Daily Commentary BY THE CURVE TEAM –

Monthly Data Is Becoming Increasingly Important

13th of June, 2017

The local data continues to roll out following last week’s soft reading on growth and the monthly updates haven’t been much better. After the large fall in the trade surplus was announced on Thursday, the lending data which followed on Friday was also quite weak. It comes ahead of another key week of data.

Lending data for April was released on Friday and saw a pretty weak outcome across the board. Investment lending, which is expected to come under increasing pressure over the coming months following increased regulatory oversight, fell 2.3% in April. Owner occupier lending was also weaker with the number of loans down 1.9% while the value of loans was down 1.1%.

The data comes ahead of a key week with three of the month’s most important releases due. Today will see the NAB business survey for May. The survey has been a pillar of strength however the survey based outcomes have yet to transition across to the majority of the hard data. The consumer sentiment survey due out the following day will be of great importance as its ongoing weakness has been evident in retail sales outcomes over the first half of the year.

Finally the employment data will be out on Thursday. It will be interesting to see if the strength from the past two months continues through May. The market is expecting a gain of 10,000 jobs for the month, a little less than we have seen in the past two months. The unemployment and participation rates are expected to remain unchanged at 5.7% and 64.8% respectively.

Following the weak outcome for growth in Q1, the run of monthly data will be of increased significance for signs that growth is bouncing back in line with RBA forecasts.

David Flanagan

Director - Interest Rate Markets