Asia week ahead: Major China data release and India’s inflation report

China will release a huge batch of data next week, the highlights of which will be industrial production and retail sales figures for August. Taking cues from the PMIs released recently, we could see a moderate improvement in industrial production at 4.8% year-on-year (from 3.7% in July). For retail sales, as it is approaching the end of the summer holiday season, we could see slower growth of 2.8% (from 2.5% in July).

India’s inflation is likely to come down as prices of tomatoes have fallen by more than 50% month-on-month. However, the price of another crucial food staple – onions – shot up by more than 20% MoM. The net result of this is that the CPI inflation rate for August should slow to 6.7% year-on-year (from 7.44% in July) – still above the top of the RBI’s upper inflation target.

Australia will release its labour report for August next week. We expect a partial reversal of the full-time job losses recorded last month, and some decline in the part-time jobs reading, resulting in a 15K increase in total employment. A similar partial reversal of last month’s unemployment surge, coupled with ongoing increases in the labour force, could see the unemployment rate dip back down to 3.6% after last month’s 3.7% print.

Exports and imports will remain in contraction for Indonesia while the overall trade surplus should improve slightly for August. Exports could fall by 17.3%YoY while imports could fall by 12.8%YoY. Resurgent global energy prices could impact both exports and imports with the overall trade balance registering at $3.6bn. The trade balance could provide some support for the Indonesian rupiah which has been under pressure of late.