Daily Commentary BY THE CURVE TEAM –

Employment Outlook Waning

8th of January, 2020

The latest employment leading indicator to suggest the labour market strength is about to fade.

Hot on the heals from another fall in consumer confidence, the ANZ job ads report posted a sharp fall in December. The level of jobs ads had been trending lower for most of the past year with the fall now accelerating as we enter the new year.

It seems only a matter of time until the weakness in these leading indicators of employment start to feed through into slower growth in new jobs. Unfortunately new jobs are going to be sorely needed, especially in those bush fire effected areas.

One area where employment is under pressure is the construction industry. This mornings AiG performance of construction index update saw it fall further below the key 50 level, suggesting the slow down in activity is accelerating. The index now sits at 38.9 with the employment index also well below 50 at 42.8.

Deteriorating data to start the year has seen the probability of a rate cut at next months RBA meeting to continue to firm. We have also seen the AUD back peddling after it snuck up above 0.70 over the holiday break. It is now pulled back and is sitting under 0.69 this morning.

Building approvals will be the next key data release out today.

David Flanagan

Director - Interest Rate Markets