After contracting for the past three months, The Data App (TDA) estimates activity in Australia rebounded sharply in July. Following a 1% decline in June, TDA’s monthly activity indicator (MAI) increased by a record 3.7% in July. As a result, the annual rate of growth went from negative to positive territory.
Whilst employment and building approvals both strengthened in July, the main driver behind the jump in the MAI, was the surge in retail sales; up a further 3.3% in the month, after rising by 2.7% in June. Consequently, due to the Government funded sugar hit*, retail sales are some 10.7% above pre-Covid-19 levels.
Compared to a year earlier the MAI is now 2.1% higher. However, with Victoria moving into a state of emergency at the beginning of August, payrolls have fallen, the impact of which will have spilt over to the rest of the economy. On the flipside, the Victoria lockdown could herald another phase of panic buying. Even so, with transfer payments peaking and home offices now fully equipped with the necessary furniture and ancillary technology, July probably heralded the pinnacle in monthly activity.
* a description credited to Damian Stone of Y Research
About the MAI
With no official monthly measure of Australian activity available it is difficult to get a timely measure of how the economy is performing. In an attempt to fill this gap, The Data App (TDA) developed a Monthly Activity Indicator (MAI). The MAI is estimated using an econometric model based on a number of different, high frequency, monthly economic activity indicators as key factor input variables.
Given the current economic climate, the MAI should assist in quantifying the magnitude of the current economic downturn, as well as identifying a point of inflection.
Key attributes of the MAI include:
• Tracks activity in the private sector economy.
• An indicator for tracking business cycles – downturns and upswings in the economy.
• A timely measure of economic activity.
The Data App (TDA) is part of the PAR.Group, an independent research collective. More information about the group can be found on the website http://par.group/