Economics

Is there a bit more underlying strength in the economy than it seems and is that going to be sustained, or will it end up being a temporary blip and run out of puff in 2022?

The Chinese economy remains almost impossible to get a bead on after the release of the monthly surveys – this time for September – of manufacturing and service sector activity.

The Asian Development Bank has trimmed its 2021 economic growth forecast for developing Asia as the Covid pandemic continues to dominate the region’s outlook and throw up roadblocks to recovery.

The early fall meeting of the US Federal Reserve dominates global markets and policy thinking this week, along with the struggles by Chinese property giant Evergrande to survive its crushing $US304 billion debt burden.

In a major surprise, US retail sales unexpectedly jumped 0.7% last month instead of following July with another big fall as economists had forecast.

Covid Delta continues to drain confidence around the world in the outlook for economic growth and earnings – but it hasn’t killed it stone dead as the original variant did in early 2020.

While the continued lockdowns in much of Australia took their toll on the labour market in August, it was a different story across the Tasman, with the NZ economy growing strongly in the June quarter.

Covid Delta hit Chinese economic activity hard right across the spectrum in August, according to the final data drop for the month from the National Bureau of Statistics on Wednesday.

US consumer price inflation slowed a little in August as the prices of used cars slid, partially reversing the surge earlier in the year that helped boost the CPI to its highest level for more than a decade.

RBA Governor Philip Lowe has repeated his belief (shared by the NAB in its latest monthly business survey) that the Australian economy will see some gloom before boom.

With the spectre of Covid Delta increasingly weighing on global economic and market activity, there’s a busy week of economic releases ahead, with UK and US inflation and local jobs data leading the way.

While generally satisfied, APRA has gently warned borrowers and lenders that the recent upsurge in Covid Delta infections and lockdowns could impact the still-improving health of the finance sector.

A 13-year high for producer prices across China’s huge manufacturing sector in August has confirmed the failure of the government’s concerted effort to suppress the cost of key commodities and services.

Unemployment looks certain to surge back over 5% after the latest Australian Bureau of Statistics payroll and wages data showed another drop in the first two weeks of August.

China’s foreign trade unexpectedly picked up in August, as solid global demand offset some of the pressure from a resurgence of Covid Delta cases and supply bottlenecks across the country.

A quiet week ahead starting with the US Labor Day holiday, with the Reserve Bank’s monetary policy decision tomorrow dominating local attention as well as August employment data on Thursday.

Shortages of workers and computer chips are having a dramatic impact on the US economy – keeping inflation higher while shutting factories and forcing retailers to boost wages.

The Australian Bureau of Statistics revealed that Australia’s trade surplus hit a record in July as exports of iron ore, coal and liquefied natural gas all rose strongly. But is that the peak for the near future?

Further evidence that the Chinese economy’s sluggishness is deepening with another monthly survey showing the first contraction since early 2020.

The Australian economy grew 0.7% in the three months to June – but that was very old news made very much out of date by the continuing lockdowns in the two biggest states in the country.

Another sign that the Chinese economy is struggling as the latest outbreak of Covid hits confidence and drags the economy to its weakest state since the slump in the March quarter of 2020.

Economists now think it less likely the Australian economy dipped into negative growth in the three months to June after the release of current account and government finance data on Tuesday.

It’s an end of month, start of month week with some important economic data such as the June quarter GDP figures for Australia and August unemployment for the US, among others.

The Australian national accounts and GDP figures are out next Wednesday and the data will be essentially redundant thanks to the worsening Covid delta outbreaks and lockdowns.

More of the same this week for markets here and offshore – earnings, Covid, China’s continuing crackdown on its best-performing parts of the economy, plus the $64k question: Will the Fed taper and, if so, when?

Data from the ABS that showed the nation’s jobless rate fell to a 13-year low is not a real reflection of the labour market as it was before the full impact of the current series of lockdowns hit.

Conclusive evidence on Monday that China’s economy is slowing more rapidly at the same time as the government orders to its steel industry to cut production to reduce carbon emissions.

New Zealand holds centre stage this week for what many analysts think will be the first significant monetary policy move from any central bank with credibility – an interest rate rise.