Below trend growth to continue
Some small short-term cost to growth due to shutdowns and border re-closures, but medium-term outlook remains brighter.
AU: Final Retail Trade data for November confirmed the 7.1% m/m bounce as Victoria reopened from lockdown. Anecdotes of spending in the important December period were generally favourable before the northern beaches outbreak resulted in the shutdown in an area affecting around 1% of Australia’s population, with associated border closures and last weekend’s 3-day Brisbane shutdown also impacting activity and spending late in Q4 and early in Q1.
Over the remainder of the week a number of mainly secondary indicators are published: Wednesday: Job Vacancies for the three months to November should show the robust recovery that has been occurring in labour demand as Australia reopened; Engineering Construction (September Qtr), which will be interesting to see the extent to which infrastructure spending is assisting growth; Thursday: Building approvals for November. Housing has been a surprise beneficiary of the shock, benefiting more from low interest rates, government support and diverted spending in spite of reduced migration and higher likely mostly temporary unemployment.
The trend for approvals seems likely to remain positive, especially for freestanding homes. Also out on Thursday, is a paper from the ABS discussing how prices will be measured for the December quarter CPI.The Q4 CPI is published on January 27th. The market continues to debate whether inflation will be higher in the medium term as a result of the covid outbreak.
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