Some top level economic data this week here and from China will test markets and investor confidence in the latest recovery.
First up, Chinese economic data for September, starting tomorrow, will start to flow this week, testing the recent rebound in support for commodity prices and resource and energy producing companies.
China’s exports and imports for the month and September quarter will be issued tomorrow and they are again expected to be weak.
Watch for the size of the fall in exports, and particularly imports – they will tell us more about the health of the economy – and the size of the trade surplus, which will be big.
Wednesday sees data on Chinese credit growth to show (further improvement) and CPI inflation (which is expected to ease after the recent jump in food prices).
The producer price index will again show deep deflation. Next Sunday sees the quarterly GDP data released in Beijing.
Industrial production figures for Japan will be issued later in the week and won’t be convincing either, according to economists, further suggesting the economy is staggering towards a recession.
But it will be the Chinese data releases that will dominate the entire week, offsetting the impact of the jobs data here and US inflation figures, as well as the US third quarter reporting season.
According to the AMP’s Chief Economist Dr Shane Oliver we can expect continued solid growth in US retail sales on Wednesday night, our time, headline consumer inflation (on Thursday night our time) to fall back into modest deflation on the back of falls in the gasoline price, but with core inflation remaining under 2%; September industrial production to have fallen 0.3% and consumer sentiment to rise after a fall last month (both out Friday night, our time).
Both the New York and Philadelphia regional manufacturing surveys will also be released and closely watched for some improvement after recent weakness.
The September quarter profit reports will start to flow in earnest. Consensus expectations are for a 4% – 5% year on year decline in profits but Dr Oliver says that if the last two quarters are any guide they are likely to end up around flat.
In Australia, watch for improvement in both the NAB business confidence and conditions surveys out tomorrow, and in the Westpac consumer confidence index (out Wednesday).
Dr Oliver says the September labour market data (out Thursday) will show flat employment last month after several strong months of growth, with unemployment rising to 6.3% from 6.1%.
And, CommSec economists say, “Despite seemingly soft economic growth rates, the job market has been quite resilient. We expect that employment may have lifted by just 5,000 in September after strong gains in previous months while the jobless rate may have held steady at 6.2 per cent.”
And the RBA’s six monthly Financial Stability Review (on Friday), the second of the year, won’t contain many surprises.
Dr Oliver says it “is expected to show that the RBA is largely comfortable with the state of the Australian financial system particularly now that APRA measures are impacting to slow investor property lending and that banks will be required to hold higher capital ratios".
And the Australian Bureau of Statistics releases August lending finance data later today, and September car sales on Thursday.
In Europe, European Union leaders gather in Brussels on Thursday to discuss the refugee crisis and EU foreign ministers are scheduled to hold a separate meeting to discuss the conflicts in North Africa and the Middle East earlier in the week.
And in US politics, the first Democratic debate of the 2016 presidential election campaign will be held in Nevada on Tuesday. The frontrunner for the Democratic nomination, Hillary Clinton, is expected to share the stage with senator Bernie Sanders of Vermont, former Rhode Island governor Lincoln Chafee, and former senator Jim Webb of Virginia in the debate being hosted by CNN. It won’t tell us very much new.
