Key Week Ahead For RBA Outlook

Next week contains a lot of data releases that are likely to be important for the RBA’s thinking. RBA Governor Lowe reiterated in his speech this week that the central bank will focus on incoming data, especially inflation and the labour market, but also indicators of consumer spending. Next week’s calendar covers all of those elements, including forward-looking surveys.

• On Tuesday September 13, the CBA’s measure of household spending for August will be published. Last month it rose 1.1% m/m and 12.2% y/y, showing consumer resilience in the face of cost-of-living pressures and higher interest rates. The August data will be watched closely for signs of that resilience wavering in the face of further hikes.

• Tuesday also sees the Westpac consumer confidence index for September. In August, it fell to its lowest since the Covid-impacted August 2020 reading and has suggested consumption weakness that hasn’t yet materialised. The survey doesn’t have an inflation expectations component but the Melbourne Institute publishes its measure for September on Thursday, which eased slightly to 5.9% in August. Given that the next official inflation number won’t be until the end of October, this is likely to gain a lot of attention.

• On the business side, NAB releases its business conditions survey for August also on Tuesday. So far, conditions and confidence have been holding up well and this survey is likely to be scrutinised not just for signs of a slowing economy but also for what it says about labour costs and prices.

• The August employment report prints on Thursday and is expected to show no change in the unemployment rate and a 37.5k gain in jobs after the unexpected drop in July. Any signs of easing in the tight labour market could be a red flag.