Building approvals continue to surprise on the upside – rising a seasonally adjusted 3.8% to a 20 year high in October from September against a market forecast for a 1% fall after September’s big 15.4% jump.
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As expected the Reserve Bank left monetary policy unchanged with the cash rate unchanged at 0.10% and no sign of any desire to make an adjustment any time soon.
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The explanation for the emerging commodities boom was confirmed with the monthly update of China’s factory activity in November which showed the strongest growth in more than three years. But on the same day, the country’s central bank surprised with a decision to inject more liquidity into the financial system.
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Australians will learn this week that the economy is in a sounder position than many analysts have previously thought, and there will be more confirmation that for all the bad headlines from China’s trade thuggery, there’s a global commodity price boom underway that will carry on into 2021.
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The September quarter downturn in business investment shouldn’t have been a big surprise – after all the impact of the COVID-19 pandemic and lockdowns has been extremely destabilising, especially to business and consumer confidence – even though both have recovered somewhat in the past couple of months.
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Iron ore exports reached a record-high $10.9 billion in October – the second such high in four months, thanks to China’s continuing appetite for Pilbara ore. Preliminary trade data for October from the ABS on Tuesday showed the nation’s exports rose 6% to $30.5 billion, with iron ore accounting for about a third of that.
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A solid jobless report from the Australian Bureau of Statistics (ABS) for October which showed another month of progress in restoring employment. While Australia’s unemployment rate edged higher to 7% as more people re-entered the labour force in October, 178,000 people found work as Victoria re-opened and other industries hired more.
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For the second quarter in a row Australia’s wage growth has slumped to historic lows and there doesn’t seem to be anyway of reviving it.
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The Japanese economy grew at the fastest pace on record in the third quarter, rebounding strongly from its biggest postwar slump in the June quarter, a classic V-shaped economy bounce, but that’s about as good as it gets because prospects for the current December quarter and into 2021 remain clouded in doubt thanks to new COVID-19 infections around the world.
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China’s National Statistics Bureau reckons Q4 quarter economic growth will rise from the moderate levels of the third quarter – a forecast made after the final tranche of data for the quarter showed solid outcomes for investment, output, and retail sales.
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The Reserve Bank of NZ is persisting with its very expansive monetary policy settings and joining the Reserve Bank of Australia in lending money to banks to on-lend to customers.
Read MoreThe rebound in the Chinese economy continues to have little impact on producer prices as deflation continues to grip the world’s biggest manufacturing sector. But consumer prices fell to their slowest pace in more than a decade as the heat continued to go out of pork prices.
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Business confidence and conditions rose in the NAB’s monthly survey for October thanks to the slow emergence of Victoria from its months of hard lockdowns. But while the economy continues to recover, the improvement remains scatty.
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More evidence the Chinese economy has recovered well from the COVID-19 hit earlier this year. China’s trade surplus surged to $US58.44 billion in October 2020 from $US42.3 billion in the same month the previous year, and far above market expectations of $US46 billion.
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While the Reserve Bank has revised upwards its forecasts for the Australian economy, predicting it will now contract by a still substantial 4% in the year to the December,’ the outlook remains weak-looking into 2021.
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As expected the US Fed kept its very easy monetary policy intact on Thursday and again said it would do whatever it can in the coming months to sustain a US economic recovery that is again being threatened by a spreading coronavirus pandemic.
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Retail sales volumes rose a record 6.5%, according to Wednesday’s September retail sales report from the Australian Bureau of Statistics. But for the good news on consumption for the quarter and the slightly less worse experience in September, the latest payroll and wages data suggests a continuing slow down in employment and incomes.
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The Reserve bank moved to further ease monetary policy even though there are clear signs the economy is doing much better than thought in August. But jobs growth and wages remain weak, household consumption is being supported by the likes of Jobkeeper and tax cuts, wage rises are remote and being cut.
Read MoreAs expected, the prospect of weak inflation, high unemployment, and tepid economic growth for the next few years has forced the Reserve Bank into a set of historic moves at Tuesday’s Melbourne Cup day monetary policy meeting.
