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The Experts

James
Craig James
Economy Expert
+ About Craig James
About Craig James

Craig James is CommSec’s Chief Economist.

On leaving school Craig James joined the (then) Rural Bank, whilst undertaking university studies. He received his Bachelor of Commerce (Economics) at University of NSW in 1984 and then a Master of Commerce (Economics) at the same university in 1988.

He remained at the Rural Bank, which became the State Bank over time and then Colonial, working in branches, Corporate, Planning and Economic Research.

He became chief economist of Colonial Group in September 1987, before becoming chief economist at CommSec in August 2000 with the Commonwealth takeover of Colonial.

In 2002 Craig had a sea-change, joining the Australian Financial Review. He had always wanted to pursue a role in journalism and enjoyed the role as an economic commentator and analysts, finding that he could pursue a journalistic-type role as well as doing more electronic media work at CommSec and rejoined the group in 2003.

On taking the reigns of chief economist at Colonial, Craig endeavoured to style their research in a “user-friendly” way – something that set their research apart and still does today. The approach has been successful in their media work and in promoting Colonial, and then CommSec, to the general public. CommSec is the most quoted economic group in the mainstream media.

CommSec economic reports are a bit different in that they devise tools such as the ‘Mums and Dads’ share index and the iPod index, and undertake research on the weather and demographic changes to show how they affect the economy.

Craig currently does around 2-3 regular TV crosses a day, ad hoc radio and newspaper interviews and writes regular commentaries as well as presenting to staff, clients and external organisations.

Outside work, Craig's main interests are athletics (cross country in winter), weight training, reading widely across a range of newspapers, magazines and electronic media, and trying to keep up with the children.

Good morning, Australia

Monday, June 24, 2019

How’dy USA

In US economic data, existing home sales rose by 2.5% in May to a 5.34 million annual rate (forecast 5.25m). The Markit flash manufacturing index eased from 50.5 to 50.1 in June (forecast 50.4) with services down from 50.9 to 50.7 (forecast 51.0). US President Donald Trump announced over the weekend that the US will impose major new sanctions on Iran on Monday.

US share markets fell on Friday as traders booked profits at the end of the week. Traders watched relations between the US and China. Also, President Trump called off retaliatory strikes following Iran's downing of a US drone. The Dow Jones index fell by 34 points or 0.1% after being up 154 points in early trade. The S&P500 index fell by 4 points or 0.1% from record highs and the Nasdaq fell by almost 20 points or 0.2%. Over the week the Dow rose by 2.4%, the S&P 500 rose by 2.2% and the Nasdaq rose by 3%.

US treasuries were weaker on Friday (yields higher) as traders took profits and squared positions at the end of the week. In the coming week, US$113 billion of Treasuries will be auctioned. US 2- year yields rose by 4 points to 1.77% and US 10-year yields were up by 6 points to 2.06%. Over the week US 2-year yields fell by 7 points and US 10-year yields fell by 3 points.

Bonjour Europe

Major currencies were mixed against the US dollar in US and European trade compared with the end of Asian trade. The Euro rose from US$1.1280 to US$1.1375 and was around US$1.1365 in late US trade. The Aussie dollar held between US69 cents and US69.35 cents and was near US69.25 cents in late US trade. And the Japanese yen held between 107.10 yen per US dollar and JPY107.72 and was near JPY107.30 in late US trade.

Global oil prices rose by around 1% on Friday. Traders continue to focus on tensions between the US and Iran. Also, US gasoline futures rose 4% following a fire at a large refinery in Philadelphia - the biggest on the East Coast. The Brent crude price rose by US75 cents or 1.2% to US$65.20 a barrel. And the US Nymex rose by US36 cents or 0.6% to US$57.43 a barrel. Over the week Brent rose by 5.1% while Nymex rose by 9.4%.

Base metal prices fell by up to 1.7% on Friday with nickel down the most while copper fell by just 0.1%. Over the week copper rose by 2.8% and nickel rose by 1.9% but tin lost 1.5% and zinc lost 0.6%.

The gold futures price rose by US$3.20 an ounce or 0.2% to US$1,396.90 an ounce. The spot gold price was trading near US$1,399 an ounce in late US trade. Over the week gold rose by US$54.80 or 4.1%. Iron ore fell by US$1.15 or 1.0% to US$116.40 a tonne. Over the week iron ore rose by US$7.00 or 6.4%.

G’day Australia

In Australia, the Reserve Bank Governor participates in a panel discussion. In the US the Chicago Federal Reserve National Activity index is released with the Dallas Federal Reserve Manufacturing index.

