On Wednesday, September figures on building approvals (local government approvals to build new homes) are released. Also released on Wednesday is the latest private sector credit data, or broadly loans outstanding. We expect another mild result with credit up 0.2% in September, following a similar rise in August. The bottom line is that consumers and businesses are reluctant to borrow.
On Thursday, data on import and export prices is released together with the Performance of Manufacturing index. The trade price data will provide a guide on the terms of trade while the manufacturing gauge will reveal if the recent rate cut has lifted activity.
And on Friday the main measure of business inflation – the producer price index (PPI) – is released together with comprehensive data on Australia’s economic performance in 2011/12 – the “Australian System of National Accounts”.
In the US, the week kicks off on Monday with data on personal income and spending while regional surveys covering manufacturing sectors in Chicago and Dallas are also released. Economists tip a healthy 0.6% lift in spending while income is expected to rise by a more modest 0.3%.
On Tuesday, consumer confidence figures are released together with the Standard & Poor’s/Case-Shiller measure of home prices. Economists expect consumer confidence to have lifted from 70.3 to 72.0 in response to higher home and share prices. And home prices probably continued their recovery with a 0.7% increase expected in August to put prices 2% higher than a year ago.
On Wednesday the influential ADP national employment index is released, a pointer to the official jobs data on Friday. Economists expect that jobs lifted by 135,000 in October. The Chicago Purchasing Managers Index is also released together with the employment costs index.
On Thursday, the ISM manufacturing index is released together with auto sales, productivity figures, construction spending, the usual weekly jobless claims data and the Challenger job layoff series.
And on Friday the pivotal non-farm payrolls data is released for October. Economists expect that jobs grew by 120,000 in the month but they aren’t confident that the recent improvement in the jobless rate will continue, with unemployment expected to edge higher from 7.8% to 7.9%.
In China both the official and HSBC manufacturing gauges are released on Tuesday.
Sharemarket, interest rates, currencies and commodities
The US profit-reporting season winds down over the coming week. Of companies in the S&P 500 index, nine companies report on Monday, 29 on Tuesday, 28 on Wednesday, 31 on Thursday and five companies on Friday.
Amongst key companies to report over the week are Loews, Ford, Pfizer, MasterCard, Visa, Starbucks, Exxon, Mobil and Chevron.
According to Thomson Reuters, of the 123 S&P 500 companies that have reported results so far, just over 60% have beaten earnings forecasts but 61% have fallen short of revenue estimates. Overall, third quarter earnings are expected to drop 2.4% in the September quarter on a year earlier.
In Australia the profit reporting season for the major banks continues in the coming week with National Australia Bank expected to release results on Wednesday. Westpac is due to report on November 5.
The recent gains on global sharemarkets are being re-assessed by investors following softer profit results in the US. But while that is bad news for investors, the re-assessment and declines in “riskier” assets such as shares and commodities is actually good news for motorists. The Singapore gasoline price has fallen 10% in US dollar terms over the past fortnight and is at the lowest level since late July. In Australian dollar terms there have been similar price declines, given that the Aussie dollar has held around the US102-103 cent level. The terminal gate or wholesale price has already fallen by 2 cents a litre over the past week.
Craig James is chief economist at CommSec.
