Separate report on the current account deficit, showed that seasonally adjusted it increased $2,258m (12%) to $21,106m in the December quarter 2015. The deficit on the balance of goods and services increased $2,592m (35%) to $9,929m. The primary income deficit decreased $331m (3%) to $10,564m. In seasonally adjusted chain volume terms, the surplus on goods and services increased $19m from $8,491m in the September quarter 2015 to $8,510m in the December quarter 2015. This is expected to contribute 0.0 percentage points to growth in the December quarter 2015 volume measure of GDP.
From China, Manufacturing PMI data was released. The manufacturing purchasing managers index dropped to 49 in February, missing the median estimate of 49.4 in a Bloomberg News survey of economists. It hasn’t been weaker since January 2009. In a sign China’s slowdown is spreading, the non-manufacturing PMI -- which has been outperforming the factory measure -- fell to the lowest level since December 2008. A separate manufacturing reading from Caixin Media and Markit Economics fell to 48 in February, from 48.4 in January. On the official manufacturing measure, the new orders, employment and purchasing quantity components slipped.
However, the focus of the session was on RBA interest rate decision and the following statement. The Reserve Bank of Australia kept the cash rate unchanged again today at two per cent — where it has remained since May — leaving interest rates at historically low levels. In the following statement it was said that inflation is quite low. "With growth in labour costs continuing to be quite subdued as well, and inflation restrained elsewhere in the world, inflation is likely to remain low over the next year or two. The exchange rate has been adjusting to the evolving economic outlook."
"Over the period ahead, new information should allow the Board to judge whether the improvement in labour market conditions is continuing and whether the recent financial turbulence portends weaker global and domestic demand. Continued low inflation would provide scope for easier policy, should that be appropriate to lend support to demand," it was concluded.
The February PMI registered 49.5 percent, an increase of 1.3 percentage points from the January reading of 48.2 percent. Analysts were anticipating smaller incline to 48.5. Comments from the panel indicate a more positive view of demand than in January, as 12 of our 18 industries report an increase in new orders, while four industries report a decrease in new orders.
From Australia, on Wednesday, GDP data was released. Australia's economic growth was a higher-than-expected 0.6% per cent for the December quarter and 3% for the year, according to the Bureau of Statistics. Economy grows 0.6% in December quarter, 3% over 2015. Consumer spending is the biggest contributor to economic growth. A broader ABS measure of economic wellbeing fell 1.2% last year. Economists surveyed by Bloomberg had typically expected economic growth to be 0.4% for the December quarter and 2.5% for year. The biggest drag on the economy came from a continued decline in business investment as the mining construction boom winds down, with capital spending taking 0.2 percentage points off GDP. While the mining investment boom is winding down, the production boom is well underway.
From Australia, on Thursday, Trade Balance data was released. In trend terms, the balance on goods and services was a deficit of $3,364m in January 2016, an increase of $133m (4%) on the deficit in December 2015. In seasonally adjusted terms, the balance on goods and services was a deficit of $2,937m in January 2016, a decrease of $587m (17%) on the deficit in December 2015. Analysts were expecting deficit of $3,220m.
This week markets will be looking at:
NAB Business Confidence (Tuesday 1:30)
China's Trade Balance (Tuesday)
Westpac Consumer Sentiment (Wednesday 00:30)
Home Loans (Wednesday 1:30)