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Good morning, Australia

Friday, June 21, 2019

How’dy USA

In US economic data, the leading index was unchanged in May (forecast +0.1%). The Philadelphia Federal Reserve index fell from +16.6 points to +0.3 points in June (forecast +11). The current account deficit narrowed from US$143.9 billion to US$130.4bn in the March quarter (forecast US$125bn). New claims for unemployment insurance fell 6,000 in the latest week to 216,000 (forecast 220,000).

US share markets rose on Thursday with the broader S&P 500 index at all-time highs. Investors anticipated lower interest rates in coming months, boosting interest in equities. The energy sector also gained 2.2% in response to higher oil prices. Boosting tech shares was Oracle, its shares up 8.2% after flagging better-than-expected profits. Economic data was largely mixed. The Dow Jones index rose by 249 points or 0.9%. The S&P500 index lifted by almost 28 points or 1.0% and the Nasdaq rose by 61 points or 0.8%.

US treasuries were firmer (yields lower) on Thursday after the Federal Reserve laid the groundwork for rate cuts. Economic data showed a still tight job market while activity eased in the Philadelphia region. US 2-year yields fell by less than 1 point to 1.765% and US 10-year yields were lower by 1 point to 2.02%.

Bonjour Europe

European share markets were firmer on Thursday on expectations of easier monetary policy in the US. The pan-European STOXX600 index rose 0.4% to six-week highs. The German Dax rose by 0.4% to 9-month highs and the UK FTSE gained 0.3%. Swiss shares hit record highs on better-than-expected watch export data. In London trade, shares of Rio Tinto rose by 0.7% and BHP gained 2.0%.

Hello World!

Major currencies were firmer against the US dollar in US and European trade compared with the end of Asian trade. The Euro rose from US$1.1265 to US$1.1315 and was around US$1.1290 in late US trade. The Aussie dollar rose from US68.90 cents to near US69.35 cents and was near US69.20 cents in late US trade. And the Japanese yen lifted from 107.85 yen per US dollar to JPY107.20 and was near JPY107.30 in late US trade.

Global oil prices soared 4-5% on Thursday on news that a US drone was shot down in international waters near Iran. Also supporting commodity prices were expectations of a US rate cut in coming months. Lower interest rates should support oil demand. The Brent crude price rose by US$2.63 or 4.3% to US$64.45 a barrel. And the US Nymex rose by US$2.89 or 5.4% to US$56.65 a barrel.

Base metal prices were generally higher. Nickel rose 1.7% but lead was up the least, up 0.5%. Aluminium was flat but zinc fell by 1.0%.

The gold futures price rose by US$48.10 an ounce or 3.6% to US$1,396.90 an ounce. The spot gold price was trading near US$1,389 an ounce in late US trade. Iron ore rose by US$3.30 or 2.9% to US$117.55 a tonne.

G’day Australia

In Australia, CBA 'flash' purchasing managers survey is released. In the US data on existing home sales is released together with the 'flash' purchasing manager indexes. Federal Reserve presidents Brainard and Mester deliver speeches.

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Good morning, Australia

Monday, June 17, 2019

How’dy USA

In US data, retail sales rose by 0.5% in May (forecast +0.6%) with ex-autos sales up 0.5% (forecast +0.3%), production up 0.4% (forecast +0.2%) and consumer sentiment in June was 97.9 (forecast 98.0).

US share markets eased on Friday. Reuters reported that shares of chipmaker, Broadcom, fell 5.6% after it cut its full-year revenue forecast by $2 billion, blaming the US-China trade conflict and export curbs on Huawei. The Dow Jones index closed lower by 17 points or 0.1%. The S&P500 index fell by almost 5 points or 0.2% and the Nasdaq lost 40 points or 0.5%. Over the week the Dow rose by 0.4%, the S&P 500 rose by 0.5% and the Nasdaq gained 0.7%.

US treasuries were mixed on Friday. US economic data generally beat forecasts, but Chinese production data missed market forecasts. US 2-year yields rose by 1 point to 1.84% and US 10-year yields fell by 1 point to 2.08%. Over the week US 2-year yields were flat but US 10-year yields rose by 1 point.

Bonjour Europe

European share markets were generally weaker on Friday. A sales warning by Broadcom weighed on chipmakers. And weaker Chinese production data reduced interest in trade-sensitive stocks. But safe-haven utilities rose by 0.5%. The pan-European STOXX600 index fell by 0.4%. The German Dax lost 0.6% and the UK FTSE fell by 0.3%. In London trade, shares of Rio Tinto fell by 0.7% and BHP lost 1%.

Hello World!

Major currencies were weaker against the US dollar in US and European trade compared with the end of Asian trade. The Euro fell from near US$1.1290 to near US$1.1200 and was around US$1.1205 in late US trade. The Aussie dollar fell from US69.05 cents to US68.60 cents and was near US68.70 cents in late US trade. And the Japanese yen eased from 108.15 yen per US dollar to JPY108.58 and was near JPY108.55 in late US trade.

