It will be one of those weeks when we will not be able to escape the word “economy”. In fact, we face a deluge of local and international economic data this week, with five leading central banks meeting, jobs and GDP figures for Australia, employment data for the US, final fourth-quarter growth data for Europe, Chinese economic data for February, including inflation and a host of less vital reports here and offshore.
Central banks in Australia, the eurozone, Britain, South Korea and New Zealand are all expected to leave monetary policy unchanged at meetings this week. (And the US Fed meets next week).
For Australia, it’s one of those rare weeks where we face five days of data, speeches and decisions. A year ago we were starting to find out the enormous damage the Queensland floods and cyclone Yasi had done to the economy (although the full extent wasn’t clear until early June with the March quarter GDP figures were released showing a 1.2% contraction, which was later cut to a slide of 0.9%). A year on, it’s more rain (less damaging) and an economy that is growing around trend, according to the Reserve Bank.
From today, its a nerd’s delight, as the interim earnings season passes from memory and is replaced by the Reserve Bank rates decision tomorrow and a key speech from a senior official on Wednesday; and the Australian Bureau of Statistics, which is releasing fourth-quarter GDP figures on Wednesday (and business inventories, wages and salaries today, current account data tomorrow, jobs figures on Thursday and trade data for January on Friday). Whew!
AMP chief economist Dr Shane Oliver wrote at the weekend:
“The RBA should be cutting interest rates when it meets on Tuesday, but it probably won’t. Sure, mining is strong, but its trickle down to the rest of the economy is proving to be just a few drips, particularly with mining investment projects relying heavily on imports. Moreover, retailing, housing, manufacturing and tourism are all struggling, layoffs are increasing and the rise in bank mortgage rates and the Australian dollar have led to very tight monetary conditions. And this is at a time when inflation is benign. Our view is the cash rate should be 0.25 to 0.5% lower. However, going by its recent commentary the RBA doesn’t agree. So expect rates to remain on hold for the next few months with the next cut not until May.”
Leading up to the national accounts release on Wednesday, we get the December quarter business indicators today with their important updates in inventories, profits, wages and salaries, the fourth quarter and calendar year current account data and the government finances figures for the last quarter of 2011 as well — both tomorrow.
According to surveys from Reuters and Bloomberg, the fourth quarter will see growth about 0.7%, down from the 1% in the September quarter, for an annual rate for 2011 of 2.3%. That would be down from the 2.5% annual rate in the year to September. Oliver is looking for growth of 0.5% for the quarter. Other economists are a bit more optimistic and looking for a quarter on quarter increase of 0.8%. If the growth is solid — 0.8% or better, some economists will tell us to ignore it because it is a lagging indicator (which it is). If it is low, 0.5% or less, then the same economists will point their iPads and exclaim “see, told you so, the economy is tanking” (ignoring that it is a lagging indicator).
Today we get the job ads survey results for February from the ANZ, and later in the week the monthly performance of services survey will be released. On Friday we get the trade figures for January, with another surplus expected.
This morning’s data dump: We got the job ads survey results for February from the ANZ and they showed a sharp improvement in February, after a big revision upwards in January. The ANZ said job ads rose 3.3% last month after the upwardly revised 7.5% jump in January. And it was all on the net with a 3.8% rise last month. Newspaper job ads slumped a nasty 8.6%. This morning’s data from the ABS showed a sharp 1.4% seasonally adjusted rise in business inventories in the December quarter, a fall of 0.2% in sales by manufacturers, and a rise of 2% in wholesalers’ sales. Gross corporate profits fell 6.5% in the quarter, but wages and salaries were up a solid 0.8%. And the monthly performance of services survey was out this morning and showed a big fall in the sector in February, the largest for 30 months, which got the rate cut urgers going again. will be released. On Friday we get the trade figures for January, with another surplus expected. The bottom line: more confusion, but the jobs market is looking a bit better, while the rise in inventories will help 4th quarter growth.
The speech by RBA deputy governor Phil Lowe in Sydney on Wednesday will come a few hours before the release of the fourth quarter GDP data in Canberra. He will be speaking with debate on the RBA board fresh in his mind and the post-meeting statement from governor Glenn Stevens (due to make a speech next week in Hong Kong).
But it’s not just Australia that we will be watching. China’s monthly data release on Friday will be dominated by inflation on Friday, and then industrial production (not released for January), trade, retail sales, house prices and car sales. These are the most important external data for Australia each month, seeing China is our biggest market.
The NZ Reserve Bank is expected to leave rates on hold as well at its meeting on Thursday. The RBNZ also releases its first monetary policy of statement for 2013 on Thursday. And, South Korea’s central bank is also set to decide on interest rates, with no change expected after the meeting on Thursday.
In the US, economists are confidently forecasting a jobs report showing 200,000 or more new positions created last month. Some forecasts say the figure was 240,000. The jobless rate isn’t expected to fall much, if at all from 8.5% set in January. The February jobs figures on Friday loom as another vital test of the US recovery.
In Europe, the meetings of the European Central Bank and the Bank of England on Thursday night stand out, but they won’t be doing much. The Bank of England last month added to the size of its quantitative easing, and the ECB last week lent more than €500 billion to banks across Europe (including some in the UK), so it’s not expected to do much more for some time.
European Union economic growth figures will be released tomorrow and will revive the euro recession fear looms headlines. But we already know that with the preliminary figures last month confirming that countries such as Greece, Italy, Holland and Spain saw weak growth in the three months to December, and even Germany dipped into the red (but France saw weak, but positive growth). By next weekend we will be heartily sick of things economic.