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RBA maps way forward from latest economic data

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Reserve Bank governor Philip Lowe will share his views on what last week’s national accounts figures mean for Australia’s economic recovery from the coronavirus pandemic when he returns to the lectern today.

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The national accounts showed the economy had expanded by 3.3 per cent in the September quarter, rebounding from the nation’s record seven per cent contraction in the June quarter.

It marked the end of Australia’s first technical recession since the early 1990s.

Dr Lowe’s initial response to the figures, while facing a parliamentary committee last Wednesday, was “good”.

The Reserve Bank is not expecting the growth rate to return to its pre-COVID levels until the end of 2021.

“If we keep getting numbers like that it will be a bit quicker,” Dr Lowe said.

The governor will address the Australian Payments Network on Innovation and Regulation in the Australian Payments System this morning.

Meanwhile, the Australian Industry Group will release its performance of services index for November.

The index in October jumped to a level that indicated the sector was expanding for the first time since November 2019 following the COVID-related slump in the June and September quarters.

ANZ will also release its monthly job advertisement report for November, a pointer to future employment.

Job ads rose by a further 9.4 per cent in October, but were still down 13.5 per cent from their February level and prior to the onslaught of the coronavirus pandemic.

Meanwhile, Wall Street’s main indexes rose to all-time highs on Friday as data showing the slowest US jobs growth in six months raised investors’ expectations for a new fiscal relief bill to help revive the coronavirus-hit economy.

So-called “cyclical” stocks seen as particularly sensitive to the economy, such as energy, materials and industrials, shined as most S&P 500 sectors rose.

The Labor Department’s closely watched report showed non-farm payrolls increased by 245,000 jobs in November, below economists’ expectations of 469,000 jobs and the smallest gain since the labour recovery started in May.

President-elect Joe Biden said Friday’s “grim” jobs report shows the economic recovery is stalling and warned the “dark winter” ahead would exacerbate the pain unless the US Congress passes a coronavirus relief bill immediately.

“The bad news of the weakening jobs picture is potentially good news for investors because it means that the stimulus bill is much more likely to take place in a fairly short time frame,” said Ryan Detrick, senior market strategist at LPL Financial in North Carolina.

 – AAP

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