Economic wrap: US data contradicts Fed rate hike expectations - Westpac

Analysts at Westpac offered an economic wrap and outlook for day ahead.

Key Quotes:

"US personal income rose 0.4% in July and spending rose 0.3% (both matching consensus expectations). Although consumption remains solid, the 5.7% savings rate is high – indicating consumer caution – and has room to fall (pushing consumption even higher). The core PCE deflator – a Fed-favoured inflation indicator – remained at 1.6% yoy (vs 1.5% expected) for a fifth consecutive month and argues for no urgency in raising the Fed funds rate next month.

Economic Event Risks Today

NZ building permits surged 16% in June, apartments and some large project contributing. We expect a pullback in July, but not enough to disturb the overall upward trend.

Australian dwelling approvals saw a 2.9% fall in June after a 5.4% drop in May, with the weakness broad-based in June. A further 1% fall is expected in July, sustaining the downtrend.

US Case-Shiller house price growth remains robust although annual growth has slowed."