LA Private


The 2024-25 budget will be the billing focus for Australian markets for part of this week, at least, though wages data on Wednesday and the April jobs report could very well take over as the focal points. That assumes that the US inflation and retail sales reports midweek are not too alarming. And there’s every chance tough new US tariffs on Chinese electric vehicles and other products might also steal the headlines and the attention of investors. They are set to be revealed on Tuesday, US time, but the headline tariffs on Chinese EVs won’t have any impact because very few are shipped to America. But the annual budget delivery here will dominate headlines for a day or so, with the analysis more along the lines of winners and losers.

According to AMP’s chief economist, Shane Oliver, the budget will be headlined by several things. He says the budget “looks like it’s going to be mainly about whether it makes the RBA’s job in fighting inflation easier or harder in the near term and getting ‘Future Made in Australia’ (FMIA) protectionism underway over the medium term.” There will be minimal cost-of-living measures for low to middle-income workers, including an extension of energy bill relief, and renewed talk of the benefits to low and middle-income households from the rejigged Stage 3 tax cuts (worth $1,929pa for those on $90,000pa and $2,429pa for those on $110,000pa).

He sees the budget containing “a combination of subsidies, tax breaks, cheap loans, and relaxed foreign investment rules to boost investment in government-chosen industries in a return to post-war protectionism and picking winners as part of the ‘Future Made in Australia’ policy.”

But after the budget, we will get two key bits of labor force data that will overtake the budget in importance – the March quarter’s Wage Price Index (WPI) on Wednesday and April’s labor force report on Thursday. The AMP’s Shane Oliver says we can expect the WPI to have remained at a quarterly growth rate of 0.9% or 4.2% annually, with some signs of slowing and around 25,000 new jobs in April after the fall of 6,600 in March. He does caution to be watchful of the jobs report, which he says “has been erratic lately, partly reflecting changed seasonal patterns so it’s dangerous to read too much into monthly movements.”

The NAB April business survey will be released today, and the RBA’s Chief Economist Sarah Hunter will deliver a speech on Thursday, likely to be consistent with recent RBA commentary but will be watched for reaction to the Budget.

Elsewhere, China’s final April data drop on Friday should see a small improvement in retail sales and production, but watch property investment data closely. And Japan’s March quarter GDP is expected to have fallen back into negative territory with growth contracting by up to 0.4%. The tiny 0.1% rise in the December quarter might also be subject to revision.

In the US, consumer price inflation, producer prices, manufacturing activity surveys in the northeast and upper Midwest, and the final weeks of the first quarter earnings season. The Consumer Price Index might show a small improvement month-to-month and in the annual rate, while the core reading may also see a small improvement. But both readings will remain well over 3% – around 3.4% to 3.8% according to most forecasts. Producer prices on Tuesday will come in around 0.2% month-on-month and just over 2% annually. There’s also a public appearance by Fed chair Jay Powell on Tuesday (the day before the release of the CPI). Walmart and Home Depot lead the way in earnings releases.