Economy heads for first major test since RBA rate hold
Employment numbers will be at the forefront as economists continue to ponder whether borrowers will see the last rate cut from the Federal Reserve this cycle.
In the first major economic data since the RBA kept interest rates steady last week, the unemployment rate is expected to fall to 4.4 per cent when the Australian Bureau of Statistics releases October figures on Thursday.
The central bank painted a bleak picture of Australia’s economic outlook on Tuesday; The updated forecasts reveal that headline inflation is expected to remain above the target range at least until mid-2026.
As it became clear that the inflation dragon was less tamed than he had hoped, Governor Michele Bullock conceded that no further rate cuts were possible.
One scenario that could force the RBA’s hand in cutting interest rates further would be a sudden deterioration in the job market.
Bank staff predict that the unemployment rate will fall from the current 4.5 percent to 4.4 percent and remain at that level for the next two years.
The unemployment rate has been rising steadily since the beginning of the year but increased by 0.2 percentage points in September.
AMP economist My Bui said the interest rate was expected to pull back some of this increase, but this was due to the volatile nature of the figures rather than an indication that the labor market was tightening.
“Employment gains will likely remain weak at just 18,000 and the participation rate will still be around 66.9 percent, the highest in history,” Ms. Bui said.
On Monday, RBA deputy governor Andrew Hauser will speak at the UBS Australasia Conference in Sydney.
As the bank’s second most senior official, his comments will be followed closely. But with no significant developments since Ms. Bullock’s post-meeting news conference, her remarks are expected to largely follow the governor’s lead.
Later Monday, policymakers will have an updated understanding of consumer and business confidence.
Westpac and the Melbourne Institute will publish their latest consumer sentiment indexes, while NAB will publish its latest business survey.
ANZ senior economist Adelaide Timbrell said she would closely monitor the survey of price indicators to learn about the future path of inflation.
Household credit data will be published by the ABS on Wednesday.
Ms Bui expects home loan values to rise 0.2 per cent in the three months to September 30 as lower sales volumes and limited listings offset a strong rise in property prices.
Meanwhile, investors turned the page on a roller-coaster week on Wall Street as economic concerns, the longest-ever federal government shutdown and soaring tech stock valuations dampened risk appetite.
But losses narrowed significantly late Friday following reports of progress in the congressional deadlock that resulted in the marathon’s shutdown.
While S&P 500 completed the day at 6,729.02 points with an increase of 8.52 points (0.13 percent), Nasdaq Composite lost 47.87 points (0.21 percent) and fell to 23,006.12 points. The Dow Jones Industrial Average rose 76.28 points, or 0.16 percent, to 46,988.58 points.
Australian stock futures rose 17 points, or 0.19 percent, to 10,470.
The S&P/ASX200 fell 58.6 points on Friday, falling 0.66 percent to 8,769.7 points, while the All Ordinaries index lost 66.9 points, or 0.74 percent, to 9,031.7 points.
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