Weekly Market & Currency Developments – From Our Bankers

The Australian Economy: Now and 25 years ago

Economic perspectives

  • Australia 25 years ago: Every generation believes they face tougher times than other generations. But the current economic times stack up surprisingly well compared with the past. We look back over the past 25 years.
  • Recently, globalisation has caused inflation and wages to grow at far slower rates than in the past while interest rates are at record lows. The ‘new age’ may lead to slower growth of sharemarket returns.
Looking back at past economic times enables investors, businesses and consumers to get perspective when making financial decisions.

What does it all mean?

  • Economies are constantly changing – just ask the Reserve Bank hierarchy. A year ago the Reserve Bank thought that the next move in interest rates would be up. But, encouraged by tame inflation, the Reserve Bank has just cut interest rates, concluding that the economy can grow faster and create more jobs.
  • Twenty-five years ago the situation was far different. The economy was accelerating, creating the risk of higher inflation. In August 1994 the Reserve Bank lifted the cash rate from 4.75 per cent to 5.50 per cent. By the end of the year the cash rate stood at 7.5 per cent. Inflation hit 5.1 per cent in the second half of 1995.
  • While economies will always fluctuate in the short term, the more important issue is whether the standard of living is enhanced over time. Certainly the standard of living is much a much broader concept than merely focussing on changes in economic variables. But it is still an important part of the equation.
  • Arguably those in their mid-40s and above – ‘Baby boomers’ and Generation X – have experienced a tremendous improvement in economic and financial circumstances over the past 25 years. Wages have soared in real terms, together with the value of assets like shares and homes. Inflation is low, unemployment is near decade lows and interest rates are the lowest since the mid-1960s. And the record economic expansion is in its 28th year.
  • The improvement in economic fortunes have occurred under Labor and Coalition governments, and despite a raft of global challenges like the Asian Financial Crisis, Technology boom and bust and the Global Financial Crisis.

Higher wealth has led to changes in spending

  • Arguably the extent of the improvement in economic circumstances has been almost unprecedented. Lack of consistent longer-term data prevents economists from declaring the improvement as the best ever.
  • But clearly the gains in real income and wealth have caused
    changes in how Aussies spend their money. Housing costs – paying the rent or the mortgage – now occupy a bigger share of household spending. Over time the relative cost (or affordability) of so-called essential items like food, clothing, cars and household goods has fallen, allowing Aussies to buy bigger and better homes.
  • And importantly the rising value of homes has added to household wealth and incomes and allowed ‘Baby boomers’ and Gen X to embrace more discretionary goods and services over time.
  • Over the past 25 years, Aussies have increased their share of spending on housing, insurance, education, health, medicines and electricity/gas. But Aussie consumers have trimmed the share of spending devoted to food, clothing, furniture, household appliances and the purchase of cars and operation of cars.
  • Lower tariffs, globalisation and technology have served to reduce the relative cost of goods such as cars, fridges, furniture and floor coverings. With extra disposable income, Aussies have chosen to upgrade homes, the schools their children attend and their elected doctors, hospitals and specialists. Higher prices have lifted the share of spending going to utilities. The ageing of the population has also lifted relative spending on health and insurance.

Income & wealth

  • Over the past 25 years wages have risen by 165 per cent, well ahead of inflation, up just over 85 per cent. Over the same period, household income per capita (per person) has lifted by 181 per cent, ahead of per capita consumer spending, up 176 per cent. And wealth per capita has lifted by 326 per cent, not far from the greatest generational lift in wealth that occurred just over a year ago with a 370 per cent per capita lift in wealth.
  • Over the past three years there has been a slowdown in income and wealth gains, arguably from an unsustainable pace. With globalisation serving to restrain inflation, wage growth has also eased. Consumers have drawn down on savings to adjust to the slower growth environment. On average household income grew at a 2.9 per cent annual rate over the past three years, behind a 3.9 per cent lift in spending.
  • Also making it difficult for Aussie consumers, taxation has risen at a 5.7 per cent annual rate over the past three years. Tax now takes 14.7 per cent of household income – a near 13-year high – reflecting ‘bracket creep’ and tougher enforcement by tax authorities.

What are the implications for investors?

