Weekly Market Recap
Week in review
- Australia 2Q real GDP 0.7%q/q
- China PMI for manufacturing falls to 49.2
- Australian building approvals fall 8.6% m/m
- RBA official cash rate
- ECB policy committee meeting
- China CPI inflation
Thought of the week
The stronger than expected economic growth in the second quarter of this year means that Australia should avoid an infamous double dip recession. However, markets are much more interested in the pace and timing of the recovery in the coming quarters, rather than what has already occurred. This places emphasis on the size of the economic contraction in the third quarter and how far mobility restrictions may encroach into the final quarter of the year. Starting from a slightly better position helps to strengthen views of a swifter recovery when it does come. The decline in the savings rate last quarter helped boost consumption and aided overall growth, and the savings rate is likely to be boosted again in 3Q given the ability to spend has been curbed, and government transfers to support households has increased again. An elevated savings rate could be a powerful tailwind to growth when Australians are finally let back out.
Australia’s savings rate looking for a top up
% of disposable income
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