Australia Economic Outlook
August 25, 2020Economic activity is likely downbeat so far in Q3: The unemployment rate ticked up to an over two-decade high in July, while business confidence nosedived in the same month and consumer confidence deteriorated in July–August. This comes amid the renewed lockdowns of the city of Melbourne and the broader region of Victoria, which will be hampering demand in these areas. More positively, the manufacturing PMI rose to a four-month high in July. This follows a second quarter in which the economy already received a blow from Covid-19. The unemployment rate jumped in the quarter while retail sales softened, indicating weaker household spending. Meanwhile, markedly deteriorating manufacturing operating conditions and deeply pessimistic business confidence will have weighed on fixed investment. On the external front, merchandise exports crashed amid foreign lockdowns weighing on demand.
Australia Economic GrowthGDP is forecast to contract notably this year. The pandemic and associated containment measures will deal a severe blow to domestic and foreign demand, with household spending, business investment and exports all affected. While a prolonged second wave of infections poses a downside risk, fiscal and monetary stimulus should cushion the fall somewhat. FocusEconomics panelists project GDP to contract 3.8% in 2020, which is down 0.3 percentage points from last month’s forecast. In 2021, the economy is seen expanding 3.1%.
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Australia Economic News
September 17, 2020
Seasonally-adjusted employment surged by 111,000 in August, following a revised 119,200 jobs gain in July (previously reported: +114,700).
September 15, 2020
Nominal retail sales in July rose 3.2% over the previous month in seasonally-adjusted terms, following June’s somewhat softer 2.7% increase. July’s rise was broad-based.
September 12, 2020
The Westpac-Melbourne Institute consumer sentiment index jumped from 79.5 in August to 93.8 in September, marking the highest reading since February.
September 12, 2020
The business confidence index produced by National Australia Bank (NAB) fell from minus 14 points in July to minus 8 points in August.
September 2, 2020
GDP fell 7.0% in seasonally-adjusted quarter-on-quarter terms in Q2, following Q1’s much softer 0.3% decrease, as Covid-19 and associated lockdown measures wreaked havoc on the economy.