Daily Commentary BY THE CURVE TEAM –

Key Recovery Barometer Due This Week

24th of May, 2021

With the recovery underway, a key barometer of its strength will be due out this week.

The upswing in economic activity in Australia has been undeniable. The recent raft of data has confirmed that economic activity has recovered well and the outlook is looking far more rosy that it was in the middle of last year.

Much of the recovery can be attributed to monetary and fiscal support along with pent up demand that has been unleashed as economies reopen. Despite the recent strength, there is still some questions over how sustainable the recent level of activity will be.

This weeks Capital Expenditure data will give us a good barometer to the underlying strength in the recovery. If we are truly in a sustainable strong up-swing then we should see a solid uplift in capital expenditure. If firms aren’t confident that the current robust conditions are sustainable then they are likely to make hay while the sun shines with their current capacity and continue to shelve expansion plans.

One other key highlight will be the high frequency labour force data after last week’s monthly data showed employment growth stalling after the conclusion of the Jobkeeper program.

David Flanagan

Head of Money Markets