Australia and NZ - economic data and event preview

Australia and New Zealand - economic data and event previews

Australia

Speech by RBA Deputy Governor Ric Battellino - The title of the Deputy’s speech to the UDIA National Congress in Brisbane is “An Update on the Economy and Financial Developments”. This leaves the Deputy Governor effectively with a blank canvas should he deem it necessary to massage market expectations, which now point to a modest 25bp rate cut in April. There is a question and answer session scheduled for after the speech.

Private sector credit - The Government’s expansion of the first home buyers grant last October, combined with the RBA’s assertive rate cuts, will have helped prevent another contraction in the outstanding pool of credit in February, but growth in private sector credit should have moderated. Business and personal lending would have been reined in, but growth in housing credit will have picked up.

Speech by RBA Assistant Governor (Financial markets) Guy Debelle - Dr. Debelle will speak on “Some Effects of the Global Financial Crisis on Australian Financial Markets” to the Financial Professionals Forum in Sydney. There is a question and answer session scheduled for after the speech.

Building approvals - Approvals should fall for the eighth straight month in February; this downtrend has emerged amid low confidence, elevated construction and material costs, excessive red tape in the building sector, and persistent funding pressures, which continue to deter new development.

Retail sales - Retail sales values probably rose 0.1%m/m in February, supported by still-elevated food prices. Retail sales ex-food should fall, after sliding 0.6%m/m in January. The RBA’s rate cut early in the month, and perhaps some lingering impact from the December bonus payments, also may provide support. Looking ahead, the retail sector should garner support from another round of one-off cash payments to low- and middle-income earners in March, worth A$12.7 billion, but these payments will provide only a temporary boost to consumer spending.

Trade balance - The dramatic drop-off in global demand will weigh on exports in February, leading to a sharp contraction in the trade surplus, given that imports should be largely steady. Preliminary imports data showed that goods imports fell 0.1%m/m in February.

New Zealand

NBNZ Business Confidence Index - The NBNZ business confidence survey will remain near -40 in March, meaning a net 40% of respondents expect business conditions to worsen in the coming year. The more important reading of firms’ own activity expectations will worsen to -20 from -18.6, pointing to sharply weaker economic growth in coming quarters.

ANZ Commodity Price Index - The ANZ commodity prices index fell 4.6%m/m in February, marking the seventh straight monthly fall; this downtrend will continue as commodity prices continue to fall. In NZD terms, though, the index rose 1.9%m/m in February, and will likely rise again in March, owing to the weaker NZ dollar.

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