The board of the Reserve Bank meets tomorrow. After the surprisingly low December CPI result, which removed immediate pressure for a rate hike, the most exciting item of the agenda will be lunch.

The RBA’s recent quarterly statement on monetary policy said of inflation “The central forecast is for year-ended underlying inflation – currently around 3% – to fall to 2¾ per cent in 2007 and 2008.” And “Overall, risks to the forecasts appear to be broadly balanced”.

Tomorrow Henry will respectfully differ with this assessment. We shall also introduce a new measure of how the RBA sees the state of the economy, building on the misery index (for ordinary folk) we introduced last month.

Wednesday brings ABS data on GDP. David Uren points out for readers of the Oz that local economists predict an outcome as low as 0.1% and as high as 0.9%. Employment data says a number near the top of that range makes more sense, but employment and GDP have been sending divergent signals for a couple of years now, so no-one should get too excited whatever the outcome.

Last week’s economic data in the US was all about the consumer – new and existing home sales, consumer spending and consumer confidence. This week the data is all about the worker.

Firstly there is the release of fourth quarter US productivity figures due on Monday. While this is a volatile statistic, it does have the capacity to move the market, especially during a period where the central bank is on the lookout for inflation, largely because if productivity falls, it raises the potential for unit labour costs to be rising faster than hourly earnings  which has inflationary consequences.

More importantly, however, is the release in the US of “The Employment Report”. This report is actually two separate reports built on two different surveys, the household survey and the establishment survey.

The household survey produces the unemployment rate, while the establishment survey produces non-farm payrolls, average workweek, and average hourly earnings figures. The Employment Report is considered to be the broadest measure of economic activity in the US.

The most important figure of the lot is undoubtedly non-farm payrolls, especially the manufacturing sector figure, as it is an accurate indicator of the business cycle. Last month’s non-farm payrolls came in well below forecast (111,000 cf. 150,000), but a whole lot of revisions to earlier results meant that the measure was considered about neutral. There is little reason this month’s result will be very different. Non-farm payrolls is published on Friday evening Australian time. Check out “Economic news: Henry’s views” on Saturday morning for an update.

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