Economic wrap and outlook: FOMC in focus and NZ jobs - Westpac

Analysts at Westpac offered an economic wrap and outlook.

Key Quotes:

"US CPI was flat in July, as expected, but ex-food and energy it was slightly disappointing at 0.1% vs 0.2% expected. The yoy headline rate is at 0.8%, the core measure at 2.2%. Housing starts rose 2.1% in July (vs -0.8% expected), but building permits fell 0.1% (vs +0.6% expected). Activity can be characterised as trending higher after a weak Q4.

The GDT dairy auction resulted on the overall product price index rising by 13%, with whole milk powder (NZ’s main export product) up 19%. This was consistent with predictions of a 12% gain from the NZX futures market. The sudden 30% bounce in WMP during the past two weeks suggests demand factors have dominated recently.

Economic Event Risks Today

NZ: We expect the unemployment rate to rise slightly from 5.2% to 5.3% in Q2, given indications from the lower profile QES survey two weeks ago. Overall though, the labour market remains strong.

Australia: Westpac MI leading index improved markedly in 2016, the June outcome indicating the balance of 2016 should see growth near trend. Mostly positive updates will be incorporated in July. Thewage price index disappointed in Q1, with the annual pace at a new record low. There’s little reason to expect a meaningful pick up in Q2.

US: July’s FOMC meeting minutes should keep focus on the consumer and labour market pulses. There’s also Fedspeak from Bullard."