FYI | May 25 2008
By Greg Peel
It will be a quiet lead-in this week as both the US and UK take public holidays on Monday. Thereafter quite a wealth of US data will flow including readings on personal consumption, spending and confidence. The highlight for Australia will be the RBA credit aggregates, giving us an insight as to whether credit growth is slowing as much as the RBA would hope.
On Tuesday the US learns April new home sales and the Case-Shiller house price index for March. All indications are that average US house prices are still dropping like stones. The Richmond Fed will also release its index of economic activity for May, and consumer confidence for May is revealed as well. On Wednesday it’s April durable goods orders, which is an important indicator of domestic demand.
On Thursday it’s the first quarter personal consumption numbers along with the latest revision of the first quarter GDP. The preliminary figure was 0.6% annualised growth. Friday brings the core personal consumption expenditure deflator for April, which is a fancy name for an alternative measure of inflation, along with April personal income and spending Then there’s the Michigan University consumer sentiment indicator for May, along with the Chicago purchasing managers’ index for May.
In Australia there’s no action until Wednesday when first quarter construction work done is released, along with May skilled vacancies. The highlight on Wednesday will be the Westpac-Melbourne Institute leading economic indicator for March. March may seem like a while back, but as a leading indicator the index is predicting three or more months ahead.
On Thursday it’s first quarter capital expenditure and on Friday the HIA new homes sales measure for April. Friday also brings the RBA credit aggregates for April – a measure of demand for credit at the business, personal and housing levels. By increasing interest rates, such demand is exactly what the RBA is trying to slow. A sharp decline may just hold off that possible further rate rise.
Elsewhere the US dollar will be set to react to the EU CPI for May, released on Friday, along with the Japanese CPI for May. A strong inflation growth number in Europe should imply more weakness for the US dollar, which then places more upward pressure on the oil price. A higher oil prices then pushes up European inflation, and dosey-doe your partner.
