July 31, 2018

Australian Markets Weekly – What do job ads tell us about the Australian economy?

The Weekly looks in detail at some of the trends in SEEK job ads and what they tell us about the trends in the various state economies.

For the full details, download the full report:  Australian Markets Weekly 30 July 2018


  • The Aussie opens its seventh week hugging 0.74. The USD/CNY closed last week at 6.8133, its highest since June 2017, opening higher today, the CNY’s weakness a thorn in the side of the AUD. China releases its July PMIs tomorrow (expected to be still solid), while locally the main market interest will be Friday’s retail sales, NAB looking for a softer-than-expected 0.1% m/m print (Mkt +0.3% m/m).
  • After the weekend’s by-elections, where the Labor Party retained its four seats, the press is now speculating whether the Coalition will shelve its proposed company tax cuts and re-configure its tax policy toward greater personal income tax cuts.
  • Offshore, last week closed with strong US GDP growth at 4.1% for Q2, after 2.2% in Q1, another sign of continuing strong growth through the middle of the year. The market this week looks ahead to the release of the big three July monthly indicators: the PCE deflators, expected to reveal core inflation steady at 2.0% (out Tuesday), then the ISM Manufacturing report (expected to be still solid, out Wednesday), then Friday’s payrolls, market expecting another near 200K outcome. Gains of this magnitude are sufficient across time to see lower US unemployment. In turn, this supports expectations of a continuing lift in the Fed funds rate, though markets will watch the ISM reports for any signs that trade tensions are impacting firms’ hiring and investment plans.
  • The Fed is tipped to leave rates steady at this week’s meeting but hike at the next (September 27) continuing along their gradual rate rise path. Elsewhere, the Bank of England is expected to lift rates and then remain on hold, after signalling only 1-2 hikes per year. There’ll be intense interest in tomorrow’s BoJ meeting, interest in whether the Bank will adjust their policy to endorse somewhat higher 10y JGB yields (from zero to 0.1%). The RBA meets tomorrow week with another month of on hold odds on.
  • This week we look in detail at some of the trends in SEEK job ads and what they tell us about the trends in the various state economies.  We also delve into what they say about the state of various industry cycles that have been important in understanding the overall trend for the Australian economy in recent years.  In this respect, think the importance of the mining, housing and infrastructure cycles.
  • We are monitoring the recent easing in overall job ads and also ads in property and residential construction, however, the latter are broadly balanced by stronger mining job ads, which are expected to continue lifting. In addition, other cyclical sectors remain reasonable, suggesting no particular reason to fear a turn in overall labour demand at the present time.

Chart 1: Real Estate and Property job ads have turned

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