In-case-you-missed-it Monday: the real stories that mattered in the financial papers this week.
Aussie Jobs – A bit too good.
The Aussie labour force data raised a few eyebrows last week. We added 116,000 new jobs in February, totally blowing economists’ expectations for 40,000 jobs out of the water. As a result, the unemployment rate ticked down to 3.7% – still one of the lowest levels in 50 years.
This will worry the RBA. If the labour market remains tight, and wages pressure remerges, inflation could lift again. This result pushes back expectations for the first rate cut.
Riding the Wave of Inflation
On that front, Bloomberg notes that the current inflation profile (orange line), is quite similar to the inflation profile in the 1970s, where there was a second spike after the first. I wouldn’t read too much into this, other than to note that there is historical precedent for a second peak to assert itself.
Goods Trade Falling
Speaking of the global economy, I thought it was interesting to see that global goods trade volumes fell sharply in 2023 – almost as much as they did during Covid.
Part of the reason for that might be the way that Covid disrupted spending patterns. Generally, there was a shift away from services to goods, as you couldn’t get a hair cut etc. But things haven’t returned to normal. In some places, like Germany and the US, people still spend more on goods than they did before, while in France and the UK, they spend less, meaning they spend more on services. I wonder what the rest of the world looks like.
Forecasting a crash
Finally, on the housing front, UDIA released forecasts for multi-unit apartment construction, and in every jurisdiction, apart from maybe Perth, the direction is down. This is not what the solution to a housing crisis looks like.
And that’s (pretty much) everything worth knowing in markets this week.
JG.
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