  • Australia has one of the highest standard of living in the world. Income has outpaced inflation over time and wealth has soared. The lift in income and wealth have prompted many to upgrade their homes. People can afford more expensive and better quality homes because interest rates have fallen to record lows and a smaller proportion of household budgets now goes to ‘essentials’.
  • Advertisements from 1994 highlight some of the gains made in affordability over time. Beer and meat are more affordable now than 25 years ago and chicken is one item that can be purchased at a cheaper price now than in 1994.
  • The current generation of 20-30 year old Aussies are faced with more expensive homes but also enjoy the same smaller proportion of spending devoted to ‘essentials’ than in the past. But Gen Z and Millennials also have different priorities, favouring travel, ‘experiences’ and smaller homes.
  • The question being asked by many across the globe is whether we have entered a new era of lower inflation, lower interest rates and lower growth of both income and wealth. The faster that people adjust to a lower growth environment, the lower the risk of economic shock.
  • Companies are having to adjust to the new realities of global competition and slower growth of sales and incomes. The risk is that some companies may over-react by cutting expenses too far (particularly wages and employment) rather than seeking to maintain or increase market share.
  • Investors may also need to adjust to the new realities of slower growth of share prices and dividends. Over the past three years dividends have increased at a 1.5 per cent annual rate. From 2013-2016, annual growth of dividends averaged 3.7 per cent.

Housing market brightens; Chinese tourism slumps

Consumers unsure on best place to put savings

Consumer confidence; Overseas arrivals; Credit cards

  • Consumer confidence: The Westpac/Melbourne Institute survey of consumer sentiment index fell by 0.6 per cent to 100.7 in June after rising by 0.6 per cent to 101.3 in May. The ANZ-Roy Morgan consumer confidence survey fell 1.4 per cent last week. Over June, the ANZ-Roy Morgan survey fell by 2.1 per cent to 114.6. Confidence readings are close to long-term averages.
  • Housing market: There was a 1.8 per cent lift in the ‘good time to buy a home’ index. House price expectations soared by 22.7 per cent.
  • Wisest places for savings: Putting extra savings in the bank is still seen as the ‘wisest’ place for savings. But the reading of 24.9 per cent is an 11-year low.
  • Tourism: Tourist arrivals fell by 0.2 per cent in April with departures down 1.1 per cent. China is the largest source of tourists to Australia. Over the past year 1,438,500 tourists came to Australia from China, up by 1.3 per cent on the year – the weakest annual growth rate in nine years.
  • Credit cards: The number of credit cards fell to a 9-year low of 19.46 million in April.
  • Chinese inflation: Producer prices rose 0.6 per cent in the year to May, in line with forecasts. Consumer prices rose 2.7 per cent over the year, in line with forecasts. Non-food prices were up 1.6 per cent on the year. Food prices were up 7.7 per cent on the year. Consumer prices were flat in the month of May.
The consumer confidence figures have implications for retailers, and other consumer-focussed businesses. Tourism data is important for airlines, hotels and booking agents. Migration data is important for retail and housing industries.

What does it all mean?

  • Consumers are feeling just OK. The election may be over and interest rates cut to record lows but those events haven’t markedly lifted the mood of consumers. Perhaps in coming weeks, consumers will focus on the lift of the sharemarket to 111⁄2-year highs and stabilisation of home
    prices.
  • Is it a good time to buy property? More people think so. The index is now almost 11 per cent up on a year ago.
  • Consumers are less certain about where to put new savings. Banks remain the choice of ‘wisest’ destination for savings but the latest reading is the lowest in 11 years. Shares and property are more in favour. But a record (46-year) 55 per cent of respondents believe the wisest place for savings is not in banks, shares or property.
  • Has the US-China trade dispute affected Australia? Certainly there has been a marked slowdown of Chinese tourists coming to Australia. Annual growth of Chinese tourism is the slowest in nine years – a major headache for airlines, hotels and tour operators.

What do the figures show?

