Employment Muddles On

Australian employment muddles along as focus shifts to Trump’s inauguration. 

Australia’s employment report saw the run of soft outcomes through 2016 continue into year end. Total employment growth was largely in line with estimates, growing by 13,500 over the month. Two thirds of the growth was attributed to full time jobs with the remaining one third coming from growth in part time positions. Despite the moderate growth in new jobs, the unemployment rate edged higher to 5.8%, thanks to a small uptick in the participation rate.

Growth for the back half of 2016 was a rather lacklustre 52,500 jobs. A result which would have seen a steady rise in the unemployment rate, were it not for the pull back in the participation rate. There is still a clear sense that employers are reluctant to embark on a wave of new hiring until they are confident that there will be sufficient growth in the economy to absorb the increase in head count.

With the employment data out of the way, all eyes are now on the US ahead of Donald Trump inauguration tonight. The moves in markets that followed his victory speech have backtracked somewhat since the FOMC tightened rates in December. This has been largely due to the erratic nature of Trump’s public comments whether they have come in the form of tweets, interviews or his one and only press conference.

Should Trump return to script and deliver a comprehensive and concise inauguration speech, returning to his core campaign promises and a plan to implement them, then we could see the Trump inspired moves seen post election reignite. If he fails to reassure voters and the market that he has a comprehensive plan to achieve his election promises then we could see further back pedalling.

David Flanagan

Director Interest Rate Markets