The start of two important weeks for the Australian economy with data starting to be released for the March quarter.
The March quarter GDP figures will be released a week this Wednesday, the day after the Reserve Bank board meets.
All the early estimates point to a weak reading for the quarter, but it will be the data this week which will shape the final report.
The two major data releases this week are the figures for construction work done in the quarter (out on Wednesday) and the private investment figures for the quarter on Thursday.
The AMP’s Dr Shane Oliver says we can expect to see a 1% fall in both March quarter construction activity and business capital expenditure, thanks to the ongoing slide in mining investment.
Other economists say the fall in both could be larger – 3% to 5% for the quarter.
But Dr Oliver and other economists point out the key part of Thursday’s report will be the second estimate of investment for the 2015-16 financial year, especially for non- mining investment, which showed a very sharp fall in the first estimate three months ago.
If that is repeated then there will be pressure for more government spending and rate cuts to avoid a possible negative quarter or two of growth.
Data for new home sales and Reserve Bank figures on private credit will also be released Friday.
The key for the latter report will be the growth in investor lending for housing and business investment – both of which have been rising in recent months.
Tomorrow also sees the first current account estimate for the March quarter (with an update in a week’s time).
As well, there’s another speech from both RBA deputy governor Phil Lowe (on Wednesday) and Assistant governor Malcolm Edey (also on Wednesday).
In the US, the big data release is the second estimate of first quarter economic growth on Friday night, our time.
According to forecasts in the US, the new estimate will be a fall, with estimates ranging from a fall of 0.2% to one of 0.9%, from the first estimate of growth of 0.2% (all annual estimates).
But there are also half a dozen other releases this week with more up to date data from the US economy which may give us a better handle on the strength of demand and activity (which seems to have improved from March, but not by very much).
Data on durable goods orders will be released tomorrow night, our time (remember tonight is a holiday in the US), and it has emerged as an important indicator with variable readings in recent months, swinging from big rises to falls. A fall is forecast for the April figures.
Also on Tuesday, two data releases on home prices are released, along with consumer confidence, and new home sales, the Richmond Federal Reserve survey and weekly data on chain store sales.
The AMP’s Dr Oliver says home prices may have risen by 0.8% in March to stand almost 5% higher than a year ago. And new home sales may have rebounded by 7.1% in April after slumping by 11.4% in March.
And on Wednesday night, our time, the ‘flash’ Markit purchasing managers survey for the US services sector is due to be released together with both the Dallas and Texas surveys on the services sector and weekly survey of housing finance.
Then on Thursday, data on pending home sales is issued together with the usual weekly figures on claims for unemployment insurance.
Besides the GDP release on Friday, there’s another speech (the second in successive Fridays) from Federal Reserve chair Janet Yellen and the Chicago purchasing managers survey.
All this will help clear the picture on the future direction for US interest rates after Ms Yellen indicated on Friday night that the Fed remains on track to tighten in 2015.
In the corporate area, the US first quarter earnings season is all but at an end with only some smaller companies due to report this week.
In Europe, eurozone confidence data for May (Thursday night) will be watched for evidence that the pick-up in eurozone growth is being sustained.
And markets will be watching any progress towards a “reform for funding deal” with Greece seeing the country is moving closer to financial crunch time.
And in Asia, the end of month release of a clutch of economic figures in Japan dominates with April figurers on employment, household spending, industrial production and inflation.
All are out Friday with the overall tone expected to confirm the emerging rebound – but inflation will again be weak and possibly slip back into the red.
