OK, so we added more jobs than expected in June — 45,900 — or three times the number the market experts reckoned, the Aussie dollar went for a fly, and a rate rise looms in August, despite the caution in this week’s post RBA board meeting statement.
Well, that’s the new market view (and just which writer on a leading paper was suggesting a “rate cut” on Tuesday was still possible?). The jobless rate was 5.1% in June, close to where the RBA starts getting more worried about capacity constraints, bottlenecks and cost increases faster than the rate of inflation.
We also had record car sales in June, the May trade surplus was the third largest on record and the ABS found another $1 billion in export revenues for April to further confirm the picture of an economy awash with income.
But there are a couple of other bits of info that will pop up before the RBA board meets on the first Tuesday in August.
There’s the much discussed July 28 release of the June quarter Consumer Price Index (and don’t we need a monthly figure, like yesterday?). A rate around 1% for the quarter or more will get the bank’s rate hand trembling, especially if the underlying rate rises noticeably.
And, next Thursday July 15, will also be vital because that’s when the June quarter economic figures from China (plus those for the month of June), on growth, production, inflation, bank lending, house prices, retail sales, imports and exports, are due for release (though some may be leaked in the days before the release).
These figures will give us a bit more of an idea of whether the cooling in China is happening, especially inflation, production and house prices.
And then on July 23, the results of stress tests on 91 of Europe’s leading banks will be released. That information and judgments of the regulators will go a long way to either calming (hopefully) worries about the European financial system, or confirming that some banks are basket cases.
Spain and Germany seem to be the areas of interest with 41 of the 91 banks on the list issued by regulators.
Both announcements will be looked at by the RBA’s ahead of the August meeting as well as new forecasts for the Australian economy on growth and inflation will be presented to the board meeting that day.
But the jobless news today is the big story for the bank and the markets: the jobless rate of 5.1% was the lowest since January of last year (when the trend was worsening, not improving).
Of the 45,900 new positions, 18,400 were full-time and 27,500 part-time.
And revisions from the Australian Bureau of Statistics showed that the jobless rate for May was also 5.1%, down from 5.2%.
The Australian economy has now added 120,000 jobs so far this year.
The pace is quickening, thanks to the resources surge in WA where the unemployment rate if now 4.1%, down from 4.3%.
The frowns at Martin Place will be deepening.