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Extended Vic lockdown to test confidence

·3-min read

Australians and businesses that keep a keen eye on developments in the economy will have had a lot to mull over in the past week.

The national accounts showed the economy not only grew at a solid 1.8 per cent in the first three months of the year, but at an annual growth rate of 1.1 per cent it means the nation has fully recovered from last year's recession.

House prices also continued to grow at a rapid pace across the country, and nationwide are now over 10 per cent higher than a year earlier.

However, such positives were countered by Victoria extending its latest COVID-19 lockdown for another seven days.

Previous snap lockdowns across the country this year have taken a toll on confidence, not only in the state where they have has occurred, but around the rest of the country.

A series of confidence readings due this week will gauge the mood of Australians and business - pointers to household spending, investment and hiring intentions.

AMP Capital chief economist Shane Oliver estimates this latest lockdown will come at an economic cost of around $1 billion to $2 billion, albeit far smaller that the $15 billion to $20 billion or more cost of last year's July to October Victorian lockdown.

"We retain our assessment that the economic impact from the snap lockdown in Victoria will be relatively minor as spending is temporarily hit, but bounces back quickly once the lockdown ends, as has been the case in response to other snap lockdowns across Australia since late last year," he said.

The weekly ANZ-Roy Morgan consumer confidence index is due on Tuesday.

It tumbled 2.5 per cent last week on Victoria's initial seven-day announcement, with confidence among Melburnians dropping 3.8 per cent.

The National Australia Bank's monthly business survey for May is also due on Tuesday after setting record highs for both conditions and confidence in April.

The monthly Westpac-Melbourne Institute consumer sentiment survey is due on Wednesday.

On the same day, the Australian Bureau of Statistics will release it's weekly payroll jobs report, a prelude to the following week's full labour force report for May.

So far the ABS believes the end of the JobKeeper wage subsidy in March has had no "discernible impact" on employment.

Treasury boss Steven Kennedy told senators some 56,000 jobs were lost in the four weeks following the end of the program, compared with his initial estimate that losses could be up 150,000.

"We would expect many of those that have lost employment at the end of JobKeeper to regain employment in coming weeks," he said.

The latest ANZ job advertisement data series kicks off the week on Monday, which provides a guide to the extent of demand for workers.

Meanwhile, Australian shares look set to extend their record-breaking run, buoyed by gains on Wall Street where the latest payroll figures are expected to see the US Federal Reserve maintain its support for the economy.

The US Labour Department said 559,000 jobs were added to the economy in May, an improvement on April's sluggish gain, but short of economists' forecasts.

The S&P 500 rose 0.9 per cent to 4,229.89, the Dow Jones Industrial Average gained 0.5 per cent to 34,756.39 and the Nasdaq climbed 1.5 per cent to 13,814.49.

Australian share futures point to a positive opening, rising seven points, or 0.09 per cent, to 7300.

On Friday, the ASX200 benchmark index struck a record high of 7300.5 points, before finishing 0.49 per cent up at 7295.4.

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