In our October market update we wrote about the many reasons to take a half glass full view of the Australian economy and look through the negativity portrayed by the media. Today we saw figures released stating that 58,000 jobs were created in October. Coupled with this was a drop in the unemployment rate to 5.9% – this is great news!
There are always swings and roundabouts with these statistics but there is other evidence pointing to the fact that business confidence is improving and it appears that growth is stabilising. Hopefully this means that a platform is being established for improved company earnings if businesses have the confidence to hire more workers, but some industries will still fair better than others. Not surprisingly, in a post mining boom era it is New South Wales and Victoria that are doing well, while the other states are still looking patchy.
Markets reacted instantly with a big jump in the Aussie dollar with the bond markets pricing in a much lower probability of a rate cut before March 2016. Our view remains that rates will stay low for a long time, the RBA to make no further cuts this cycle and that mortgage rates have bottomed.
Rob Gilmour is the Managing Principal of Wealth Simplicity. The information provided should not be considered personal financial advice as it is intended to provide general advice only. The content has been prepared without taking into account your personal objectives, financial situations or needs. You should seek personal financial advice before making any financial or investment decisions.