Global oil prices rose on Friday. Attacks on two oil tankers in the Gulf of Oman have raised fears about some disruption to oil supplies from the Middle East. But the fears were not enough to prevent oil prices ending lower over the week. The Brent crude price rose by US70 cents or 1.1% to US$62.01 a barrel. And the US Nymex rose by US23 cents or 0.4% to US$51.51 a barrel. Over the week Brent fell by 2% and Nymex fell by 2.7%.

Base metal prices fell by up to 1.3% on Friday with aluminium down the most. But nickel went against the trend, up 0.3%. Over the week metals rose by up to 2.2%, led by nickel. But zinc bucked the trend, down 1.9%.

The gold futures price rose by US80 cents an ounce or 0.1% to $1,345.30 an ounce. The spot gold price was trading near US$1,341 an ounce in late US trade. Over the week gold fell by US80 cents or 0.1%. Iron ore fell by US80 cents or 0.7% to US$109.40 a tonne. Over the week iron ore rose by US$11.05 or 11.2%.

G’day Australia

In Australia no major economic data is expected. In the US, the Empire State manufacturing index is released with capital flows data and the NAHB housing market index.

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Good morning, Australia

Monday, June 03, 2019

How’dy USA

In US data, personal income rose by 0.5% in April (forecast +0.3%) with spending up 0.3% (forecast +0.2%). The core personal consumption deflator (inflation measure) rose 0.2% to be up 1.6% on the year, in line with forecasts. The Chicago purchasing managers index rose from 52.6 to 54.2 in May (forecast 53.7). Consumer sentiment rose from 97.2 to 100 in May (forecast 101.5).

US share markets fell on Friday after President Trump threatened tariffs on Mexico. The 5% proposed tariff from June 10 would rise to 25% unless illegal Mexican immigration to the US stopped. Auto stocks slumped. The Dow Jones index lost 355 points or 1.4%. The S&P500 index fell by 1.3% and the Nasdaq lost 115 points or 1.5%. Over the week the Dow Jones fell by 3%, the S&P 500 lost 2.6% and the Nasdaq fell by 2.4%. Over the month the Dow lost 6.7%; S&P fell 6.6% and Nasdaq fell 7.9%

US treasuries rose on Friday (yields lower) on fresh concerns about global trade. US 2-year yields fell by 15 points to near 1.92% and US 10-year yields fell by 9 points to 2.13%. Over the week, US 2-year yields fell by 23 points and US 10-year yields fell by 19 points.

Bonjour Europe

European share markets were weaker on Friday. US President Trump threatened to impose a 5% tariff on Mexican goods on June 10 unless Mexico stopped people from crossing illegally to the US. The pan-European STOXX600 index fell by 0.8% to be down 5.7% on the month - the biggest fall since January 2016. The UK FTSE also fell by 0.8% and the German Dax lost 1.5%. In London trade, shares of Rio Tinto fell by 2.3% and BHP lost 1.4%.

Hello World

Major currencies were firmer against the US dollar in US and European trade compared with the end of Asian trade. The Euro rose from near US$1.1125 to around US$1.1180 and was around US$1.1165 in late US trade. The Aussie dollar rose from near US69.00 cents to US69.45 cents and was at US69.40 cents in late US trade. And the Japanese yen rose from near 109.00 yen per US dollar to JPY108.25 and was near the strongest levels in late US trade.

Global oil prices fell sharply as fresh trade worries raised concerns about the outlook for the global economy and oil demand. The number of oil rigs in the US rose by three to 800. Higher Saudi and US output in May offset lower Iranian exports. The Brent crude price fell by US$2.38 or 3.6% to US$64.49 a barrel. And the US Nymex fell by US$3.09 or 5.5% to US$53.50 a barrel. Over the week Brent crude fell by 6.1% and Nymex fell by 8.7%

Base metal prices were generally lower on the London Metal Exchange on Friday. Zinc and nickel fell by around 1.5%. But aluminium rose by 0.9% and lead rose 0.2%. Over the week prices fell by 1.1-3.9% with tin down the most. But aluminium rose by 0.1%.

The gold futures price rose by US$18.70 an ounce or 1.4% to $1,311.10 an ounce. The spot gold price was trading near US$1,305 an ounce in late US trade. Over the week gold rose by US$26.90 or 2.1%. Iron ore fell by US$1.90 or 1.9% to US$99.80 a tonne. Over the week iron ore fell by US$3.85 or 3.7%.

