No easy answers from US jobs report. Friday night’s US jobs report for August provided no joy for tea-leaf readers or dart throwers trying to pick whether the US central bank will lift rates this month. At the same time, the G20 meeting of finance ministers and central bank governors made it clear they were not happy with the idea of a Fed rate rise, a point again underlined for the second time in five days by IMF head Christine Lagarde. The biggest puzzle in the US is why the continuing solid jobs growth hasn’t boosted inflation or caused a surge in wage costs. The jobs report noted a fewer-than-expected 173,000 new jobs created in August (over 200,000 was the forecast), but July’s jobs figure was boosted from 215,000 to 245,000, another 14,000 new jobs added to June’s total. Adding the 44,000 new jobs for the two preceding months, a solid 217,000 new jobs were reported in August, which is about what the markets had forecast. August’s unemployment rate fell to 5.1%, the lowest since 2008 (that alone would have prompted “Rate rise looms” headlines). But wages were only up 2.2% in the year to August. That’s modest, but with the Fed’s core inflation gauge showing an ultra-low 1.2% rise in the year to August, and there’s real wage growth (small, but real), unlike Australia. And no sign of any inflationary pressures. In fact more and more economists are worried about deflation re-appearing in the US thanks to the rising greenback and falling oil prices. — Glenn Dyer

Dollar down, still falling. The US, China and local data have combined to push the Aussie dollar lower, and it will drop under 69 US cents in the next day (it was 69.08 cents on Saturday morning and hit a new six-year low of 68.96 cents this morning). The currency is now well below the 75-cent level that RBA governor Glenn Stevens nominated at the end of 2013 as his preferred level, and it wouldn’t surprise many to see it push towards 60 US cents by year’s end (as AMP’s Dr Shane Oliver forecast last week). Local brokers, analysts and business media have shown confusion about the falling dollar — many see it as somehow “bad”, a sign of national economic weakness, when all it is, is a normal reaction (at last) to the 36% plunge in our terms of trade over the past four years. Since June 30 (the end of the 2014-15 financial year), the Aussie dollar has lost close to 9% against the greenback, while since the start of the year, its fall is close to 15%. — Glenn Dyer

So many talking points, where to start? With all that background, there are a lot for Reserve Bank officials to talk about as we see another surge in public appearances by some of the bank’s top executives in the next two weeks. The RBA’s senior officials have had a lot to say in the past month or so as they have tried to reshape the economic debate. Governor Glenn Stevens, for instance, has been telling us lately that we had better get used to lower and slower economic growth for longer, and challenged us to be creative in finding ways of giving the economy a tickle so that growth rises and unemployment eases. Phil Lowe, the RBA’s deputy governor, has also been talking about land values, growth wealth and especially the way the economy is transitioning from the resources boom. Chris Kent, the head of the bank’s fleet of economists, has tried to make sense of the slowdown in wages growth (and whether it has helped push jobs growth a bit higher).

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The next fortnight will bring a quartet of public appearances, starting with Phil Lowe, who speaks on Wednesday in Melbourne at a business lunch (topic unknown at the moment). The day before, Luci Ellis, the bank’s head of financial stability, speaks on what we know so far about property markets and financial stability — she’s one of the world’s go-to experts on the subject. And Guy Debelle, the bank’s head of financial markets, will give a briefing in London on Wednesday night on the new global code of conduct for the global multitrillion-dollar foreign exchange market (that’s in the wake of the recent rorting charges we have seen from big US and European and UK banks) and then back home next week for a speech entitled “Some Current Issues in Financial Markets”. This speech is a day before the US Fed’s interest rate decision on September 17. Two days later, Stevens has his second meeting of the year with the House of Representatives Economics Committee in Canberra. That makes the governor’s appearance more interesting than normal. — Glenn Dyer

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Peter Fray
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