Below trend growth to continue
What to watch, week commencing 6 October
There’s three key local data/policy scheduled events this coming week the local market will be paying close attention to. First, there is the RBA Board meeting where it’s universally expected the RBA will again leave the cash rate unchanged. The market will honing in on the words in the RBA’s 2.30pm Media Release, especially references to their now dialed-up concerns about certain fast-moving sections of the housing market, especially in Sydney and Melbourne. We expect the RBA to maintain their final policy outlook statement that “the most prudent course is likely to be a period of stability in interest rates”.
Thursday’s employment figures – clearly the most market sensitive piece of local economy news – has become a lottery in recent months. The unemployment rate spiked 0.3% in July to 6.4% only to retrace all of that in August on the back of an unbelievable record 121,000 jump in employment at a time of tentative labour market conditions. It’s not surprising then that the range of guesstimates for employment is from payback of -100K to +30K with median of -30K. NAB is picking -60K, a heavy retracement and a back-up in the unemployment rate to 6.3%. Spin the wheel!
Finally, on Friday is housing finance approvals for August, an indicator that’s fast becoming one that’s garnering top flight status given the policy interest in accelerated growth in investor housing in Melbourne and Sydney. Little growth in the number of owner-occupied housing loans is expected, but more interest will focus on the value of investor housing side that showed accelerated growth of 6.8% in July.
We expect next Tuesday’s NZIER Quarterly Survey of Business Opinion (QSBO) will exhibit a fair bit of robustness. This is even though its general confidence measure, in straddling the General Election, will probably look a bit cagey. Indeed, the QSBO could well look better than September’s ANZ business survey did (which itself suggested annual GDP growth of at least 4%). This is because the NZIER survey doesn’t directly survey farmers and so won’t be subject to the extent of pain coming from the dairy price slump, which is getting serious.
The NZ data flow kicks off, however, with Monday’s Quotable Value NZ housing report for September. If it’s like the other we’ve seen for that month already, the QVNZ data will show something of a listings-constrained holding pattern, with September’s election front of mind.
Tuesday afternoon (3:00pm) the NZ Treasury delivers the 2013/14 June-year Crown Accounts. We’re not expecting any news in these. More to just check them against August’s PREFU plan, to confirm everything’s on track for an underlying operating surplus for the coming 2014/15 fiscal year. And we’ll see if tax revenue growth has improved, to be more in line with nominal GDP growth. Finally, for Thursday’s electronic card transactions we’re looking for a gain of 0.7%. Any upside surprises could relate to the start of sales of the new iphone in (late) September and signs, from registrations, that vehicles sales were strong in the month.
It’s a light week of scheduled releases for China this week. As far as the firmly scheduled data is concerned there is only the HSBC Services and Composite PMIs on Wednesday, the last day of public holidays that started this week.
New yuan loans, aggregate financing, and money supply figures will be released on or after Friday 10 October, interest in a gauge of growth and the monetary authorities’ continuing concerns over the past growth in shadow banking and the need to arrest growth, notwithstanding the quickly emerging slowdown in the property-related industries. Both new yuan loans and aggregate financing are tipped to show faster growth in August.
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