Consumer confidence

  • The Westpac/Melbourne Institute survey of consumer sentiment index fell by 0.6 per cent to 100.7 in June after rising by 0.6 per cent to 101.3 in May. The ANZ-Roy Morgan weekly consumer confidence survey fell 1.4 per cent last week. Over June, the ANZ-Roy Morgan survey fell 2.1 per cent to 114.6. Confidence readings are close to long-term averages.
  • Looking at the Westpac survey: the current conditions index fell by 1.1 per cent, and the expectations index fell by 0.3 per cent.
  • Three of the five components of the index fell in June:
    • The estimate of family finances compared with a year ago fell by 2.4 per cent to 83.2;
    • The estimate of family finances over the next year rose by 3.1 per cent to 107.0;
    • Economic conditions over the next 12 months fell by 4.7 per cent to 99.3;
    • Economic conditions over the next 5 years rose by 1.0 per cent to 98.2;
    • The measure on whether it was a good time to buy a major household item fell by 0.2 per cent to 115.5.
  • Housing outlook: A good time to buy a dwelling? The index rose by 1.8 per cent to 116.9, and was up 10.6 per cent on the year. House price expectations soared by 22.7 per cent to 109.7, but were still down by 8.6 per cent on a year ago.
  • Unemployment expectations: Unemployment expectations rose by 5.1 per cent to 127.0 in June (assuming a weaker job market) after falling by 5.1 per cent in May.
  • Wisest place for savings: ‘Banks’ fell from 28.8 per cent to an 11-year low of 24.9 per cent; ‘shares’ rose from 7.5 per cent to a 3-year high of 9.6 per cent; ‘real estate’ rose from 8.8 per cent to 10.4 per cent; ‘spend it’ rose from 5.3 per cent to 6.3 per cent; ‘pay debt’ fell from 26.3 per cent to 24.7 per cent.

Tourism & migration

  • Tourist arrivals fell by 0.2 per cent in April after falling by 1.9 per cent in March.
  • Aussie tourist departures fell by 1.1 per cent in April, easing after a 1.5 per cent increase in March.
  • Over the year to April, arrivals were up 0.4 per cent. In March arrivals were down by 1.1 per cent – the weakest annual rate in 71⁄2 years. Departures were down by 1.3 per cent over the year, the slowest annual rate in 14 months.
  • In April, tourists from Greater China (China and Hong Kong) totalled 135,800 (mainland China 109,600; Hong Kong 26,200), ahead of New Zealand (117,400).
  • China is the largest source of tourists to Australia. Over the past year 1,438,500 tourists came to Australia from China, up by 1.3 per cent on the year earlier – the weakest annual growth rate in nine years.
  • A record 365,600 Indian tourists travelled to Australia over the year to April, up by 12.6 per cent on a year ago.
  • In April, there were record tourist inflows from Belgium and Colombia. And in the month a record number of Aussies travelled to South Korea, Bangladesh.

Migration

  • In April, there were 57,590 permanent and long-term arrivals in Australia. The annual number of permanent and long-term overseas arrivals was 843,950, down from the record high of 845,840 in March, but up by 5.5 per cent over the year. In net terms (arrivals less departures) permanent and long-term overseas arrivals totalled 292,280 over the year to April.

Credit and debit card lending:

  • The number of personal credit and charge card accounts stood at 14.6 million in April. While there have been ‘series breaks’ over time, accounts stand at 4-year lows. The number of commercial credit card accounts rose from 1,186,700 to 1,186.900.
  • The number of credit cards hit a 9-year low of 19.46 million in April.
  • The number of credit and charge card purchase transactions in April was up 3.9 per cent on a year ago with the value up just 2.1 per cent.
  • The value of overseas purchases made with personal credit and charge cards in April was 1.6 per cent lower than a year ago. Earlier, in January, overseas purchases were down by 6.3 per cent on a year ago, the biggest fall in 9 years.

What is the importance of the economic data?

  • Westpac and the Melbourne Institute release the Index of Consumer Sentiment each month. According to Melbourne Institute: “The survey of consumer sentiment was first undertaken in 1973 and was conducted on a quarterly basis until 1976, a six-weekly basis from 1976 to 1986, and has been conducted monthly ever since.” Confident consumers may be more inclined to spend, especially on major items.
  • The ANZ/Roy Morgan weekly survey of consumer confidence closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the Reserve Bank.
  • The Australian Bureau of Statistics releases data on overseas arrivals and departures is produced monthly and is an indicator of the health of the tourism sector. The figures are also useful in understanding spending trends and tracking migrant numbers – an indicator with widespread implications for employment, housing and spending.
  • The Reserve Bank releases data on credit and debit card transactions each month. The credit card figures are useful in highlighting consumer borrowing and spending trends.

What are the implications for interest rates and investors?

  • The latest data doesn’t throw any light on the timing of the next rate cut. But anyone thinking that rate cuts would work miracles on the economy need think again. There are more and more people looking to save. Slower growth in inflation and wages and lower interest rates mean lower returns on investments.
  • Experts continue to pencil in another rate cut in August. But fiscal stimulus is a better idea. Labor support for the Government’s tax plans would go a long way in providing certainty for Aussie workers.
  • The slowdown in tourist arrivals highlights the slowdown in the global economy. The sooner a US-China trade deal is secured, the better for all concerned.
  • There are more signs of a bottoming in home prices. While the rate cut didn’t light a fire under consumers, it has made people more optimistic that home prices are likely to rise again and that now is a good time to buy residential property.
  • The best measure of Chinese inflation is non-food prices. And the slowdown in this measure to a 3-year low of 1.6 per cent annual rate shows the absence of inflationary pressures – not just in China but globally.