G’day Australia

In Australia the ANZ job ads series is released with the monthly inflation gauge, Business Indicators, purchasing manager surveys and CoreLogic home price series. In China the Caixin manufacturing survey is released. In the US data on vehicle sales, construction and the ISM manufacturing survey are released.

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Australia: Interest rates & economic growth

Friday, May 31, 2019

On Monday

The week kicks off on Monday when the Bureau of Statistics (ABS) issues the Business Indicators publication that includes data on profits, sales, wages and stocks. Also, on Monday are surveys of manufacturing from AiGroup and CBA. CoreLogic issues the May data on home prices. ANZ job ads and the Melbourne Institute inflation gauge are issued. In May, home prices may have fallen by around 0.5%. But the data pre-dates the Federal Election result, APRA announcement of mortgage serviceability and the Reserve Bank Governor’s guidance on rate cuts.

On Tuesday

On Tuesday the Reserve Bank meets and economists are in agreement that a quarter of a per cent rate cut will be delivered – the first move in almost three years. The Reserve Bank Governor speaks at the RBA Board dinner held with the business community. In terms of data, the quarterly balance of payments figures is issued with government finance, retail trade and the weekly reading of consumer sentiment. Retail spending has risen for the last three months, averaging 0.4% gains a month. But some of this growth in spending can be attributed to higher grocery prices.

On Wednesday

On Wednesday the focus will be on the March quarter economic growth (GDP) estimates. The data is now almost ancient history. Not only are readings on the economy available for April and May, the federal election is also in the rear window. Activity has seemingly lifted markedly post-election. Overall, we expect that the economy grew by around 0.5% in the quarter with annual growth near 2.3%. Also, on Wednesday, both AiGroup and the CBA release the May surveys on services activity. And the Federal Chamber of Automotive Industries issues the May data on new vehicle sales.

On Thursday

On Thursday the April figures on exports and imports (international trade) are released. There have been 15 consecutive monthly trade surpluses and the annual surplus to March was at a record high of $34.1 billion.

On Friday

And on Friday, the comprehensive April data is released on new lending by financial intermediaries to the household and business sectors with the Performance of Construction index. Encouragingly, Bankers Association data suggests that the number of housing loans lifted 1.7% in the month with the value of commitments up 6.5%.

Overseas: US jobs data & the Beige Book awaited

A busy week is in prospect. In the US the Beige Book is issued on Wednesday and non-farm payrolls (jobs) on Friday.

On Monday

The week begins on Monday with readings on the manufacturing sector in the US and China. In the US there are rival surveys from Markit and the Institute of Supply Management. In China, there is the survey from the private sector Caixin group. Manufacturing activity has softened across the globe. Also, on Monday in the US is data on new vehicle sales and construction spending.

On Tuesday

On Tuesday in the US, data on factory orders and the ISM New York index are released with weekly chain store sales. The Federal Reserve chair, Jerome Powell, gives opening remarks at a conference.

On Wednesday

On Wednesday, the focus shifts to surveys on the services sector. Again, in the US there are the Markit and ISM services surveys. In China, the services survey is conducted by Caixin. On Wednesday, the focus shifts to surveys on the services sector. Again, in the US there are the Markit and ISM services surveys. In China, the services survey is conducted by Caixin

On Thursday

On Thursday in the US is the April international trade data (exports and imports). The deficit is seemingly stuck near US$50 billion. Also, on Thursday are final estimates of unit labour costs and productivity for the March quarter, the Challenger survey of job cuts and the weekly data on initial claims for unemployment insurance.

On Friday

On Friday in the US, the all-important non-farm payrolls (jobs) data is released. The job market is strong. Unemployment stands at a 49-year low of 3.6%. Jobs lifted by 263,000 in April. And hourly earnings are up 3.2% over the year. Economists tip a 195,000 lift in payrolls with little change tipped for hourly earnings and the jobless rate.

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Good morning, Australia

Monday, May 27, 2019

In US data, durable goods orders fell 2.1% in April (forecast -2%). Excluding defence goods, orders fell 2.5% (forecast -2%). Excluding transport, orders were flat (forecast +0.2%).

US share markets rose on Friday. Investors still remain hopeful of a trade deal with China. Late on Thursday, President Donald Trump said that US complaints against telco equipment maker, Huawei, might be resolved within the framework of a US-China trade deal. Financials rose 0.8%. The Dow Jones index ended higher by 95 points or 0.4%. The S&P500 index and the Nasdaq index both rose by 0.1%. Over the week the Dow Jones fell by 0.7%, the S&P 500 lost 1.2% and the Nasdaq fell by 2.3%.

