb and flow of local government approvals. We are mindful that medium density high-rise approvals are already trending lower and that will likely continue this month. Demand for detached homes was also under something of a cloud through May given brittle sentiment; the “time to buy a dwelling” index fell back heavily in April and May. This could see detached house approvals pull back further. We look for an overall 3% decline in residential building approvals.

New Zealand

New Zealand’s data week gets off to a cracking start Monday. The 1pm ANZ business survey will be scoured for any signs of further slowdown, it having lost a modicum of gas in May (albeit still riding high in an absolute sense). Monday morning’s building consents might struggle to match the apartment-laden result of April. Still, we’d be surprised if the trends didn’t remain very strong, across residential and, now, non-residential. May’s credit aggregates, due 3pm Monday, will be perused for any further slight slowing, as transpired in April. Accompanying detail will likely confirm an ongoing jump off floating mortgages toward fixed, and onto increasingly longer fixes at that.

Then it’s all about commodities. With Wednesday morning’s Global Dairy Trade auction in view we suggest the 0.9% rise in prices at the previous event was more a relief than a game changer. We think dairy 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 since February. June’s ANZ commodity export prices, due Wednesday 1pm, are likely to be a mixed bag with dairy and forestry down but meat and aluminium up. In summary, we come down on the side of a 0.8% fall in world prices terms and slightly more of a fall when converted into NZ dollars, given the boisterous NZ dollar.


The main focus on China data will be the official manufacturing PMI for June, out Tuesday morning.

With the flash HSBC Manufacturing PMI having bounced more decisively than expected from 49.4 to 50.8, it’s not hard to see why the market is expecting the official PMI to also rise, from 50.8 to 51.1, a result that would be the best since last November (51.4).

The official non-manufacturing PMI (L: 55.5) is being released on Thursday along with a later estimate of the HSBC Manufacturing index and its counterpart Services (L: 50.7) and Composite indexes (L: 50.2).