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Focus on jobs, RBA as big firms report

More light will be shed how the Australia economy is performing during the coronavirus pandemic this week when the central bank governor is grilled by federal MPs and new jobs figures are released.

The company reporting season, which gets into full swing with results from the country’s biggest bank, Commonwealth Bank of Australia, will also show how businesses have fared so far in the face of COVID-19.

Australian share futures are predicting modest gains on the stock exchange on Monday after a mixed to lower close among key Wall Street stock indexes on Friday.

However, US President Donald Trump has since Friday signed executive orders that will provide additional support for Americans hit by the pandemic after drawn-out negotiations failed in Congress.

On Friday, the Australian S&P/ASX200 benchmark index fell 0.62 per cent to 6004.8 points but was still 1.3 per cent higher over the week.

Reserve Bank governor Philip Lowe will face the House of Representatives economics committee on Friday when he is likely to be pressed on the central bank’s outlook for just a gradual recovery from the nation’s first recession in nearly 30 years.

University of Sydney economist Warren Hogan believes the tighter restrictions in virus-hit Victoria has put paid to any hopes of quick national recovery in 2021.

“The economy essentially is going to remain in emergency support mode right through to the end of this year and we look to 2021 for any sort of meaningful recovery,” the former ANZ chief economist told Sky News on Sunday.

Last week, the Reserve Bank released its quarterly statement on monetary policy, which showed its baseline case was for the unemployment rate to hit 10 per cent by the end of this year and still be at seven per cent mark in two years’ time.

Economists expect Thursday’s labour force report for July to show the jobless rate rising to a fresh 22-year high of 7.8 per cent, from 7.4 per cent in June.

However, economists may well revisit their expectations when the Australian Bureau of Statistics releases its weekly payrolls data on Tuesday – a special series introduced to give a more frequent reading on the impact of the coronavirus.

On Wednesday, the June quarter wage price index – used by both the Reserve Bank and Treasury to gauge wages growth – is expected to show only a slim 0.3 per cent rise in the quarter, which would take the annual rate below two per cent and around a record low for the series.

Little wonder that mood among consumers remains dour.

The weekly ANZ-Roy Morgan consumer confidence index due on Tuesday and is already on a six-week run of declines.

The monthly Westpac-Melbourne Institute consumer sentiment survey is due on Wednesday. Westpac economists expect to see a further weakening in confidence from the tight restrictions in Melbourne and the high level of infections.

The National Australia Bank monthly business survey is also released on Tuesday.

Separate recent data has shown while industries like manufacturing and services remain in decline, the pace of contraction has eased.

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