Economics

Outside of Australia’s big week, there’s plenty from offshore to grab the attention of investors, topped by the US jobs report on Friday night.

Business investment fell by more than expected in the March quarter while building approvals for April also continued to ease. In fact, the bulk of recent data all but confirms its full steam ahead for Tuesday’s Reserve Bank rate cut.

Now, this isn’t what the Reserve Bank wanted to read about – the value of construction work in Australia falling for the third quarter in a row in the three months to March.

The media concentrated on the rise in seasonally adjusted unemployment in April, but the real story was in the trend data where the growth in the labour market is back to levels last seen in August 2018.

Further evidence yesterday that wage growth continues to be weaker than the Reserve Bank, Federal government and most forecasters think.

China’s April trade data showed an economy softer than in March – exports were weaker than expected, imports a bit better, but yesterday we got more confirmation that China’s economic activity weakened last month (before the escalation in the US trade war at the start of last week) as growth in factory production, investment and retail sales all slowed.

The National Australia Bank has seen March’s surprise jump in business conditions in its monthly survey unwind in April – with conditions, confidence and forward orders now all below average as they were in February.

While attention was on yesterday’s Reserve Bank interest rate decision, the retail trade and trade account reports provided no further clarity on the health of the wider economy.

After two months of small improvements, the latest surveys of Chinese manufacturing activity unexpectedly slowed noticeably in April, raising the question if the sector was starting another downturn at the start of the June quarter.

No worries with the solid March jobs report, now for the March quarter Consumer Price Index report next Wednesday which is not expected to worry the central bank – but some headless chickens in the markets might take fright judging by some pre-Easter commentary.

China’s economic growth was a bit better than expected in the three months to March, with a stronger than forecast jump in production reported.

China’s exports rebounded last month but imports dropped for the fourth month in a row as the trade war with the US stumbles onwards without any real sign of a deal.

The fading relevance of the ANZ Bank’s job ads series has again been illustrated with the March report released on Monday showing job vacancies are continuing to fall. They aren’t.

Australia racked up a record $4.801 billion trade surplus in February, it’s second in a row after a surplus of $4.351 billion in January.

A bad miss by economists and analysts who completely underestimated the solid 0.8% rise in retail sales in February. It was the highest monthly rise since November 2017 when a rise of 1.3% was reported.

The surge in commodity prices and our highest terms of trade since 2011, plus the still solid labour market have financed a return to surplus via higher taxes, but the reality is that the outlook for the economy remains mixed to lacklustre.

On the eve of the 2019-20 federal Budget, the National Australia Bank’s March survey of business conditions and confidence has picked up a small improvement in conditions.

Another small hint that the strength of the labour market might be fading, even though job vacancies hit another all-time high in the three months to February.

The unemployment rate in February fell to another eight-year low of 4.9% yesterday, seasonally adjusted (and an unchanged 5% on the more accurate trend basis) according to the latest Labour Force report from the Australian Bureau of Statistics.