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Australia: Coronavirus crisis impact on jobs, wages and confidence in focus

  • The impact of the COVID-19 economic shutdown will be laid bare this week. Federal Treasurer Josh Frydenberg provides an economic update on Tuesday and the nation will be glued to their screens when the April jobs data is issued on Thursday. Consumer and business surveys along with wages and tourism data headline a busy week.
  • The week starts on Tuesday, with a bevy of confidence surveys. The weekly ANZ-Roy Morgan consumer sentiment index kicks off proceedings, followed by NAB’s update on business confidence and conditions. Confidence and conditions hit record lows in March, driven lower by a slump in forward orders and profitability as virus restrictions shut down businesses.
  • Also on Tuesday, overseas arrivals and departures data for March is issued by the Bureau of Statistics (ABS). Widespread international travel bans were put in place by Border Control during the month to contain the virus outbreak.
  • Federal Treasurer Josh Frydenberg will provide an unprecedented update on the impact of the coronavirus on the nation’s economy and finances on Tuesday. With the Federal Budget delayed until October 6, the Treasurer’s statement will be the first official update since December’s Mid-Year Economic & Fiscal Outlook.
  • Also on Tuesday, the Reserve Bank of Australia’s estimates of March credit and debit card lending are due.
  • On Wednesday, the ABS releases the Wage Price Index for the March quarter. Commonwealth Bank (CBA) Group economists expect annual wage growth to ease by 0.1 percentage points to 2.1 per cent.
  • Also on Wednesday, Westpac and the Melbourne Institute issue the May consumer confidence index. The index hit 29-year lows in April. And the ABS issues provisional overseas travel statistics for April.
  • On Thursday the all-important April labour force survey is released by the ABS. CBA Group economists forecast around 550,000 jobs to have been lost with the unemployment rate hitting a 22½-year high of 8 per cent due to the economic lockdown. Recent surveys by the ABS paint a bleak picture of the labour market, despite the $130 billion JobKeeper wage subsidy tying workers to their employers as businesses hibernate during the crisis.

Overseas: US retail spending and Chinese monthly activity data in focus

  • With the US corporate reporting season in the rear-view mirror, attention will return to economic data releases. Consumer and producer prices data will be scrutinised by investors for signs of deflation. The ongoing impact of COVID-19 shutdowns on US retail spending will be a highlight along with the April monthly activity data in China.
  • The week kicks off on Monday when US consumer inflation expectations data is issued for April.
  • On Tuesday in China, inflation data is scheduled for Food, airline ticket and oil prices are expected to moderate even further as the global virus crisis depresses demand. Factory gate prices are already in deflation.
  • On Tuesday in the US, the weekly Johnson Redbook chain store sales figures, the National Federation of Independent Business (NFIB) Small Business Optimism Index, inflation and the April Budget Statement are all scheduled. Philadelphia Fed President Patrick Harker discusses the impact of COVID-19 on the US economy.
  • Most interest will be on consumer prices (CPI). The core CPI – which excludes volatile food and energy costs – posted the first monthly drop in a decade in March. Falling gasoline, airfares, hotel and apparel costs could push consumer prices even lower in April with headline and core inflation tipped to fall by between 0.2-0.7 per cent by most economists.
  • On Wednesday, the Reserve Bank of New Zealand hands down its interest rate decision. No change in the official cash rate is expected. Massive stimulus is currently being delivered to the New Zealand economy through the Ardern Government’s economic rescue packages and the Reserve Bank’s Quantitative Easing (QE) program.
  • On Wednesday in the US, the regular weekly data on US mortgage applications from the Mortgage Bankers Association (MBA) and April producer prices data are both due.
  • On Thursday in the US, the weekly data on new claims for unemployment insurance (jobless claims) is issued with export and import prices data for April.
  • On Friday in China, monthly activity data is scheduled for April. The Chinese economy faces both headwinds (weak external demand for exports and second-round effects of COVID-19) and tailwinds (additional policy easing and the continued easing of COVID-19 related restrictions). Measures of industrial production, retail spending and investment are all expected to improve as the economy gradually re-opens.
  • On Friday in the US, a smorgasbord of data is released to complete the week. The New York Empire State Manufacturing index, business inventories, industrial production, JOLTS Job Openings and the preliminary May reading on consumer sentiment by the University of Michigan are all scheduled. Above all, investors will be focused on the April retail sales data. A huge 10 per cent decline in consumer spending is forecast by economists due to the government’s social distancing measures to contain the pandemic.

Published by Ryan Felsman, Senior Economist, CommSec