US treasuries were weaker (yields higher) on Friday as investors booked profits ahead of the long weekend. But weaker durable goods orders data provided support for bond prices. US 2-year yields rose by 4 points to near 2.17% and US 10-year yields rose by 3 points to 2.32%. Over the week, US 2-year yields fell by 3.5 points and US 10-year yields fell by 7 points.

Bonjour Europe

European share markets were firmer on Friday. Hopes for a US China trade deal remain. And investors took in their stride news that the UK Prime Minister had resigned, effective June 7. Utilities rose 1.3% with mining and insurers both up 1.1% The pan-European STOXX600 index rose by 0.6%. The UK FTSE lifted by 0.7% and the German Dax gained 0.5%. In London trade, shares of Rio Tinto rose by 1.1% and BHP gained 2.4%.

Hello World

Major currencies were firmer against the US dollar in US and European trade compared with the end of Asian trade. The Euro rose from near US$1.1180 to around US$1.1210 and was around US$1.1200 in late US trade. The Aussie dollar rose from near US68.85 cents to US69.35 cents and was at US69.23 cents in late US trade. And the Japanese yen rose from near 109.72 yen per US dollar to JPY109.27 and was at JPY109.29 in late US trade.

Base metal prices were higher by up to 3.8% on Friday with nickel up the most. But tin fell by 0.3%. Over the week aluminium, copper, zinc and tin fell by up to 2% led by aluminium. But nickel rose by 2.9%

The gold futures price fell by US$1.20 an ounce or 0.1% to $1,284.20 an ounce. The spot gold price was trading near US$1,285 an ounce in late US trade. Over the week gold rose by US$8.50 or 0.7%. Iron ore rose by US$1.20 or 1.2% to US$103.65 a tonne. Over the week iron ore rose by US$3.25 or 3.2%.

G’day Australia

In Australia no major economic data is scheduled. In China, industrial profits data is expected. In the US, markets are closed for Memorial Day.

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Australia: Business investment and credit growth data in focus

Friday, May 24, 2019

In the coming week updates on business investment, building approvals and credit growth feature on the data docket. The figures on investment spending will help formulate views on economic growth for the March quarter. The report also includes estimates of future investment. The first estimate of spending in 2019/20 was $92.14 billion, up 11% on the first estimate for 2018/19 and the strongest growth in seven years. 

Furthermore, Commonwealth Bank Group economists forecast new business investment (spending on buildings and equipment) to fall by 0.7% in the March quarter.

On Tuesday

The week kicks off on Tuesday when the weekly Roy Morgan-ANZ measure of consumer sentiment is released. Consumer reaction to the re-election of the Morrison government and new Reserve Bank commentary on interest rates and the economic outlook will be closely observed.

On Thursday

On Thursday the Bureau of Statistics (‘ABS’) issues the publication “Private New Capital Expenditure and Expected Expenditure” for the March quarter. In the December quarter new business investment (spending on buildings and equipment) rose by 2% to be up 1.9% over the year. Also, on Thursday one of the major leading indicators for home building - council approvals to build new homes - is released. Approvals fell by 15.5% in March to be down by 27.3% over the year.

In March, the total number of new council approvals on a rolling annual basis fell below 200,000 units for the first time since June 2014. While there is still a reasonably healthy pipeline of residential building taking place, dwelling commencements have fallen to three-year lows, reducing demand for residential construction workers.

On Friday

On Friday the Reserve Bank releases its “Private Sector Credit” data (a measure of loans outstanding). Annual credit growth fell to a five-year low of 3.9% in March due to the decline in housing finance and falling home prices. Annual investor housing credit growth is the weakest on record. Also, on Friday the Australian Prudential Regulation Authority (‘APRA’) releases credit card data. Bank lending to households by credit card fell by 4.8% in the year to March – the second biggest annual decline since June 2002. Debit cards and ‘buy now, pay later’ platforms, such as Afterpay, are increasingly being used by younger Australians to finance their purchases of goods.

Overseas: US economic growth and inflation data released after Memorial Day holiday 

The Memorial Day public holiday is observed in the US on Monday. Financial markets are closed. But over the week the second estimate of US economic growth, an update on US income and spending (including the US Federal Reserve’s key inflation measure) and China’s official factory gauge will dominate headlines.

US Federal Reserve Chair Jerome Powell has cautioned that low inflation in the US is likely be “transitory”. Chair Powell has cited categories including portfolio management and investment advice services, clothing and footwear, and air transportation for depressing prices. But rising gasoline prices and increased customs duties (such as tariffs) on Chinese imported goods are likely to boost US producer and consumer prices.

On Monday

The week begins on Monday in China when industrial profits data is released for April. Annual profits for China's industrial companies grew by 13.9% in March. Profit margins, however, are being pressured by slowing domestic demand and US tariffs on imported Chinese goods. That said, the cut in the Chinese government’s Value Added Tax (‘VAT’) effective from April 1 may support profit growth for manufacturing enterprises.

