The small patterns showing signs of life in the Australian economy
Head of Investment Strategy and Economics and Chief Economist, AMP Capital Sydney, Australia
On top of the headline jobs, wages and retail numbers, we have been monitoring data which speaks to the daily habits of Australians. So far, these numbers look promising.
The economic data has been grim the world over in the last few months, and as the statistical bureaus release their numbers on March and April in full, we will get a better picture of the scale of economic damage the COVID-19 forced shutdowns have caused.
Important as this data is, it’s released monthly, and doesn’t give early indications of how economic activity is tracking or changing. Because of that, we set up a series of activity trackers, to keep an eye on how things are moving in Australia and the United States on a more real-time basis. We chose Australia because, well, we live here! We chose the United States because it remains the world’s largest economy, and leads global share markets.
The kind of activity we have tracked includes consumer confidence, restaurant bookings, credit card data, box office takings, foot traffic through cities and shopping centres.
What we saw was that, in about mid-March, economic activity fell off a cliff for both Australia and the United States. Since then, we can see that activity in the United States remains low, but has steadied, and therefore isn’t taking steep dives as it was when lockdowns first hit.
Australia is the good news story in this data. We can see that activity is trending upwards, which is consistent with the infection in Australia being controlled, economies gradually re-opening, and people starting to go about their regular lives (and spending habits) again.
Separately it’s worth noting that share markets have produced some of their biggest rallies since their COVID-19 lows. As of May 28, the Aussie share market was about 29.5% higher than its low point on March 23, which was preceded by a ~37% decline. The US share market also hit a new recovery high, up ~35.7% from its low on March 23.
We all know we’ve got a long way to go, and a steep local and global recession to withstand. But all these movements – in activity, in share markets – remind us that societies and investment markets do find their feet. It can be hard to see that as bad news abounds, but as I always say, turn down the noise, because we are moving towards recovery.
For more on this, you can listen to AMP Capital’s podcast, After the Bell, with Shane Oliver.
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Important notes
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