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Australian Markets Weekly: experimental high-frequency data index

Australian Markets Weekly: 発表頻度の高いデータで経済回復を見る試み

• The coronavirus pandemic has renewed interest in tracking partial economic indicators to get a better sense of the hit to the economy and the unfolding recovery.  We have constructed an experimental summary index based on the common trend in a range of a mix of daily and weekly private-sector and official statistics, ranging from confidence and web searches through to NAB’s balance-sheet data and hard economic indicators.
• The severe common shock of the virus is apparent across nearly all of the series used to construct the index.  This common shock is shown in the summary index falling 22% from its pre-virus level to a low in late April.  Reflecting rebounds in most of the underlying data, the summary index has gradually recovered over recent weeks and is currently 11% below pre-virus levels.
• At this stage, there is no way of knowing how well the summary index tracks GDP given its ultra-short history.  We believe that it has information about the broader economy, but likely struggles to track key spending on services and public demand.  Until we can get a better handle on how well it measures activity we plan to track the index more as a directional signal of the economy.

The week ahead – AU trade, NAB data; NZ RBNZ; US durable goods, personal consumption; EZ PMIs

• Australia:  Preliminary merchandise trade on Tuesday should show the goods trade surplus remains broadly unchanged at high levels. The ABS business survey on Wednesday will show how businesses fared in mid June following the easing of social distancing restrictions. NAB updates its consumer spending and business cashflow report.  NZ: We expect Wednesday’s OCR Review to pass without incident. The RBNZ is fully expected to leave its policy settings unchanged, including its cash rate at 0.25%. The Bank will likely acknowledge the not-so-horrible economic indicators post the 13 May Monetary Policy Statement, but in the context of maintained caution from a broader perspective.
• CH: The focus is on the new coronavirus outbreak in Beijing, where some containment restrictions have been reimposed. US: Durable goods orders for May (Thursday) will show how business spending is faring amid the ongoing rise in unemployment. The May personal income and spending report is expected to see some recovery in spending (up 8.7%) amid a further slowing in core inflation to 0.9% from 1%. EZ: The flash June services and manufacturing sector PMIs are released on Tuesday. The consensus looks for a further improvement in services and manufacturing to 40 and 43 points, respectively

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