It's a BIG week for economic news

Sun, 31 Aug 2014  |  

The week starting 1 September is a blockbuster for economic news and events.

The RBA Board meeting on Tuesday will likely leave interest rates unchanged, even though the case for an interest rate cut is strong, with a 12 year high unemployment rate, a record low pace of wages growth and inflation more than comfortably within the target range the key factors behind the case for some more monetary policy easing.

Alas, working against the case for what is an increasingly necessary rate cut is the RBA confidence that the current low level of interest rates, now in place for 13 months, will at some time kick start growth and with it, underpin a more troublesome inflation outlook.

Time will tell whether the RBA has got it right or not.

Also out this week are the June quarter national accounts. It looks like GDP for the quarter will be a touch soft, around 0.4 per cent growth, but that result must be put in context of the 1.1 per cent lift in GDP in the March quarter. Taken together, it looks like the economy was sort of okay in the first half of 2014, although the loss of momentum in the June quarter, together with the rising unemployment rate, suggests all is not right with the pace of growth.

The other snippets of news this week have value in working out just where the economy is.

The RPData house price series will show prices rose 1.2 per cent in August, continuing the unsustainable pace of house price gains.

The TD-MI Monthly inflation gauge is set to confirm a cooling of inflation pressure through to August, while news on company profits and inventories will likely fit with the narrative of the economy doing "okay". The Dun & Bradstreet business expectations survey is also out and after a solid swing towards optimism in recent months, it will be interesting to see if this good news for the business sector is sustained.

There is also a run of news on net foreign debt, the current account deficit, building approvals, international trade and retail sales to round out the data flow.

The RBA Governor, Glenn Stevens, speaks on Wednesday so he may or may not be able to give a bit of a post-GDP assessment of where the economy is at. Either way, Stevens is always worth listen to.

All up, it is a week that has the potential to change and redefine assessments about the economy and the market lull of recent times, especially for the Australian dollar, just might get a jolt.

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