And on Wednesday, the Bureau of Statistics releases key data on wages – the wage price index – together with new figures on car sales. The wages data should confirm that remuneration is growing at a sustainable pace with wages tipped to lift by 0.9% in the March quarter, leaving the annual growth rate at 3.4 %.
And the ABS will recast the industry data on car sales in seasonally adjusted and trend terms. In April car sales were up 7.6% on a year ago although the early timing of Easter would have bumped up the result.
In the US, a busy schedule of economic events awaits – in marked contrast to the previous quiet week. The week kicks off with data on retail sales and business inventories. Economists tip only a slight 0.1% rise in sales in April following a 0.4 % decline in March. And on Tuesday, data on import and export prices is due.
On Wednesday, a busy day is in prospect. Production figures hog the spotlight but capital flows data, producers prices, the National Association of Home Builders index and the New York Federal Reserve manufacturing survey are also slated for release. Economists tip small 0.1% increases in production and core producer prices (excludes food and energy) in April.
On Thursday in the US, data on consumer prices is issued alongside housing starts and the Philadelphia Federal Reserve survey. And on Friday, the leading index and preliminary consumer sentiment data for May are slated for release.
Elsewhere, pivotal Chinese economic data for April is released on Tuesday covering investment, production and retail sales. Modest improvements are expected in annual growth rates for each variable. Also over the week is finance data, covering outstanding loan growth, new yuan lending and M2 money supply.
Sharemarket, interest rates, currencies and commodities
The US Dow Jones index is at record highs. The broader S&P 500 index is at record highs. Even the German Dax hit record highs in early May. So what’s wrong with the Australian sharemarket?
In essence, nothing. It gets down more to the composition of the market and the unsustainable highs reached in 2007. In 2007, the resources sector rode on the back of the once-in-a-generation gains recorded in commodity prices. The Chinese economy took off but miners and energy companies were unprepared for the sheer scale of raw material purchases. Demand exceeded supply for a raft of commodities, prices soared and resource producers benefitted from super-normal revenues and profits. And the moves were reflected in share prices.
But supply eventually had to catch up with demand and there was an unwinding of commodity prices, bringing resource profitability back to earth. And given the weight of resources in the Aussie sharemarket, the end result is an apparent under-performance of our bourse.
The ASX 200 would need to rise by around 32% from here to re-visit the record levels of 2007. But that isn’t the whole story. Our sharemarket performance is more influenced by dividends than many other markets across the globe. If we instead focus on total returns, the Australian sharemarket only needs to rise around 2.5% to return to record highs.
Healthcare, industrials and telecoms accumulation indexes are closest to record highs with the Telecoms sector lifting 13 % in the past month alone.
Craig James is chief economist at CommSec.
