September 24, 2018
Australian Markets Weekly – A tale of two indicators: SEEK and cranes
SEEK data for August showed that Job Ads fell again and the RLB Crane Index reported that residential high-rise surprisingly increased.
- It’s a quiet week for local market sensitive indicators; the Statistician’s quarterly measure of Job Vacancies for August out Thursday and RBA Credit on Friday (also August) the picks. Job Vacancies was at a record in the June quarter, in absolute levels and in proportion to the workforce, a sign of very strong labour demand and employment outlook. We will be interested to see whether that growth has continued into August. One of the two indicators we are focusing on in this Weekly is what the SEEK labour market database says about labour demand, salary and wage trends and labour market tightness. SEEK Job Ads have fallen in three of the past four months, opening the possibility of a turn in the labour market though it’s not confirmed elsewhere and other considerations argue caution drawing this conclusion.
- Also this week, we will have a watchful eye on the Statistician’s Engineering Construction Activity report for Q2 (Wednesday) for what it says about the infrastructure pipeline. Last week RLB Crane Index for this half pointed to a further increase in numbers, including for infrastructure, especially in Victoria. We take the opportunity in this Weekly to delve into this index. The number of cranes in use for residential high-rise surprisingly increased, as did those for non-residential building projects and for infrastructure work. The construction sector continues to operate at a high level, and across cities.
- The other local indicator of note is RBA Credit for August – out Friday – where we look for a pull-back in monthly growth from 0.4% to 0.3% on still-cautious levels of housing credit, especially credit for investors. There is also an update of regional population for 2017, providing further colour on how continued population growth beyond the capital cities is playing out.
- Offshore, we start the week with the press reporting that China is cancelling trade talks with the US, quite possibly until after the US mid-term elections. After testing 0.73 late Friday, the AUD and the NZD have pulled back on this press news, the AUD at 0.7270 this morning. The additional US 10% tariff rate on $200bn of Chinese imports and 5-10% Chinese tariffs on $60bn of US imports take effect this week.
- With a quiet week also for offshore data, there’ll be even greater focus on the FOMC (early Thursday our time), a hike is expected and priced in, taking the Fed funds rate to 2.00-2.25%. There’ll be interest in 1) how the Fed describes the stance of monetary policy currently and might at forthcoming meetings (accommodative/ neutral), the funds rate moving toward the 2¾-3% neutral rate; and 2) whether the Fed will amend its dot point forecasts for the Fed funds rate. The median Fed forecast calls for a 3-3½% rate by the end of 2019, a slightly restrictive stance. We doubt there will be much change at all to those rate forecasts, nor in the Fed’s economic outlook, positive economic momentum offsetting trade uncertainties.
For further FX, Interest rate and Commodities information visit nab.com.au/nabfinancialmarkets