There are two key events before economists and investors start winding down for year-end – jobs figures and the mid-year budget review.
Thursday’s labour force report for November is not expected to be the blockbuster seen in the previous month, when there was a surprising 178,800 surge in the number of people employed, aided by a return to work in Victoria as its lockdown ended.
For November, economists’ forecasts centre on a 40,000 increase in employment.
The unemployment rate is expected to remain at seven per cent, still shy of the spike to 7.5 per cent seen in June and during the depths of the pandemic, which was the highest level in 22 years.
But this would still mean nearly a million people are without a job.
An analysis by the Reserve Bank last week warned that while the economic outlook remains highly uncertain, it is likely that the unemployment rate will remain elevated for a number of years.
“As such, some unemployed people are facing the prospect of a prolonged period of unemployment,” it says.
Currently around one in every five unemployed people has been jobless for more than a year, an increase from about one in every eight a decade ago.
The mid-year budget review – or the Mid-Year Economic and Fiscal Outlook (MYEFO) to give it its formal title – is due at some stage this week.
It comes just weeks after the Treasurer Josh Frydenberg’s 2020/21 budget was handed down in October, which was delayed from May due to the pandemic.
Even so, there has been some significant developments in that short space of time.
The economy’s rebound from recession has been stronger than expected, as has the rise in employment, while confidence among Australian and business confidence has gone through the roof – a key pointer to future activity.
“(MYEFO) is likely to see an upgrade to the growth outlook and a downgrade to the budget deficit projections, reflecting stronger revenue flows and slightly less emergency spending than expected in the budget,” AMP Capital chief economist Shane Oliver said.
Dr Oliver expects growth for 2020/21 will be upgraded to flat (0.0 per cent) from a 1.5 per cent contraction and the jobless rate revised down to seven per cent from 7.25 per cent for the financial year.
He also predicts the budget deficit for 2020/21, while still huge, will be $200 billion rather that $214 billion.
“Hopefully peak deficit has been seen, but peak debt will be years away,” he says.
An analysis by the independent Parliamentary Budget Office last week predicted net debt would still be $1.3 trillion in 2030/31 compared to just $374 billion in 2018/19.
Meanwhile, the Australian share market looks set for a flat opening on Monday after Wall Street was kept in check by the lack of an aid package from Washington and rising levels of COVID-19.
The US S&P 500 index slipped 0.1 per cent to 3,663.46, the Dow Jones Industrial Average managed a 0.2 per cent rise to 30,046.37 and the tech-heavy Nasdaq lost 0.2 per cent to 12,377.87.
Australian SPI 200 futures were down one point at 6630.
On Friday, the Australian S&P/ASX200 benchmark index closed 0.6 per cent down at 6642.6 after CSL chose not to continue with its coronavirus vaccine.
But it still managed to rise 0.1 per cent on the week, its sixth consecutive weekly gain.