Weekly Reports | May 31 2013
For a more comprehensive preview of next week's events, please refer to "The Monday Report", published each Monday morning. For all economic data release dates, ex-div dates and times and other relevant information, please refer to the FNArena Calendar.
By Greg Peel
A week ago the economists at ANZ were forecasting 1.0% growth for Australia’s March quarter GDP. This week we have seen weak quarterly construction and capex numbers, so that forecast is at risk. Early next week we will see quarterly profits, inventories and trade data, which together have the capacity to further alter predictions ahead of Wednesday’s GDP release. Quite clearly the currency is vulnerable at this stage.
Yet a rate cut from the RBA is not expected after its meeting on Tuesday. The central bank had been concerned, almost bewildered, as to why the Aussie dollar had not responded to rate cuts to date, but suddenly the Aussie has dropped seven cents. Yesterday’s capex intentions number was not as bad as was expected, and building approvals, although volatile, were positive. It is unlikely the RBA will follow up the May cut before assessing the somewhat different picture.
China will report its official May manufacturing PMI tomorrow and Australia, the UK, eurozone and US will follow suit on Monday. China’s services PMI is out on Monday, and everyone else reports on Wednesday. Australia’s construction PMI is due on Friday, following monthly retail sales and trade data during the week.
Next Friday sees the release of the US non-farm payrolls data for May. This release, while always important, has taken on a greater significance since talk of a Fed exit emerged. If the number is positive, will Wall Street buy or sell? There’s certainly been little in the way of selling to date.
The US will also see data on construction, trade, vehicle sales, chain store sales and factory orders next week, as well as the PMIs. The Fed’s Beige Book is due on Wednesday, and the market will be looking for any improvement on “moderate” as the central bank’s anecdotal call on the US economic recovery. “Moderate” represents an upgrade from a previous “modest”.
Thursday sees monetary policy announcements from both the ECB and Bank of England. Despite downgrades to eurozone growth forecasts, last month’s ECB rate cut and the extension of timing for budget deficit reduction targets across the zone this week should ensure no change from the ECB.
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