– MARCH 2020 INSIGHTS BY THE CURVE TEAM –
- The outlook for the economy has shifted dramatically in March amid further spreading of the Covid-19 Virus and outbreak of an oil price dispute between Russia and OPEC.
- This saw the RBA cut the cash rate to 0.50% in March with a promise of further easing, along with fiscal support from the federal government.
- Market instability was a broad theme throughout the month as Covid-19 and Oil disturbances caused heavy sell-offs and impacted investor confidence.
- With uncertainty about the extent of the virus outbreak, emergency fiscal and monetary policy measures may be required with the only certainly being a continued volatility for the immediate short term.
Australian Economic Highlights
Growth ticked up slightly in Q4 for 2020 printing at 0.5% for the quarter bringing the annualised rate to 2.2%. Despite an indication that growth may be at a gentle turning point recent event could see large changes when Q1 data arrives.
Inflation pressures rose slightly in Q4, with both headline and core inflation printing in line with expectations. The headline index was up 0.7% which saw the annual rate edge up to 1.8%, while the trimmed mean was up 0.4%, leaving the annual rate unchanged at 1.6%. Both were in line with the RBA’s forecasts.
Employment data for January saw a gain of 13,000 jobs over the month. The unemployment rate edged higher to 5.2% with the participation rate a steady 66.0%.
ANZ Job ads gained back some of the lost February ground in March, up 0.7%. Despite the volatility the series trend still appears to be in decline.
Business confidence fell heavily in February, losing 3 points to post at -4 for the month. Business conditions also fell at 0 points for the month. The crucial Employment index gained 1 point to post at 2 points for the month.
Consumer confidence fell in February and continued it’s recent run of soft prints. The index posted a 93.4 reading, which was a 2.3% fall over the January reading.
- Retail sales had a weak start to 2020 with a negative print for January. Of the sectors that grew in January, food retailing 0.2% was the strongest.
- After a mixed run of data, housing finance was slightly up in December. The value of new credit to owner occupier’s continue to rise but by a reduced rate, printing at 2% for the month. Growth in outstanding credit continues to slow as mortgage holders continue to repay their loans quicker thanks to interest rate cuts.
- Australia continues to post robust trade surpluses, chalking up another $5bn in January, down slightly on December. The decline was the result of reduction in exports outpacing the reduction in imports.
- Building approvals saw improvement in January up 0.5%, after the strong recent downtrend the market looked favourably upon the recent uplift.