Australian AiG Performance of Manufacturing Index (SEP) (23:30 GMT; 19:30 EST)
Consensus: n/a
Previous: 52.1
Outlook: Though there is no consensus regarding expectations for Septemberâ,"s factory activity read released by AiG, a few key ingredients should contribute to the direction of the indicator. Specifically making the case for a decline in optimism for the period were a drop in business confidence and the lingering effects of a previous rate hike. In August, the Reserve Bank of Australia increased the benchmark lending rate by 25 basis points to a five-and-a-half year high to contain inflation that ran beyond their comfort zone for the first time in three-years. More specific for the September read however was the drop in the National Australia Bankâ,"s business confidence over the previous month. On the other hand, there are a number of complementary indicators for greater firm confidence. First of all, the most recent trade figures reported an improvement in the deficit from A$635 million to A$588 million in July. Consumer demand may also be a point of agreement for this indicator. Consumer confidence grew 12.5 percent in the month of September according to a Westpac report and a concurrent increase in spending would help to bolster demand. Finally, the best argument for a rise in manufacturing activity comes on the part of cheaper input prices.
Previous: AiGâ,"s manufacturing index increased in August to a 52.1 read from 49.7 the month before. This was the fifth increase in the past 12 months which comes as demand from domestic and foreign sources continues to drive production in the 200 companies surveyed in the indicator. According to the breakdown of the questions asked of surveyees, most areas of interest improved over the month. Production increased by 3.0 points to 53.5 while new orders, an indicator of future activity, grew 3.7 points to 52.9. One increase that was played down was the slight rise in the employment sub-gauge. Though the job component increase by 0.4 points, the figure was held below the 50.0-level, which denotes it is contractionary.
Australian Retail Sales (AUG) (01:30 GMT; 21:30 EST)
Consensus: 0.2%
Previous: 0.6%
Outlook: Australians are expected to have increased spending by 0.2 percent in the month of August as cheaper gasoline and tax cuts are expected to offset the burden placed on consumers by a rate hike. Perhaps the most promising reason behind higher spending forecasts in August is the governmentâ,"s A$36.7 billion tax cut that will be spaced out over the next four years. While this will not offer a large nominal sum for the average Australian, it will have helped improve consumer sentiment and could have offset the recent increase in mortgage payments that followed the hike in overnight lending rates over the same period. Reasoning for increased spending also comes on the part of cheaper gasoline prices. In a recent sentiment survey, nearly half the respondents listed fuel prices as their biggest concern. Since July, petrol prices dropped over 12 percent from their highs, which translated to A$1.21 per liter for the average Aussie. For further evidence, the proprietary Cashcard Retail Index, measuring spending at retailers using electronic cards, rose 0.1 percent in August. Consumer spending accounts for nearly two-thirds of the Australian economy, so a positive read in the periodâ,"s retail sales number could encourage the central bank to consider another rate hike before the yearâ,"s end.
Previous: Retail sales in the Asian-Pacificâ,"s fifth largest economy grew 0.6 percent in July as strong employment trends and a recent tax cut helped to lubricate Aussieâ,"s spending habits. At the beginning of the period, the government initiated its planned income tax break that is expected to provide A$40 per month for the average Australian consumer. Another overall income and confidence boost for the month came from the improvement in employment trends. The nationâ,"s jobless rate fell to its lowest level in 30 years in July after it was reported that employers added a net 50,000 hires their already bulging payrolls. Whatâ,"s more, wages from the same period a year ago reached 4.1 percent, a quick enough pace to counteract the 4.0 percent rate of inflation over the second quarter. Breaking the headline number down, department sales grew 7.0 percent, household goods grew 1.2 percent and clothing sales rose 0.6 percent.
Swiss Consumer Price Index (SEP) (05:45 GMT; 01:45 EST)
(MoM) (YoY)
Consensus: 0.0% 1.1%
Previous: 0.2% 1.5%
Outlook: Inflation is expected to be unchanged in September as Swiss core inflation is still subject to cost factors that are based in volatile energy products. Starting the second half of August, crude oil prices have rapidly dropped from near all-time highs, cutting the run short just below $60 per barrel. This drop in the unrefined energy product could contribute to cheaper prices for consumers as firms lower the prices of their goods to compete on the global market place for foreign dollars. However, despite the lessened price risk, and annualized core inflation holding steady under the SNBâ,"s target rate of 2.0 percent, interest rates are widely expected to be bumped 25 basis points higher in December. Such sentiment comes as the booming economy broadens the scope for monetary policy officials and the Euro-Zoneâ,"s central monetary authority continues to lift its own rates at an unfettered quarterly pace.
Previous: August CPI rose 0.2 percent, which boosted the annual rate to a 1.5 percent clip. This compares to the SNB medium-term target rate of 2 percent. For the period, resilient energy prices found continued to find an outlet in other consumer goods such as apartment rentals and transport prices. Furthermore, even though gasoline prices started to decline in the latter half of the month, gasoline prices were still elevated at uncomfortable levels. Also adding to Swiss economic worries over the same period was the September KOF leading indicator which declined to its lowest level since April and the third consecutive drop this year. Though price growth in the consumer basket held within the SNBâ,"s tolerance band, the group of policy makers decided to increase the nationâ,"s target three-month libor rate by 25 basis points to a median of 1.75 percent.
Euro-Zone Producer Price Index (AUG) (09:00 GMT; 05:00 EST)
(MoM) (YoY)
Consensus: 0.2% 5.7%
Previous: 0.6% 5.9%
Outlook: Prices paid at the factory gate are expected to have grown 0.2 percent in August, a reduced pace from the previous periods 0.6 percent figure. Although the central bank has produced optimistic reports of both growth and inflation for the months ahead, there are indicators suggesting producers are taming the cost of their goods. The most relevant indicator for comparison to the monthâ,"s PPI number comes on the part of the consumer price index. Ticking lower to 2.3 percent annual pace of growth in the month of August, the CPI reflects the efforts of European business in cutting costs to sustain the high profit margins during the World Cup. However, spending has abated since the region-wide event has ended and investor and consumer sentiment in some of the key economies has seen marked reductions. In fact, the Euro-Zone ZEW report, that tracks investor sentiment, fell to its lowest level since July of 2001. Given this outlook, and the cheaper prices of raw materials as the month wore on, European producer likely reduced the prices of their wares to sustain activity. Should this gauge start to trend into deflationary territory, the interest rate hikes that seem so assured now, could be off the slate in the monthâ,"s ahead.
Previous: In July, inflation at the wholesale level accelerated 0.6 percent, twice the pace as the month before. On an annual measure, the gauge was bumped up to a 5.9 percent. For the period, producers were finding it easier to pass on the costs they were paying for the record energy prices due to the liberal spending habits of consumers during the World Cup. Convincing factories to boost prices in the period specifically were record crude oil prices. Prices for energy related goods rose 15 percent from a year earlier according to component data. In fact, stripping the effects of this volatile component, would have left the inflation gauge at a much more modest 3.4 percent pace. In light of the fast pace of price growth at both the producer and consumer price level, ECB president Jean-Claude Trichet laden his rhetoric for his outlook with the need for â,"strong vigilanceâ, in regards to price pressures and possible interest rate hikes that would be needed to control it.
Richard Lee is a Currency Strategist at FXCM.