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In the wake of US jobs report, global economic data flow gathers momentum

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2023-08-28

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As the echoes of the June 30 reporting seasons reverberate worldwide (except for China, where it reaches its peak this week), attention shifts to a flurry of data releases marking the start of the new month.

Australia is poised for a crucial week, featuring the June quarter national accounts and GDP announcements for the 2022-23 financial year, alongside the impending Reserve Bank rate decision.

The customary end-of-month inflation gauge for July takes center stage on Wednesday, with AMP Chief Economist Shane Oliver projecting a slight uptick to "5.5% YoY from 5.4% YoY," reflecting higher electricity and gas prices, partially offset by power bill subsidies and marginally lower petrol costs.

Additionally, this week brings the debut figures for July, including building approvals for the first month of the new financial year, coupled with the latest business activity surveys due on Friday.

Friday also unveils a cascade of financial data, encompassing housing, business, and individual sectors, with information originating from both the Reserve Bank on Thursday and the Australian Bureau of Statistics on Friday.

Further figures to anticipate this week include retail sales for July, where a modest 0.1% increase is foreseen by Dr. Oliver following June's 0.8% decline. Furthermore, insights from CoreLogic on house prices are set to be disclosed on Friday.

In the run-up to the impending June quarter GDP data release, the upcoming week boasts a valuable array of information. Wednesday brings figures on the value of construction work completed in the June quarter, while Thursday offers the ultimate private investment data for both the June quarter and the broader 2022-23 period.

The curtain draws on the June 30 reporting season across the next five days, with approximately 40 ASX 200 companies poised to report. Of particular note are reports from Fortescue Metals and Harvey Norman, expected to shed light on the season's trajectory.

Adding to the mix is Friday's initiation of the US jobs data for August, coinciding with the Labor Day Weekend and marking the end of American summer, catalyzing a shift toward year-end activities, coupled with intensified apprehension across markets.

As the calendar turns to September, recollections of historic market weaknesses resurface, including the 2008 Lehman Brothers collapse that precipitated the Global Financial Crisis. Against the backdrop of a somewhat unsettled US banking sector, the possibility of sectoral fluctuations remains, compounded by meticulous monitoring from all three ratings agencies.

Simultaneously, significant data releases are anticipated from the US, EU, and China, accompanied by economic activity surveys for various economies spanning Asia, Europe, and North America.

The eagerly awaited US jobs report for August, scheduled for Friday, is projected to affirm a jobless rate increase from 3.5% to 3.6%, alongside the creation of approximately 170,000 new jobs (down from 187,000 previously).

It is imperative to keep an eye out for potential revisions to previous months, capable of altering the scope of the unemployment pool and diminishing the tally of jobs established over the past year, a trend possibly extending to a second month. Wages are anticipated to manifest an annual growth of around 4.3%.

Accompanying this are forthcoming US job openings and resignation statistics for July, slated for Wednesday, with economists envisioning a regression to approximately 9 million openings. Moreover, the monthly personal consumption expenditure and price data, favored by the Federal Reserve, may register an increase to 4.2% from 4.1%, mirroring the slight rise in the July Consumer Price Index to 3.2% from 3%.

Ahead of these events, Wednesday offers the second estimate of US economic growth, with market consensus leaning towards a reading as high as 4.1%, up from the initial 2.4%. Should this estimation hold, concerns regarding interest rates may be reignited.

The trajectory of the report, combined with an unexpectedly robust jobs report on Friday, could rekindle fears of an imminent rate hike by the Federal Reserve. Conversely, underwhelming figures might offer solace to investors.

In Europe, early inflation and employment data are poised for release, predicting a slight decline in the former to 5.1% for August, compared to the preceding month's 5.3%. The employment data is anticipated to exhibit modest improvement, surpassing the 6.4% figure from the previous month. Amidst this, the European Central Bank is projected to implement a 0.25% increase in its key rate at the upcoming meeting.

Meanwhile, Asia takes the spotlight as it awaits a pivotal data release, comprising China's economic activity reports for both manufacturing and services, emanating from both the official National Bureau of Statistics and the private Caixin survey.

Economists suggest that China's manufacturing index for August will remain below the neutral mark, with Moody's economists projecting a rise to 49.6 from July's 49.3. On the services front, the survey reading is poised to stay just above 50, indicating a slow pace of expansion.

A persistently weak reading could fuel concerns surrounding China's economic health and prompt inquiries into governmental efforts to stabilize activity and foster growth.

Lastly, Japan contributes to the data wave with the release of inflation and employment statistics in the current week.

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