Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
Treasurer Josh Frydenberg is likely to hand down an improved budget position when he releases his midyear review on Thursday, coinciding with new figures that will likely show a drop in the unemployment rate.
The treasurer has already indicated he will upgrade his economic growth forecast in the midyear economic and fiscal outlook for the 2021/22 given signs of a sharp recovery following the recent COVID-19 lockdowns.
The government’s monthly financial statement for October released last week also showed the underlying budget deficit was running $7.8 billion smaller after four months of the 2021/22 financial year.
The May budget predicted the deficit for the full financial year would be $106.6 billion.
This follows the record $134.2 billion deficit in 2020/21, itself a $26.8 billion improvement on what was expected in the May budget.
At the same time, the Australian Bureau of Statistics will release its labour force report for November.
Economists expect a marked rebound in the number of people employed after the COVID-19 lockdowns ended in NSW, Victoria and the ACT.
Forecasts point to a large 200,000 employment increase in November, although expectations range for gains of between 150,000 and 280,000.
However, this would still be short of the 378,000 employment positions lost during the September quarter when the lockdowns were at their height.
The unemployment rate is expected to fall to five per cent after the unexpected spike to 5.2 per cent in October, but again forecasts range from 4.7 per cent to 5.5 per cent.
Heading into these twin events, Reserve Bank of Australia governor Philip Lowe will deliver a speech to the CPA Australia Riverina Business Conference.
Following last week’s final RBA board meeting of the year, Dr Lowe gave a largely upbeat appraisal for the outlook, but reiterated the central bank would remain patient about raising the cash rate.
The first part of the week will be dominated by a spread of confidence surveys for consumers and business.
The weekly ANZ-Roy Morgan consumer confidence index is released on Tuesday, a pointer to future household spending.
On the same day, the National Australia Bank will issue its monthly business survey, which is a guide to future employment and investment intentions.
The Australian Chamber of Commerce and Industry-Westpac business survey for the December quarter is also released on Tuesday.
On Wednesday, the monthly Westpac-Melbourne Institute consumer sentiment survey is due.
Meanwhile, Australian shares look set for a firm start to the week after Wall Street rallied, relieved the latest US inflation figures were in line with expectations.
Even so, the US Bureau of Labor Statistics said consumer prices jumped 6.8 per cent in November compared with a year earlier, the highest inflation rate since 1982.
Core inflation, which excludes food and energy, rose 4.9 per cent.
The US S&P 500 rose 44.57 points, or one per cent, to a new high of 4,712.02, and beating previous record peak on November 18.
The Dow Jones Industrial Average gained 216.30 points, or 0.6 per cent, to 35,970.99, while the Nasdaq rose 113.23 points or 0.7 per cent.
Australian share futures followed the positive tone, rising 13 points or 0.17 per cent to 7366.
The Australian benchmark S&P/ASX200 index closed down 31 points, or 0.42 per cent, on Friday to 7353.5 points.