 

Two-speed job market

Labour force; Domestic airfares

  • Employment rose for the 12th straight month, up by 42,300 in May after a revised 43,100 increase in jobs in April (previously reported as a 28,400 increase in jobs). Full-time jobs rose by 2,400, but part-time jobs rose by 39,800. Economists had tipped an increase in total jobs of around 15,000.
  • Hours worked fell by 0.3 per cent in the month to be up 2.1 per cent over the year. In trend terms, hours worked rose 0.2 per cent to be up 2.5 per cent on the year.
  • The unemployment rate was steady at 5.2 per cent in seasonally adjusted terms (actually down from 5.22 per cent to 5.19 per cent). In trend terms the jobless rate was steady at 5.1 per cent.
  • Participation rate: The participation rate rose from 65.9 per cent to a record high of 66.0 per cent. In trend terms the participation rate rose from 65.8 per cent to a record high of 65.9 per cent.
  • Unemployment across states in May: NSW 4.6 per cent (April 4.6 per cent); Victoria 4.6 per cent (4.8 per cent); Queensland 6.2 per cent (5.9 per cent); South Australia 5.7 per cent (6.1 per cent); Western Australia 6.3 per cent (6.1 per cent); Tasmania 6.4 per cent (6.8 per cent). In trend terms, Northern Territory 4.5 per cent (4.5 per cent); ACT 3.9 per cent (3.8 per cent).
  • Domestic airfares: Airfares can be volatile on a month-to-month basis. But the smoothed measures show that business class airfares are falling at the fastest annual rate in six years with discount fares dropping at the fastest annual rate in three years in June.
A raft of companies is affected by the employment data but especially those dependent on consumer spending. Amongst stocks affected are Nine Entertainment, West Australian Newspapers, Seek Limited and McMillan Shakespeare.

What does it all mean?

  • Last month we said that there was seemingly something for everyone in the latest labour force data. And the same conclusion can be made again. There was good job growth in the month, albeit focussed on part-time jobs. The jobless rate didn’t budge. But the proportion of working age Aussies in the job market (participation rate) hit record highs. Admittedly the data covered the election period and that may account for the skew to part-time workers. Clearly there are temporary jobs created each three years for election-related roles.
  • A big question for the Reserve Bank is whether it believes that lower interest rates can truly drive the national jobless rate to 4.5 per cent or whether structural factors will impede progress. NSW, Victoria, the ACT and the Northern Territory have jobless rates of 4.6 per cent or lower but next best is South Australia at 5.7 per cent.
  • So the ball is back in the Reserve Bank’s court. We know that interest rates are being driven by the job market. So does the Reserve Bank follow the June rate cut with another move in July or does it wait a little longer – perhaps August after the late July inflation data?
  • We continue to favour August for the next rate cut. There certainly is no rush. The economy lost momentum late in 2018/early in 2009 due to the US-China trade stoush. Other countries have similarly experienced softer growth. Australia has also experienced slower growth in 2019 as both businesses and consumers awaited the election result. With a clear election result obtained, the economy should gain pace from here.
  • The Reserve Bank doesn’t seem to see any barriers to further rate stimulus. ‘Full employment’ is now defined as a jobless rate near 4.5 per cent. And inflation is set to stay at lower levels for longer. That assumption was backed by today’s data showing plunging airfares in June.
  • Certainly stimulus is coming from lower interest rates, the minimum wage decision, the upcoming tax cut and some loosening of home lending policy from the regulators. A lower Aussie dollar is also supporting activity in the economy. Sydney home prices have lifted 0.3 per cent from recent lows with Melbourne prices up 0.2 per cent.

What do the figures show?