On Tuesday

On Tuesday in the US, data on consumer confidence and home prices are issued with the influential Dallas Federal Reserve manufacturing index. And the regular weekly reading on chain store sales is scheduled.

On Wednesday

On Wednesday, the weekly mortgage applications data is released by the Mortgage Bankers Association. And the Richmond Federal Reserve manufacturing gauge is also scheduled.

On Thursday

On Thursday data on pending home sales is issued with the advance reading on goods trade and weekly figures on new claims for unemployment insurance. Also, on Thursday, the second estimate of economic growth (GDP) for the March quarter is released. The annual growth rate is forecast to be revised down by just 0.1% to 3.1% according to economists surveyed by Bloomberg. The composition of growth drivers will be of most interest to investors with household and government spending both slowing at the start of 2019.

On Friday

On Friday in the US, the Chicago business barometer is tipped to lift by 3.4 points to 56 points in May. In April, business activity in the Chicago region registered its biggest slowdown since January 2017. Also, on Friday, the US personal income release includes a key inflation reading. The personal consumption deflator is the preferred inflation measure of US Federal Reserve policymakers. The annual growth rate of the core personal consumption expenditures price index is forecast to remain subdued at around 1.6% in April.

On Friday in China, the National Bureau of Statistics manufacturing and services purchasing manager indexes are scheduled for May. Factory activity expanded at weaker pace in April after a solid rebound in March.

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Jobs data: Something for everyone

Friday, May 17, 2019

There is seemingly something for everyone in the latest labour force data. The pessimists will focus on a slight rise in the jobless rate. The optimists will focus on another month of job gains and a record labour force participation rate. But what is the objective assessment of the data? It was a good, but not great set of numbers. Although, arguably it was a stronger outcome than most economists had expected. Job growth again exceeded expectations.

A softer result was to be expected given the extended holiday period in April and slowdown in business activity ahead of the election. Over four of the past five polls (including the current poll), trend job growth slowed. There is also the global economic slowdown caused by the USChina trade dispute. Full-time job growth was always going to correct after the out-sized job gain of near 50,000 in March. And then there is the small matter of hiring of election workers to further muddy the waters. The proportion of Australians in work or looking for work is at record highs. In fact the record participation rate applies to female workers and to both male and female workers combined. That means it is getting harder for employers to find the right staff for unfilled positions – fewer ‘suitable’ candidates are available.

Does this make it more or less likely that the Reserve Bank will cut rates in the months ahead? While the jobless rate edged up a touch, that result can be attributed to the pre-election economic slowdown. When the election is out of the way, business will get back to business as we have seen after previous polls. More people are finding work and more people are looking for work. The NSW trend jobless rate is still at record lows. So, the job market remains solid. The Reserve Bank will not make a knee-jerk response to the latest jobs figure. It will wait for clear air to make a judgement.

If interest rates were to be cut, August seems the earliest time period that this could occur – after two more months of job figures. It must be remembered that stimulus from tax cuts is likely to flow through to workers from July/August. And that could push any need for monetary stimulus out to November. 

What do the figures show? 

Employment rose for the ninth straight month, up by 28,400 in April after a revised 27,700 increase in jobs in March (previously reported as a 25,700 increase in jobs). Full-time jobs fell by 6,300, but part-time jobs rose by 34,700. Economists had tipped an increase in total jobs of around 15,000.

Annual job growth rose from 2.4% to a 10-month high of 2.6% (decade average 1.6%). Hours worked rose by 0.1% in the month to be up 1.9% over the year. In trend terms, hours worked rose 0.3% to be up 2.8% on the year.

The unemployment rate rose from 5.1% to 5.2% in seasonally adjusted terms. In trend terms the jobless rate was steady at 5.1%. Participation rate: The participation rate rose from 65.7% to a record high of 65.8%. In trend terms the 65.7% participation rate remained at record highs.

Unemployment across states in April: NSW 4.5% (March 4.3%); Victoria 4.9% (4.6%); Queensland 5.9% (6.1%); South Australia 6.1%(5.9%); Western Australia 6.1% (6.0%); Tasmania 6.8% (6.7%). In trend terms, Northern Territory 4.5% (4.5%); ACT 3.9% (3.8%).

State/Territory jobs: In seasonally adjusted terms, the largest increase in employment was in NSW (up 25,100 persons), followed by Western Australia (up 6,400 persons) and Queensland (up 5,400 persons). The only decrease was in Victoria (down 7,600 persons). 

