Weekly Market Recap

Australia

20/07/2020

Week in review

Australia business confidence rises to 1.0
Australia consumer confidence falls to 87.9
Chinese real GDP 3.2% y/y in 2Q

Week ahead

Global PMIs for manufacturing and services
Australia preliminary retail sales
Treasurer update on economic and fiscal outlook

Thought of the week

It may not seem like it but Australia is going back to work. The June employment report showed a stronger than expected 210,000 jobs added last month. The growth in employment was not strong enough to offset the rise in the participation rate however as more workers returned to the labour force, resulting in a rising unemployment rate. The job gains were all in part time employment as companies tentatively take on workers. More workers worked more hours as well. Hours worked increased 4.7% m/m even if still down in y/y terms (see chart). This helped to improve broader measures of labour market health such as underemployment. It will be these measures that are more indicative of how the labour market is faring in the face of COVID-19. The unemployment rate will continue to rise in the coming months and there is still ample capacity to argue for further fiscal support.

More jobs, more hours
Employment and hours worked, change year-over-year

Source: ABS, J.P. Morgan Asset Management, all returns in local currency unless otherwise stated.
Equity price levels and returns: Levels are prices and returns represent total returns for stated period.
Bond yields and returns: Yields are yield to maturity for government bonds and yield to worst for corporate bonds. All returns represent total returns. AusBond Comp is the AusBond Composite 0+ Yr, AusBond IG is the AusBond Credit 0+ Yr both provided by Bloomberg.
Currencies: All cross rates are against the Australian dollar. An appreciation of the foreign currency against the Australian dollar would be positive and a depreciation of the foreign currency against the Australian dollar would be negative.

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