It’s been labelled Australia’s worst economic downturn since the Great Depression and data in the next couple of weeks will show how bad it really is.
The national accounts for the June quarter will be released on September 2, which will confirm the nation has suffered its first recession in nearly 30 years after the small negative result three months earlier.
The Reserve Bank expects the economy contracted by about seven per cent in the June quarter.
Figures on Wednesday will show how the COVID-19 pandemic affected the construction sector. Economists expect work completed in the June quarter declined by 5.8 per cent after a one per cent fall in the previous quarter.
On Thursday, business investment data will be released. Economists expect June quarter private business capital expenditure tumbled 7.9 per cent, extending the 1.6 per cent fall in the first three months of the year.
“These data are likely to show a sharp fall in activity amid the peak impact of the pandemic,” National Australia Bank global head of research Ivan Colhoun said.
In both cases, NAB expects larger falls of seven per cent and 12 per cent respectively, which will subtract 1.5 percentage points from economic growth in the June quarter for an overall 6.1 per cent contraction.
These figures add to the dire 3.4 per cent decline in June quarter retail spending as consumers went from being hoarders fearing a pandemic to being forced into lockdown across the country.
More up-to-date reports will be released on Tuesday, with the weekly ANZ-Roy Morgan consumer confidence index and the Australian Bureau of Statistics payrolls report, which will show how jobs fared in early August.
The company reporting season has been equally gloomy, with a flurry of coronavirus-hit earnings results.
Companies reporting this week include supermarket giant Woolworths on Thursday.
However, it hasn’t been all doom and gloom, according
to Michael Price, portfolio manager of the Ausbil Active Dividend Income Fund.
“While there was a fear that all companies might cut their payout ratios, that hasn’t happened across the board, with many companies paying higher dividends than expected,” he said.
“Overall dividends have been much better than the worst-case fears of dividend investors.”
The Australian share market looks set for a soft opening on Monday despite modest gains on Wall Street on Friday, notably the S&P 500 index reaching another record high.
This benchmark index rose 0.3 per cent to 3,397.16, to be up 0.7 per cent for the week.
The Dow Jones Industrial Average climbed 0.7 per cent to 27,930.33, and the Nasdaq composite added 0.4 per cent to 11,311.80.
In contrast, Australian ASX/SPI 200 futures were 11 points down at 6057.0.
The S&P/ASX200 benchmark index closed down by 0.1 per cent at 6111.2 on Friday, finishing the week down 0.25 per cent.