The working age population rose by 25,900 in April to 20.54 million. Over the year the working age population rose by 362,400 or a 6-year high of 1.80%, but this is still down from the record 2.36% annual growth in December 2008. The monthly trend underemployment rate remained steady at 8.3%. The monthly underutilisation rate increased 0.1pts to 13.4%. The monthly seasonally adjusted underemployment rate increased 0.3pts to 8.5%. The monthly underutilisation rate increased 0.4 pts to 13.7%.

Domestic airfares

Business class airfares fell by 1% in May after declining by 6.6% in April – the biggest decrease in 4½ years. Business class airfares are down 9.2% on a year ago – falling at the fastest annual rate in six years. In smoothed terms, business class airfares fell by 1.4% in May to be down 7.6% on the year. Discount airfares are volatile month-to-month. In May, fares fell by 25.6% after lifting by 25.3% in April. Discount airfares are down 7.1% over the year to May. In smoothed terms, discount airfares fell by 2.3% in May to be down 3.9% on the year – the biggest fall in the annual growth rate in three years.  Restricted economy airfares fell by 0.5% in May, but were up by 6% on the year. In smoothed terms, restricted economy fares rose just 0.1% in May to be up by 5.5% on the year.

Why is the data important?

The Labour Force estimates are derived from a monthly survey conducted by the Bureau of Statistics. The population survey is based on a multi-stage area sample of private dwellings (currently about 22,800 houses, flats, etc.) and a sample of non-private dwellings (hotels, motels, etc.). The survey covers about 0.24% of the population of Australia and includes all people over 15 years of age, except defence personnel.

If more people are employed, then there is greater spending power in the economy. But at the same time companies may adjust the work hours of employees. If employees work less hours, and therefore get paid less, then spending power in the economy is reduced.

The Bureau of Infrastructure, Transport and Regional Economics (BITRE) releases data on domestic and international aviation each month. The data is useful in tracking consumer spending and airline performance as well as broader economic activity.

What are the implications?

CommSec doesn’t expect a change in interest rates for the next few months. If there were to be a change in rates, rate cuts are more likely than rate hikes. We’ll know more when the Reserve Bank Governor speaks on Tuesday.

More people in jobs, means more spending power in the economy. And this spending power is underpinned by rising wages. In fact, today, SEEK indicated that annual wage growth of the available positions had lifted to 4.1 per cent – well above the official wage growth result for private sector employees of 2.4 per cent.

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Good morning, Australia

Monday, May 13, 2019

In US data, consumer prices rose by 0.3% in April with the annual rate up from 1.9% to 2% (forecast 2.1%). Excluding food and energy, prices rose by 0.1% with the annual rate up from 2.0% to 2.1% as expected. The budget was in surplus by US$160 billion in April (forecast US$165bn).

US share markets rebounded from lows on Friday. Despite new tariffs being imposed by the US on Chinese goods, investors are still optimistic about a trade deal eventually being secured. US President Trump said he was in "absolutely no rush" to secure a deal. Trade talks will continue in Beijing. Shares in ride-hailing firm Uber Technologies fell by 7.6% in its first day of trade. After being down 358 points, the Dow Jones ended higher by 114 points or 0.4%. The S&P500 index rose by 0.4%. And the Nasdaq index lifted by 6 points or 0.1%. Over the week the Dow lost 2.1%, the S&P 500 fell by 2.2% and the Nasdaq lost 3%.

US treasuries were mixed on Friday. Inflation data was a bit softer than forecast but most traders focussed on China-US trade talks. US 2-year yields were flat near 2.27% and US 10-year yields rose 2 points to 2.47%. Over the week US 2-year yields fell by 8 points and US 10-year yields fell by 7 points.

Bonjour Europe

European share markets were generally firmer on Friday. Shares in German industrial conglomerate ThyssenKrupp rose by 28.2% on news it will list its elevators business. The pan-European STOXX600 index rose by 0.3%. But while the UK FTSE fell 0.1%, the German Dax lifted by 0.7%. In London trade, shares of Rio Tinto rose by 0.9% and BHP rose by 0.5%.

Hello World!

Major currencies were mixed against the US dollar in US and European trade compared with the end of Asian trade. The Euro rose from near US$1.1215 to US$1.1250 and was around US$1.1233 in late US trade. The Aussie dollar rose from near US69.85 cents to US70.08 cents and was around US70 cents in late US trade. And the Japanese yen eased from 109.50 yen per US dollar to JPY110.03 and was around JPY109.94 in late US trade. This morning the Aussie is near US69.85 cents and Japanese yen near JPY109.70.

Global oil prices closed mixed on Friday. Investors awaited news on the China-US trade talks. The Brent crude price rose by US23 cents or 0.3% to US$70.62 a barrel. And the US Nymex fell by US4 cents or 0.1% to US$61.66 a barrel. Over the week Brent fell by 0.3% and Nymex fell by 0.5%.

