Are you struggling to understand what's going on in the Australian economy?

The week in finance: March labour force data (Thursday) forecast to show 15,000 new jobs but unemployment rising back to 5pc

March labour force data (Thursday) forecast to show 15,000 new jobs but unemployment rising back to 5pc Chinese Q1 GDP (Wednesday) likely to slow further to 6.3pc over the year

Chinese Q1 GDP (Wednesday) likely to slow further to 6.3pc over the year Quarterly production reports from BHP, Rio Tinto and Woodside

Don't worry, you're in the same boat as some the nation's most qualified, highly-educated economists holed up in the Reserve Bank's Martin Place HQ.

While not exactly throwing his hands up in despair at the futility of trying to make uncooperative Australian data fit into neat economic models, deputy governor Guy Debelle remains deeply perplexed by the core conundrum; strong jobs growth and weak economic growth.

"The strength of the labour market is at odds with the slow pace of GDP growth," Dr Debelle observed in a speech titled "The State of Economy" last week.

It's a tussle that's been going on for years and it's the primary reason the RBA has been stuck at its record low cash rate of 1.5 per cent for a record period on hold. Something has to give, but clearly it hasn't been the RBA.

The next round in the battle will be played out this week with the release of March labour force data.

February delivered much weaker than expected jobs growth, yet the unemployment rate fell below 5 per cent to an 8-year low.

While largely solid, there were some soggy patches. The fall in unemployment was driven by fewer people looking for work and the surge of full-time jobs in January was largely reversed.

This time around the market is forecasting unemployment nudging back up and around 15,000 new jobs being created in March.

Tensions mounting

Still, the current GDP/jobs enigma has Dr Debelle stumped; things are getting tense, both literally and figuratively speaking.

"The two lenses on economic growth provided by the labour market and the GDP data are in stark contrast. A third lens, in the form of business surveys [conditions], sits in between the two," Dr Debelle said.

"The tension highlighted by these different lenses on economic growth is of crucial importance. Hopefully we will get some resolution of this tension in the coming months with the incoming flow of data."

All very frustrating for a data-dependent central bank.

Reserve Bank deputy governor Guy Debelle is puzzled why employment is strong, yet the economy is weak. ( ABC News: Maisie Cohen )

Dr Debelle and RBA's hunch is the labour market's strength will overpower a listless GDP number.

"Businesses continued to invest through the end of 2018 and have continued to hire into 2019. Why would they do this if growth in economic activity has slowed so much?," Dr Debelle asked rhetorically.

Wages will pick up, consumption will pick up and all the economic pieces will fit together like a beautiful mosaic.

In that scenario interest rates are heading up, not down as the market is currently betting.

JP Morgan's Sally Auld says in general the "tension" can be resolved in two ways.

"One, by GDP growth rebounding back toward trend and reversing the weakness of the second half of 2018 or two, by the unemployment rate ticking higher and realigning with soft underlying domestic activity," Ms Auld said.

"We view the second scenario as more likely given our expectation that low wage growth and negative wealth effects stemming from the housing market will continue to constrain household spending."

JP Morgan's house view is pretty much in line with the consensus view for March, but with a gradual rise in unemployment continuing in months ahead.

"This is consistent with our view that the RBA is likely to ease in July and August, by which time the unemployment rate is likely to be tracking in the low/mid 5 per cent with GDP growth stuck below trend," Ms Auld said.

That's not how the RBA sees it.

During the question and answer session after his speech, Dr Debelle conceded that the RBA could cut rates if necessary, but he still saw decent growth in the economy and declining unemployment ahead.

The three key dates to the RBA resolving the economic versus employment growth "tension" will be next week's and next month's jobs data and first quarter reads on inflation (April 24), wages (May 15) and GDP (June 6).

In other words, don't expect any action on interest rates before July's board meeting.

Wall Street back near a record high

Investors were back buying risk by the end of the week, with a solid rise on Wall Street pushing the S&P 500 within 1 per cent of a new record high.

Positive results at the start of another reporting season — particularly from investment bank J.P. Morgan — and rebound in exporting vigour in China saw equities suck money out of the bond market.

US treasury yields rose to three-week highs, which in effect was a bet that the threat of recession was easing.

Over the week the US was up 0.5 per cent, while the ASX rose more than 1 per cent. Futures markets point to a flat start to an Easter-shortened week locally.

Markets on Friday's close: ASX SPI 200 futures flat at 6,236, ASX 200 (Friday's close) +0.9pc at 6,251

ASX SPI 200 futures flat at 6,236, ASX 200 (Friday's close) +0.9pc at 6,251 AUD: 71.7 US cents, 63.4 euro cents, 54.8 British pence, 80.3 Japanese yen, $NZ1.06

AUD: 71.7 US cents, 63.4 euro cents, 54.8 British pence, 80.3 Japanese yen, $NZ1.06 US: Dow Jones +1pc at 26,412, S&P500 +0.7pc at 2,907, NASDAQ +0.5pc at 7,984

US: Dow Jones +1pc at 26,412, S&P500 +0.7pc at 2,907, NASDAQ +0.5pc at 7,984 Europe: FTSE +0.3pc at 7,437, DAX +0.5pc at 12,000, EuroStoxx50 +0.4pc at 3,448

Europe: FTSE +0.3pc at 7,437, DAX +0.5pc at 12,000, EuroStoxx50 +0.4pc at 3,448 Commodities: Brent oil +1pc at $US71.55/barrel, Gold -0.2pc at $US1,290/ounce, Iron ore $US95.00/tonne

Global green shoots

The theory global economies are beginning to sprout green shoots will be tested with a number of key data releases.

US industrial production (Tuesday), and US and European Purchasing Managers' Index (Thursday) numbers will be released. They have been poor (the US) to dismal (Europe) recently.

The markets are betting things have improved over the past month. The numbers may tell a different tale.

However from Australia's point of view, China's monthly data dump and first quarter GDP figures (Wednesday) will be the most significant event of the week.

Capital Economics believes those expecting a rebound will be disappointed.

"The stronger-than-anticipated rise in exports hints at an uptick in foreign demand in March, but disappointing imports suggest that domestic demand may not be holding up as well as some had hoped," CE's Chang Liu said.

"Next week, while the Q1 GDP data will get the most attention, those figures have been implausibly stable in recent years.

"The activity and spending data for March will be a better gauge of recent economic performance, which we think will show a slight improvement. But we doubt that will last," Mr Liu said.

Australia

Date Event Forecast/comment Monday 15/4/2019 Quarterly corporate update March quarter production and revenue figures from Iluka Tuesday 16/4/2019 RBA board minutes More detail on April's hold. Tensions are mounting over lack of economic and wages pick-up Quarterly corporate updates March quarter production and revenue figures from Rio Tinto, Oil Search, Transurban Wednesday 17/4/2019 Quarterly corporate updates March quarter production and revenue figures from BHP, Brambles, Challenger, S32, Santos Thursday 18/4/2019 Employment/unemployment Mar: Consensus forecast is for 20K new jobs, but unemployment to rise back to 5pc Quarterly corporate updates March quarter production and revenue figures from Fortescue, Woodside Friday 19/4/2019 Good Friday ASX closed Business confidence Q1: NAB survey. Monthly numbers have been weakening. While hiring plans are holding up, activity hasn't

Overseas