Australian jobs data disappoints

Asians markets were flat despite positive offshore leads. The MSCI Asia Pacific Index was 0.1% higher in late Tokyo trading with no clear catalyst driving markets in either direction. There is some skepticism heading into the Obama speech overnight with some traders arguing the good news is already priced in. Australia’s ASX200 index finished flat after giving away its morning leads. Today’s jobs data looks poor on face value.

Taking a closer look, the Australian economy shed 9,700 jobs with a 12,600 decrease in full employment only partially offset by 2,900 jobs. More importantly, the headline unemployment rate has risen from 5.1% to 5.3% seasonally adjusted. The jobs report comes despite a better than expected retail sales number and strong GDP figures, not only for the second quarter but a revision to the first quarter too.

On a state-by-state basis, Queensland seems to have the most disappointing numbers with seasonally adjusted unemployment up from 5.7% last month to 6.2%. It’s worth noting that around 10,000 jobs are expected to be created in Queensland commencing from the end of this year as two very key LNG projects commence development, among investment in other infrastructure. Western Australia also saw an increase from 4.0% to 4.4% but remains comfortably below the national average. South Australia’s rate actually fell, from 5.2% to 5.1%, perhaps the brightspot and a sign of better things to come.

The unemployment rate has now moved from 4.9% seasonally adjusted in March to 5.3% this month, not completely disastrous. Put in context, this is still down on the 5.8% rate in the same month two years ago. RBA Governor Glen Stevens has made clear the need to ensure inflation targeting over the medium term and so we still think this data set alone is not adequate enough to see the RBA changing course anytime soon, at least not over the next month.

Corporate news remains very quiet. Australia’s Takeovers Panel today announced it won’t be initiating any proceedings towards Foster’s after SABMiller complaint on disclosure points. The acquisition remains hostile and isn’t expected to change anytime soon.

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