Base metal prices were higher by up to 2.0% on Friday with tin up the most although copper only rose by 0.3%. And lead was the exception, down by 0.8%. Over the week metals were lower by 1.9- 4.2% with lead and zinc down the most. But aluminium was the exception, up by 0.4%.

The gold futures price rose by US$2.20 an ounce or 0.2% to $1,287.40 an ounce. But the spot gold price ended lower, near US$1,286 an ounce in late US trade. Over the week gold rose by US$6.10 or 0.5%. Iron ore was up 30 cents to US$95.45 a tonne. Over the week iron ore rose by US80 cents a tonne or 0.8%.

G’day Australia

In Australia lending data is released with overseas arrivals/departures and credit/debit card statistics. In China, foreign direct investment and vehicle sales data are released. In the US data on consumer inflation expectations is issued.

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Australia: Wage and jobs data in focus before Election Day

Friday, May 10, 2019

In the coming week, the economic data spotlight is firmly on wages (Wednesday) and the job market (Friday) – the last key indicators released before the election. In April, we expect that 20,000 jobs were created with the jobless rate stable at 5.0%.

On Monday

The week kicks off on Monday when the Australian Bureau of Statistics (ABS) releases March data on overseas arrivals and departures. Tourist arrivals rose by 0.9 per cent in February, the strongest gain in five months while departures fell by 3.3%, the biggest fall in almost two years. Net permanent and long-term arrivals stood at a 5-year high of 299,100 in the year to February, up 11.4% on the year.

Also, on Monday the ABS issues home loan data within the publication “Lending to households and businesses” while the Reserve Bank issues the credit and debit card statistics for March. The value of home loans rose by 2.6% in February with the share of first home buyers in the market at 6-year highs.

On Tuesday

On Tuesday, National Australia Bank issues its April business survey. In March the business conditions index rose from +4.2 points to +7.0 points, above the long-term average of +5.9 points. The business confidence index fell from +1.8 points to 0.4 points in March – a 5½-year low and below the long-term average of +5.8 points. The Roy Morgan-ANZ weekly measure of consumer sentiment is also released on Tuesday – a measure that has tracked a zig-zag course in recent months.

On Wednesday

On Wednesday the all-important wage price index (WPI) is released – the main measure of wages in Australia. Wage growth has been edging higher over the past year and we expect that this continued in the March quarter. Wages may have lifted 0.6% in the quarter to be up 2.4% on the year. Also, on Wednesday the May consumer sentiment index is released. The sentiment gauge rose by 1.7% in April following the budget, but a flat reading is expected ahead of the election.

On Thursday

On Thursday the April job market data is expected. In March employment rose for the eighth straight month (only one fall in 30 months), up by 25,700. The unemployment rate rose from 4.9% to 5.0% in seasonally adjusted terms. In trend terms the jobless rate remained steady at a 10-year low of 5.0%.

Overseas: Chinese activity data in the spotlight

In China, the key monthly business activity data is the highlight (released Wednesday). While in the US there are no stand-outs. Over the week five Federal Reserve presidents deliver speeches.

On Monday

The week begins on Monday in the US when data on consumer inflation expectations is released.

On Tuesday

On Tuesday in the US, the National Federation of Independent Business (NFIB) releases its business optimism gauge. In March the index edged up to a three-month high but readings are well down from mid-2018. Also, on Tuesday, data on export and import prices are released with the regular weekly reading on chain store sales.

On Wednesday

On Wednesday in the US, a bevy of data is released: retail sales, industrial production, and the Empire State manufacturing index, the National Association of Home Builders housing market index and capital flows data. The former two indicators are the ones to watch. Retail sales may have lifted just 0.1% in April after a 1.6% gain in March. Excluding autos though a more significant 0.8% increase in sales is expected. In terms of industrial production, a 0.2% increase is tipped for April after the 0.1% fall in March. On Wednesday in China, the monthly activity indicators are released – retail sales, production and investment. Each of the indicators was surprisingly strong in March.

On Thursday

Also, in China the house price index is scheduled for release on Thursday with lending indicators slated for Friday. On Thursday in the US data on housing starts & building permits is issued with the influential Philadelphia Federal Reserve manufacturing index and weekly figures on new claims for unemployment insurance. Starts were flat in March after a 12% fall in February. Economists tip a 6.5% lift in April starts.

On Friday

On Friday in the US the Conference Board releases the leading index for April. A 0.4% increase is expected in the month. Also, on Friday the University of Michigan releases the preliminary consumer sentiment index for May. The index is healthy, just off four-month highs.

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