The run-up to the release of the March quarter GDP figures next week starts this week with important data on the value of construction activity and private sector investment.
Wednesday’s release of Australian Bureau of Statistics data on the value of construction work done on Wednesday is expected to flat to slightly lower.
Thursday’s ABS figures though is expected to show a 5% slide in current CapEx spending, and a downturn in spending planned for 2020-21.
The AMP’s chief economist, Dr Shane Oliver says the investment data “may not fully capture the impact of the shutdown” on corporate spending plans.
He also says the preliminary April goods trade data from the ABS on Thursday “will likely show continuing strength in exports driven by iron ore and soft imports.”
Credit data for April on Friday should show likely show continuing strength in lending to business (capturing some of the early rise in loans to COVID-19 hit companies) but weak credit growth for housing.
There’s also early reports on the impact of COVID-19 on households and on business for May on Friday as well as the May survey of manufacturing activity, also on Friday.
But the data will be overshadowed by the “significant error” in the Morrison government’s JobKeeper application form that (with administrative incompetence) inflated the number of people using the scheme and its total cost by $60 billion.
In a statement released on its website on Friday afternoon and later emailed, Treasury revealed the $130 billion program was likely to cost $70 billion and cover 3.5 million workers, rather than more than 6 million.
It said a tax office review of the enrolment forms used by businesses to apply for the scheme had found about 1,000 firms had made “significant errors” when estimating the number of staff who would use the program.
The mistake was discovered as the Tax Office and Treasury found a major difference between their initial forecast and the amount of cash flowing to businesses to support their staff.
That saw investigations into the problem start early last week. Media reports said that as late as Thursday, Treasury secretary Dr Steven Kennedy told a Senate inquiry that more than 6 million people were being supported by JobKeeper.
Prime Minister Scott Morrison announced on March 30 the scheme was initially forecast to support 6 million workers and cost $130 billion.
Meanwhile department store chain Myer will reopen the rest of its stores across Australia this week. The bulk of the retailer’s 60 stores will all be open on Wednesday after being shut for almost two months. All Victorian Myer stores, including at Chadstone and Bourke St will be among those to reopen. Stores including in NSW’s Blacktown, Eastgardens and Charlestown opened on Friday.
Several Myer stores in NSW, Queensland, WA and South Australia have already opened in line with governments’ COVID-19 measures. In Perth, the Karrinyup store will open next Saturday as refurbishment works are being wrapped up.
Earnings results from Select Harvests and ALS.
Offshore and COVID-19 again hold the key, along with the continuing US-China tensions.
A number of GDP updates, including for India, Singapore, Taiwan, Germany, France and Italy, and the US are widely expected to confirm economies were already hit hard by the COVID-19 pandemic in the first quarter.
In the US the second update on March quarter GDP will be released and economists don’t expect any change from the first estimate of a fall of an annual 4.8% in the three months.
More up to date reports for the current quarter will come from data on new and pending house sales will show big falls of 10% to 20% on Tuesday and Thursday.
Data on durable goods orders (Thursday) and personal spending (Friday) will also show similar-sized falls.
House price data for April on Tuesday will also be watched for how deep price falls were in the month.
The inflation data in the personal spending report could show core private consumption deflator inflation fell to a slow annual growth of 1.1%.
Consumer confidence data for May is expected to show a slight improvement consistent with the slow reopening.
More jobless claims – for this week, will be released Thursday night – a figure of around 2 million is tipped compared with the 2.48 million last week.
In the Eurozone economic sentiment for May on Thursday is expected to improve slightly but core inflation for May (Friday) is likely to have fallen to around 0.8%yoy, according to estimates from the AMP’s chief economist, Dr. Shane Oliver.
China’s official manufacturing activity survey results will be released on Friday.
In Japan data for April due Friday is expected to show a fall in industrial production and rise in unemployment.
