Weekly Market Recap
Business is back
Week in review
- Australia business confidence rose to highest in decade
- Governor Lowe reinforces low for longer rates view
- U.S. CPI inflation firmed to 1.7% y/y
- U.S. retail sales
- Australia labour market report and unemployment rate
- RBA policy meeting minutes
Thought of the week
Business is back, or at least according to the results of the latest Australian business confidence survey. The business confidence and conditions indices rebounded in February. Business confidence hasn’t been this high since 2010. This index is highly correlated with domestic demand and points towards a strong start to economic activity in 2021. The sub-index on employment improved but the end of the JobKeeper scheme in March may slow the momentum in the labour market, at least temporarily. However, strong sentiment will be crucial as the economy further re-opens to push the unemployment rate down and drive inflation higher. There is still a strong need for greater levels of business investment, and rising capex intensions will be another key indicator to monitor. Certainly, the RBA are looking at greater business strength in the coming quarters in their assessment of the economy and the scope to increase interest rates.
Business confidence highest in more than a decade
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