Economics

Australian unemployment is heading for a better outcome than previously thought after the surprise rise of more than 110,000 new jobs in August. The rise came even as Victoria went into coronavirus lockdown – Stage four in Melbourne and Stage 3 in regional areas.

So-called ‘Developing Asia’ – the 45 economies in Asia-Pacific outside of Japan – is now expected to contract 0.7% this year, the Asian Development Bank forecast yesterday instead of enjoying a sluggish but positive year of growth.

After a surprise 12.0% rise in building approvals in July, lending data yesterday from the Australian Bureau of Statistics produced another shock – the sharpest rise in new home loans on record.

While the NAB survey for August showed business conditions were down last month across the country, payroll jobs and wages again recovered, according to the Australian Bureau of Statistics (ABS). Meanwhile, Victoria’s lockdowns and their impact has seen Fitch Ratings trim its Australian growth forecasts for 2020 (as did Moody’s in late August).

Business conditions slipped in August – unwinding most of the previous month’s gains – but confidence rose, with Victoria seeing a sharp improvement.

China’s exports in August rose 9.5% from a year earlier, following a 7.2% increase in July. But on the other side, August saw another fall in imports – down 2.1% from a year ago which was a bigger fall than the 1.4% dip in July.

In recently presenting a market outlook webinar we received lots of questions about the outlook but were unable to answer them all given time limitations. Here we try and cover the main questions investors have in a simple Q&A format.

The Chinese economy – especially the larger services sector – continues to recover slowly from the COVID-19 slump earlier in the year, but in Japan its more of a struggle, despite more positive signs.

A busy start of month week here, in the US and globally to go with the continuing COVID-19 infections and the start of the US November 3 presidential and congressional elections as well as the start of month surveys on manufacturing activity across the globe including China, Australia, Europe, and the US.

Australian jobs are under more pressure and the impact of the lockdowns across Victoria has seen the CBA’s chief economist Stephen Halmarick warn that the economy will take much longer to regain its pre-COVID-19 pandemic levels at the start of 2020.

Victoria’s tightening lockdown could knock at least $12bn off the Victorian and national economy and delay the return to positive Australian GDP growth to the December quarter. The further hit to the economy and likely additional upwards pressure on unemployment is increasing pressure for more policy stimulus.

Markets ended in the green on Wall Street after the US Federal Reserve did what was expected of it and kept its expansive monetary policy stance unchanged and promised to do what it had to keep the economy afloat.

Consumer prices fell by 1.9% in the June quarter, a bit better than the market forecast for a 2.5% slump in the June quarter but still the single largest three-month fall in 72 years, thanks to the impact of the COVID-19 pandemic and lockdowns.

South Korea has joined the likes of the US, Japan, Thailand, Singapore, Germany, and other economies officially in recession as a result of the impact of COVID-19.

Yesterday’s economic update from the Federal Government had long been tipped by leaks and briefings to media and business, but the headline figures about huge budget deficits actually hide the real story.

The budget and associated debt blowout is unlikely to cause a major problem as public debt is relatively low, borrowing costs are very low, the Government is borrowing in $A’s & it’s not dependent on foreign capital. Letting the deficit rise is the right thing to do writes Dr. Shane Oliver.