  • Employment rose for the 12th straight month, up by 42,300 in May after a revised 43,100 increase in jobs in April (previously reported as a 28,400 increase in jobs). Full-time jobs rose by 2,400, but part-time jobs rose by 39,800. Economists had tipped an increase in total jobs of around 15,000.
  • Annual job growth rose from 2.5 per cent to a 14-month high of 2.9 per cent (decade average 1.7 per cent).
  • Hours worked fell by 0.3 per cent in the month to be up 2.1 per cent over the year. In trend terms, hours worked rose 0.2 per cent to be up 2.5 per cent on the year.
  • The unemployment rate was steady at 5.2 per cent in seasonally adjusted terms. In trend terms the jobless rate was steady at 5.1 per cent.
  • The participation rate rose from 65.9 per cent to a record high of 66.0 per cent. In trend terms the participation rate rose from 65.8 per cent to a record high of 65.9 per cent.
  • Unemployment across states in May: NSW 4.6 per cent (April 4.6 per cent); Victoria 4.6 per cent (4.8 per cent); Queensland 6.2 per cent (5.9 per cent); South Australia 5.7 per cent (6.1 per cent); Western Australia 6.3 per cent (6.1 per cent); Tasmania 6.4 per cent (6.8 per cent). In trend terms, Northern Territory 4.5 per cent (4.5 per cent); ACT 3.9 per cent (3.8 per cent).
  • State/Territory jobs: In seasonally adjusted terms, the largest increase in employment was in New South Wales (up 38,500 persons), followed by Victoria (up 28,600 persons) and Queensland (up 7,800 persons). The only decreases were in Western Australia (down 4,000 persons) and Tasmania (down 400 persons).
  • The working age population rose by 26,000 in May to 20.56 million. Over the year the working age population rose by 356,100 – a 91⁄2-year high – or 1.76 per cent, but this is still down from the record 2.36 per cent annual growth in December 2008.
  • The monthly trend underemployment rate increased 0.1pt to 8.5 per cent. The monthly trend under utilisation rate increased 0.1pt to 13.6 per cent.
  • The monthly seasonally adjusted underemployment rate increased 0.1pt to 8.6 per cent. The monthlyunderutilisation rate remained steady at 13.7 per cent.

Domestic airfares

  • Business class airfares fell by 0.2 per cent in June after falling by 1 per cent in May. Business class airfares are down 9.6 per cent on a year ago – falling at the fastest annual rate in six years. And the actual fares stand at the lowest level in four years. In smoothed terms, business class airfares fell by 1.3 per cent in June to be down 9.3 per cent on the year.
  • Discount airfares are volatile month-to-month. In June, fares rose by 15.2 per cent after falling by 25.9 per cent in May. Discount airfares are down 5.9 per cent over the year to June. In smoothed terms, discount airfares fell by 1.9 per cent in June to be down 3.1 per cent on the year – the biggest fall in the annual growth rate in three years. Fares are the lowest in two years.
  • Restricted economy airfares rose by 0.7 per cent in June after falling by 0.5 per cent in May. In smoothed terms, restricted economy fares rose just 0.2 per cent in June to be up by 5.3 per cent on the year.

Why is the data important?

  • The Labour Force estimates are derived from a monthly survey conducted by the Bureau of Statistics. The population survey is based on a multi-stage area sample of private dwellings (currently about 22,800 houses, flats, etc.) and a sample of non-private dwellings (hotels, motels, etc.). The survey covers about 0.24 per cent of the population of Australia and includes all people over 15 years of age, except defence personnel.
  • If more people are employed, then there is greater spending power in the economy. But at the same time companies may adjust the work hours of employees. If employees work less hours, and therefore get paid less, then spending power in the economy is reduced.
  • The Bureau of Infrastructure, Transport and Regional Economics (BITRE) releases data on domestic and international aviation each month. The data is useful in tracking consumer spending and airline performance as well as broader economic activity.

What are the implications?

  • We are pencilling in another rate cut for August.
  • But we are looking for significant debate about whether there is value in cutting rates much further. The south- eastern corner of Australia is arguably at or near full-employment. But there is a huge gap to the other states. The Reserve Bank Governor has a super-important speech in a week’s time: “The Labour Market and Spare Capacity”. Aussies will be hanging on every word.

 

