And that brings us to the business investment or “private capital expenditure” figures. Not only does the data include estimates of spending in the December quarter but also expected spending over the following 18 months. We are tipping a 4% lift in December quarter investment. The fifth estimate of spending for 2012/13 needs to be around $176 billion for investment to be growing at a “normal” pace.
Also on Thursday the Reserve Bank releases data on lending (private sector credit) and we tip a modest 0.2% rise. Data on new home sales will also be issued on Thursday and investors will hope that the fledgling recovery remains intact.
And on Friday the Performance of Manufacturing index is produced together with the RP Data/Rismark home value index. A flat result for home prices is expected in February after the out-sized 1.2% gain in January.
In the US, the week begins with two regional manufacturing gauges covering Chicago and the Dallas manufacturing sector while on Tuesday there are two further regional surveys covering Richmond and the Dallas services sector.
Also on Tuesday the Federal Housing Finance Agency and S&P/Case Shiller both release December home price data while figures on new home sales and consumer confidence are both issued. Economists are looking for gains on all fronts with home prices up 0.7%, home sales up 3% and consumer confidence up from 58.6 to 59.3. An encouraging economic recovery is clearly in place.
And yet another event on Tuesday is the biannual “Humphrey Hawkins” testimony to Congress by Federal Reserve chairman Ben Bernanke. On Tuesday, Bernanke faces a grilling by the Senate Banking Committee and follows this up with an appearance before the House Financial Services Committee on Wednesday. Main questions will centre on Bernanke’s views on the economy and the pre-conditions given for an end to the quantitative easing policy.
On Wednesday a gauge of business investment (orders of durable goods) is released together with pending home sales. New orders of durable goods are expected to have fallen 4.4% in January after lifting by 4.3% in December. Conversely pending home sales are tipped to have lifted by 1.7% after a 4.3% decline in December.
On Thursday the regular US weekly data on new claims for unemployment insurance (jobless claims) is issued alongside preliminary economic growth figures for the December quarter. The “flash” GDP reading shocked some investors with a 0.1% fall in the December quarter. Economists believe the revised estimate will show a stronger reading of 0.5%.
And on Friday in the US, the ISM manufacturing gauge is issued together with personal income, construction spending and monthly sales of new vehicles.
Sharemarket, interest rates, currencies and commodities
In the coming week the Australian profit-reporting (earnings season) draws to a close. Today amongst the companies that are expected to report are Caltex, IOOF, Macquarie Atlas Roads, M2 Telecommunications, PrimeAg and Spark Infrastructure.
On Tuesday, results include those from AWE Limited, Blackmores, Beach Petroleum, Charter Hall, Flight Centre, James Hardie, Oil Search, QBE, Prime Media, Ramsay Health Care, Seven Group, Transfield and Virgin Australia.
On Wednesday, earnings results are expected from AGL Energy, Henderson Group, Roc Oil, Sydney Airport, UGL Limited and Wotif.
On Thursday, Aquila Resources, Aurora Oil & Gas, Challenger, Harvey Norman, Lynas Corp, Perpetual, Treasury Wine Estates and Woolworths are included amongst companies expected to report earnings.
Craig James is chief economist at CommSec.
