Economics

China’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.

Another fall in the trade surplus in August as export and imports fell – but the reasons for the falls were very different. Exports fell because of a slide in the value of gold shipments (by Australian miners) while imports dipped because of lower shipments of capital goods.

The New Zealand economy sunk by a record amount in the three months to June as the country’s tough lockdowns hit demand and suppressed activity.

No problems with consumer price inflation in China last month but producer prices remain in a state of deflation. China’s National Bureau of Statistics said yesterday that producer prices (PPI) fell for the 7th month in a row, though the rate of fall eased from July.

New vehicle sales in Australia slumped nearly 30% in August, thanks largely to the stage four lockdowns in Melbourne and stage 3 restrictions across the rest of the state.

The impact of the COVID-19 pandemic and widespread lockdowns in April and May saw a 7% quarter on quarter fall in Australian GDP in the three months to June, ending the country’s 28 years of unbroken growth (with a couple of narrow misses, such as in 2008-09 in the GFC).

Mixed economic news from Asia yesterday – more confirmation that the Chinese economy is growing, but as well, more confirmation from South Korea that it’s export dependant economy remains stalled as shipments fell sharply in November.

Building approvals surged in July something of a surprise at the start of the new financial year, jumping 12% with solid rises from private and non-private dwellings.

A big week for the Australian economy with confirmation expected on Wednesday’s national accounts of the steepest fall in GDP since the Great Depression and another no move decision from the Reserve Bank on interest rates tomorrow.

Global ratings agency Moody’s has joined the Commonwealth Bank in cutting its growth forecasts for the Australian economy this year. But the ratings group instead sees a strong pace of expansion in 2021.

The impact of the continuing Victorian lockdowns showed up in the jobs market in a more decisive way in early August while early trade data for July shows a big jump in imports, a worrying dip in exports but yet another trade surplus – the 32nd in a row.

Mixed news about the strength of China’s economic recovery on Friday which do not support the idea that the economy is recovering strongly.

Better news from July’s Labour Force report from the Australian Bureau of Statistics yesterday. But for the first time ever more than one million people out of work, available to work and actively looking for work.

The Reserve Bank of New Zealand left its key interest rate unchanged at 0.25% yesterday, but markedly increased its quantitative easing target to $NZ100 billion and hinted at the possible introduction of negative interest rates.

More confirmation of the toll Victoria’s lockdowns are having on the economy with the July jobs report tomorrow looking to take a hit from the new tighter approach to community movement across Melbourne in particular.

While Australian recorded another $8 billion-plus trade surplus for the month of June, there was a never seen before 60% plus surge in the size of the surplus for the financial year to June 30.

The US economy saw its largest fall ever in economic activity in the three months to June, falling a record 9.5% from the March quarter, for an annual slump of 32.9% (also a record), according to the first estimate of June quarter’s GDP issued on Thursday.

Dwelling investment is well on the way to the forecast fall of 16% in the next year after another fall in approvals in June.