Gloomy consumers and an expected further rise in unemployment will set the scene a week out from the government’s economic update.
The Australian Bureau of Statistics will release the June labour force figures on Thursday.
Unemployment rose to 7.1 per cent in May but Treasurer Josh Frydenberg has conceded the real rate is above 13 per cent once people working zero hours and those who have dropped out of the workforce are taken into account.
Ahead of the official figures, NAB economists said the labour market had stabilised somewhat since May although the recovery has stalled in recent weeks amid growing coronavirus outbreaks in Melbourne and now Sydney.
They forecast 175,000 more people will be in jobs in June but the unemployment rate will rise further as more people start looking for work.
“Overall we expect the unemployment rate to peak at over eight per cent this year – less than previously expected – but for it to only recover gradually over the next two years, reaching 5.8 per cent at end-2022,” the bank’s July forward view said.
The return to lockdowns in Melbourne over the past few weeks dragged consumer confidence back down, with the Westpac-Melbourne Institute survey released on Wednesday showing all the gains of June were wiped out in July.
Consumer sentiment in Melbourne dropped more than 10 per cent, while elsewhere in the country it fell by 4.5 points.
Company directors are calling on the government to extend a range of temporary relief measures including a pause on insolvency proceedings and the ability to hold virtual annual general meetings.
Australian Institute of Company Directors head Angus Armour says the effects of the pandemic will linger well beyond the initial six months most measures were scheduled.
He also wants to see a cautious and tapered approach to withdrawing the JobKeeper wage subsidies and other support measures.
Mr Frydenberg will outline the future of JobKeeper and the increased JobSeeker dole payment when he gives an economic update on July 23.