Investor Signposts: Week Beginning June 16 2019

Australia: Reserve Bank in focus

  • In the coming week, Reserve Bank events dominate. Governor Philip Lowe’s speech in Adelaide on Thursday will hog the headlines. The minutes of the June 4 Board meeting are
    issued on Tuesday. On the data front, the Bureau of Statistics
    (ABS) provides updates on population growth, property prices and jobs. Skilled internet job vacancies figures are also issued.
  • The week kicks off on Tuesday with a speech by the Reserve Bank’s Head of Financial Stability Jonathan Kearns at the Property Leaders’ Summit in Canberra at 9.15am AEST. And the Reserve Bank Board’s June 4 monetary policy meeting minutes will be keenly observed. At that meeting rates were cut for the first time in almost three years.
  • Also on Tuesday, the regular weekly reading on consumer confidence is published by ANZ and Roy Morgan. And the ABS releases its quarterly publication “Residential Property Price Indexes”. Apart from home prices there is other data covering the average value of homes and changes in the number of homes in each state.
  • On Wednesday the Department of Jobs and Small Business releases the Internet Vacancy Index for May. Vacancies have fallen for four successive months and are down by 5.8 per cent over the year to April – the weakest growth rate in five years.
  • On Thursday the Business Sales Index for May are issued. But all eyes with be on Reserve Bank Governor Philip Lowe’s speech at the CEDA luncheon in Adelaide at 11.15am AEST. The July 2 Reserve Bank Board monetary policy meeting is considered a ‘live’ meeting for another potential interest rate cut. Economists, therefore, will be scrutinising the commentary very closely for further clues on the policymaker’s views.
  • Also on Thursday, the ABS releases the December quarter population estimates. Annual population growth probably held near 1.5-1.6 per cent – still one of the fastest rates across advanced nations. And detailed estimates on the job market for May are also issued. The data will include industry estimates of employment.

Overseas: US Federal Reserve interest rate meeting dominates

  • In the US, the Federal Reserve interest rate decision is the key focus of investors over the coming week. US housing data and manufacturing gauges also feature prominently. Home prices data is scheduled in China.
  • The week begins on Monday in the US when the New York Empire State Manufacturing Index is issued together with the National Association of Home Builders’ (NAHB) Housing Market Index for June. Home building sentiment in the north-eastern region of the US rose by 10 points to 65 points in May – the highest level since October 2005.
  • On Tuesday in China, home price data is scheduled. Home prices rose 10.7 per cent in the year to April – the strongest growth in two years. Economists are forecasting prices to grow by 12 per cent over the year to May.
  • Also on Tuesday in the US, the regular US weekly data on chain store sales is scheduled along with the monthly update on housing starts and building permits for May. Starts rose by 5.7 per cent to 1.235 million units in April, driven by gains in the construction of both single and multi-family housing units. Sentiment was boosted by declining mortgage rates and drier weather in the Mid-west region of the US. A 0.4 per cent lift is tipped in May.
  • On Wednesday the US Federal Reserve Open Market Committee (‘FOMC’) hands down its interest rate decision following its two-day meeting. No change in the Federal Funds target rate of 2.25-2.50 per cent is expected in the near term after the FOMC’s ‘dovish’ commentary earlier this year.
  • While US policymakers are expected to remain data-dependent, economic growth is expected to slow to an annual growth rate of closer to 2 per cent by year-end as the corporate tax cut stimulus fades. But late-cycle growth remains supported by solid consumer spending on the back of labour scarcity and low joblessness. That said, persistently low inflation and the intensification of US-China trade tensions could necessitate policy action.
  • Also on Wednesday, the regular weekly reading on new mortgage applications are released.
  • On Thursday, the US current account deficit is forecast to narrow to US$130 billion in the March quarter fromUS$134.38 billion in the December quarter.
  • Also on Thursday, the influential Philadelphia Fed Manufacturing Index, Conference Board Leading Index and the usual weekly data on claims for unemployment insurance are all released.
  • The ‘Philly’ Fed factory gauge will likely remain sensitive to negative trade headlines. And growing inventories are also weighing on US output. A weakening in conditions is
    expected in June after the US increased import duties (tariffs)
    from 10 per cent to 25 per cent on US$200 billion worth ofChinese goods on May 10. That said, the proposed 5 per cent US tariffs on Mexican goods have been averted for now.
  • On Friday, IHS Markit issues June ‘flash’ manufacturing indexes. Factory activity is contracting in Germany and Japan. The final US gauge fell to 50.5 points in May, the lowest reading since August 2009.
  • Also on Friday, US existing home sales figures are issued for May. An increase of 1.4 per cent is forecast by economists.

DISCLAIMER

This Freightplus article contains information obtained from sources believed to be reliable and has been prepared in good faith and with all reasonable care. Freightplus makes no warranty, express or implied, concerning the suitability, completeness, quality or exactness of the information and models provided in this website.

Neither Freightplus (Australia) Pty Ltd, its related entities, nor any of its providers of information, have any liability to the user, or any other third party, for the accuracy of the information or models contained in this article, or for any errors or omissions therein, nor will Freightplus (Australia) Pty Ltd or any of its providers of information have any liability for the use, interpretation or implementation of the information or models contained herein by any person.



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