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October looks like it was slightly better for China’s factories, judging by the official survey of manufacturing activity released at the weekend.
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As expected the US economy grew in the third quarter at its fastest pace in postwar history as activity bounced back from coronavirus lockdowns. GDP rose 7.4% from the June quarter or an annual rate of 33.1%.
Read MoreGold bugs snore on or why today’s September quarter inflation figures won’t matter (except as a part of economic history and statistical record-keeping).
Read MoreThe Chinese economy grew at an annual 4.9% in the three months to September quarter, slower than forecast but enough to bring the economy nearly back up to the roughly 6% growth rate at the end of 2019.
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The UK’s credit rating has been downgraded by Moody’s as analysts at the agency warned of a scarring to the country’s economy from the coronavirus, on top of the damage from Brexit.
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China’s consumer price inflation continued to ease in September as the surge in pork prices again slowed – but producer price deflation rose a touch last month, despite a clear pick up in activity in manufacturing and other producing sectors.
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On the day the Reserve Bank made it clear it would not be lifting interest rates until it was convinced unemployment was sustainably falling and inflation was firmly in the 2%-3% target range, the September Labour Force report produced no clear guide on whether jobless numbers were continuing to improve.
Read MoreAnother major shift in monetary policy from the RBA which will change the timing of interest rate movements in years to come as the bank turns its back on old, established ways of reacting to events in the economy that are perceived to be inflationary, such as a big wage rise or a surge in oil prices.
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The International Monetary Fund has trimmed the size of its forecast rebound in 2022 for the global economy, while lifting its forecast for this year.
Read MoreChina’s trade performance picked up in September with exports growing a touch faster, but imports finally perking up after several months of contraction. In fact, the double-digit rise in imports took economists by surprise and it dropped the trade surplus by a third, which also surprised forecasts.
Read MoreProviding more stimulus & holding off on budget repair are the right thing to do. But it will be a long hard slog to get the deficit back down and stabilise public debt.
Read MoreThe labour market continues its slow gains from the depths of the recession and even locked down Victoria is starting to improve. On Wednesday the Australian Bureau of Statistics (ABS) revealed that payroll jobs rose by 0.3% over the two weeks to September 19 compared with a 0.5% contraction in the prior fortnight.
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If the 2020-21 budget is, as the Morrison government says it is, all about jobs, what are the chances of the ambitious targets being met? Well, a bit rubbery at the moment and you only have to look at our most recent performance in the area to get an understanding of how tough the next couple of years are going to be in repairing the broken jobs market.
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Almost all companies, bar the mining giants or the likes of CSL will be able to immediately write off the full value of eligible assets purchased. The initiative targets small, medium, and larger businesses with a turnover of up to $5 billion until June 2022.
Read MoreThe budget is clearly a pro-business, pro employment document, containing $98 billion in new spending, including $50 million in tax relief for business and low-and-middle-income earners.
Read MoreOn the eve of the tonight’s delayed 2020-21 federal budget and a key Reserve Bank monetary policy board meeting this morning, the National Australia Bank’s monthly survey of Australian business conditions and confidence has shown another improvement as the economy staggers back towards pre-COVID-levels.
Read MoreThe delayed 2020-21 budget is expected to be big on spending and economic reforms but light on issues that might be too divisive politically and deflect the thrust of fiscal policy to support demand in the economy and start the reduction in the level of unemployment.
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A defining week for Australia this week with all attention on the Federal budget which for once, will overshadow the monthly Reserve Bank monetary policy meeting earlier in the day. Could the Reserve Bank announce a new series of measures to go with the budget spending?
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Two interesting developments from the economy yesterday. The number of job vacancies in Australia bounced back strongly in the three months to August, while house prices are not as weak as many pundits had predicted.
Read MoreChina’s economy continues its recovery in the wake of the coronavirus outbreak earlier in the year with signs the pace of the rebound is strengthening.
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