Diary: Australian Growth, Rates, Jobs

The flow of economic data and decisions will perhaps be the most important week this year and for the early months of next year for the global economy, and especially Europe and Australia.

From growth figures, jobs data and of course an interest rate decision in Australia, to the start of the monthly data flow from slowing China, and the two-day summit of eurozone and EU leaders on Thursday and Friday, future directions of markets, confidence, jobs and growth will be impacted.

Let's look at the week ahead.

Europe will remain the focus for investors in the week ahead with the European Central Bank meeting on Thursday and the EU leaders' summit on Friday.

In view of the increasing deterioration in the European economic outlook and rising evidence of a credit crunch, analysts expect the ECB to announce another cut in its main interest rate which would drop it to 1% from 1.25%.

As well, new measures to ease bank access to funding are expected to be revealed.

The EU leaders' summit is widely forecast to announce measures to move towards greater fiscal integration, and a series of deals that will see the ECB, and perhaps other European central banks working with the International Monetary Fund to backstop sovereign debt in the eurozone.

Surveys of services sector activity in most European countries will be released along with October retail sales and industrial production data for the UK.

The UK producer price index for November will be released, along with non-EU trade balance data for November and October trade balance figures are also due for release.

The Bank of England is also due to meet on Thursday night, our time, about the same time as the ECB meets in Germany.

In Asia, Chinese economic data for November will dominate attention.

The figures are due at the end of the week with industrial production, retail sales and consumer and wholesale inflation.

The AMP's chief economist, Dr Shane Oliver says the figures "are likely to show a further moderation in the pace of economic growth and a slowing in inflation to 4.5% reflecting softening food and non-food price inflation".

Last Thursday saw the pair of monthly manufacturing surveys confirm the sector had slipped into contraction mode in November, which helped produce the slight loosening of monetary policy from the central bank.

The government-sponsored Purchasing Managers' Index and the rival HSBC/Markit survey hit their lowest levels since 2009.

Dr Oliver says cooling economic growth and slowing inflation will underpin further policy easing in the months ahead.

The Bank of Korea is also due to a monetary policy decision on Thursday.

The US, which now seems to be in a recovery, will only produce a few minor stats: the monthly survey on the performance of services, consumer sentiment, trade data, wholesale trade and factory orders, plus consumer credit data from the Federal Reserve.

Friday's solid jobs figures however couldn't spark a buying surge on Wall Street on Friday.

The 120,000 news jobs (plus tens of thousands of new job in earlier months) and a fall in the unemployment rate to 8.6% should have sparked a longer lasting rally.

Shares jumped, then lost ground for the rest of Friday as fears about Europe returned to dominate market worries.

In Australia, the economy will dominate this week with third quarter balance of payments, wages and salaries, government spending and profits data, and the big one, the economic growth on Wednesday and November's jobs data the next day.

Many economists expect the RBA to cut interest rates again by another 0.25% taking the cash rate down to 4.25%.

On top of that RBA head Glenn Stevens is due to make his last speech for the year on Thursday, with his deputy Ric Battellino speaking next week.

Mr Stevens will deliver a speech at the inaugural Warren Hogan Memorial Lecture in Sydney. Investors will listen carefully for any further insight on Tuesday's rate decision, and what the bank sees in 2012.

Dr Oliver says, " While recent better than expected data in Australia, notably for business investment, make it a close call, the threat from Europe and rising bank funding costs at a time when the inflation outlook is benign, strongly argue in favour of another rate cut.

"Waiting two months till the next Board meeting in February is too big a risk to take given the deteriorating situation in Europe. So the RBA's policy of "least regret" would argue strongly in favour of a precautionary rate cut in the week ahead."

But other economists think the central bank, which is very worried about the crisis in Europe, might wait until after the series of meeting in Europe at the end of the week.

They say that, if needed, the bank could easily cut rates next week if markets fall sharply in the wake of the European meetings.

The RBA cut the cash rate at its November meeting, reversing the rise at the meeting in the same month of 2010.

The growth data on Wednesday is topped to see a solid 1% or more gain in September quarter GDP (Wednesday) on the back of surging business investment, construction and solid consumer spending.

And economists say the jobs figures on Thursday should see another 10,000 gain in employment and the unemployment rate remaining around 5.2%.

Late today the ANZ releases its monthly survey of job ads in the media and on the internet.

We will also get the monthly survey of activity in the services sector.

Besides the GDP and jobs data we will also get figures on the September quarter current account, government finances and the key business indicators of wages/salaries and profits and inventories.

In the corporate area, Ten Network Holdings and Bank of Queensland hold AGMs this week, as do TPG Telecom Ltd and Charter Hall Retail Management.