Economics

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.

Once again its Japan’s exports, not China’s that tell a lot about the real state of the global economic demand and its weak growth prospects.

Australia’s June unemployment rate jumped to a level last seen in 1998s even though the number of people employed grew by more than expected as more people returned to jobs they had previously been stood down from.

Shane Oliver looks at the key issues around fiscal support and the budget in Australia ahead of the Treasurer’s Economic Statement which is expected to provide new economic forecasts, an estimate of the budget cost of support measures so far and outline plans for future support measures.

Australian business conditions and confidence improved in June but are still at historically weak levels, according to the latest business survey from the NAB.

Ahead of key trade and GDP data this week, we saw a small rise in car sales in June for the second month in a row, moderate consumer inflation, strong bank lending, and producer price deflation, although at a slightly easier level.

Jobs figures will be the major focus in Australian markets this week along with the updates from the Australian Bureau of Statistics on household impacts and payroll jobs data.

China’s economy seems to be getting healthier with the official June surveys of manufacturing and services (known as PMIs) both showing rises to new multi-month highs.

Australians became slightly poorer in the March quarter, thanks to the stockmarket slump triggered by the COVID-19 pandemic and lockdowns, and that trend looks like continuing for a while as the impact of job losses, using up savings and superannuation balances and selling assets continues.

It should be no surprise that given the COVID-19 pandemic, lockdowns, and massive job losses, that we learned on Thursday that the number of job vacancies collapsed in the three months to May.

China’s economy is still battling to regain growth momentum. Surveys of manufacturing and service sector activity for May, released last week were weaker than expected, now exports for last month have slid and imports slumped.

Annual growth in the year to March was the slowest through-the-year growth since September 2009 when Australia was in the GFC. But there’s worse to come with some forecasts pointing to a fall of 8% or more in the June quarter.