Diary: Federal Election Dominates Proceedings

By Glenn Dyer | More Articles by Glenn Dyer

It’s the final week of the lead-up to this Saturday’s Australian federal election and pre-poll and postal voting has been heavy after just a week or so of activity, with around two million early votes already cast as of the weekend just past.

The last-minute politics will overshadow – but shouldn’t – three bits of vital data or commentary this week – the minutes from the RBA’s May board meeting tomorrow, the March quarter’s Wage Price Index on Wednesday and the April jobs data on Thursday.

The RBA minutes will help us understand the reasoning behind the central bank’s 0.25% lift in the cash rate to 0.35%.

Wednesday’s March quarter wages data is expected to show an acceleration to 0.8% quarter on quarter rise according to the AMP’s chief economist, Shane Oliver who says a rise of this size will be the fastest increase since 2014 and will take annual wages growth to 2.5%.

That will still be well short of the 5.1% annual inflation rate and the 2.1% quarter on quarter rise and add to the pressure on the Morrison government in the final days of the election campaign.

April jobs data on Thursday is forecast to show a 20,000 gain in employment with unemployment dipping slightly to 3.9%, the lowest since 1974.That will help the Morrison government defend its economic record.

There are a few Australian profits – Nufarm, James Hardie (4th quarter and final), United Malt, Webjet, Aristocrat and Australian Agriculture.

For Australia and other economies more important data from China later today that will strongly suggest economic activity is contracting thanks to President Xi’s Covid elimination policy.

The Chinese economic activity data for April will show industrial production slowing to growth for the past year to 0.50% and falling from March, retail sales contracting by 6.2%, investment growth again weak (especially in property) and unemployment edging up again to a new year high, according to market forecasts.

Combined, the data will provide a clearer read on how COVID-19 shutdowns have disrupted Chinese production and consumer spending – in effect forcing the economy onto the edge of a possible recession.

In the US expect to see solid gains in April retail sales and industrial production but with home builder conditions again easing (all due tomorrow), housing starts (out Wednesday) also likely to fall and manufacturing conditions indexes for the New York and Philadelphia regions likely to pull back slightly in May (due Monday and Thursday), according to the AMP’s Shane Oliver.

The retail sales data will go well with the quarterly reports from major US retail chains this week – Walmart and Target, as well as home improvement groups, Home Depot and Lowes Cos. Kohls department store chain also reports, as does discount brands groups, TJX Companies and Ross Stores. Other major chains reporting include Foot Locker, Shoe Carnival, VF Corp and Decker’s outdoor.

Today sees the release of the Japanese March quarter GDP data. Shane Oliver says it is expected to have contracted by -0.5% quarter on quarter (after a 1.1% rise in the December quarter) “reflecting the impact of Covid restrictions”.

Japanese inflation data on Friday for April is expected to jump reflecting the dropping out of the reduction in mobile phone charges a year ago with core inflation rising to 0.3% yoy from -0.7%.

Europe gets a final readout of April inflation data. Britain sees the release of retail sales and unemployment data.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

View more articles by Glenn Dyer →