Lift in job vacancies falls back over past quarter

Australia:  

Private sector credit grew by 0.4% in May, following a 0.5% lift in April.  

This result was a touch weaker than the 0.5% average growth recorded over the previous six months.  Over the year to May 2016, credit has grown 6.5%.  

Credit expansion in annual terms is well up on the pace seen in the aftermath of the GFC and appears to have settled in a 6-7% range.  

This annual pace is not especially robust, but is reasonable given the subdued pace of inflation.

On an annual basis, the growth rate of business credit rose to 7.1%, close to its strongest pace since January 2009.  

A year ago, business credit was growing at 5.3% per annum, suggesting that business activity has picked up in the last twelve months.

Business credit is growing at a faster annual pace than housing credit.  Following a 0.5% lift in the month of May, the annual pace in housing credit stood at 7.0%.  This rate is down on the recent peak of 7.5% recorded towards the end of 2015.

Job vacancies fell by 1.9% in the quarter to May, after a revised rise of 2.8% in the previous quarter.  

The biggest falls in job vacancies were recorded in accommodation & food services and in the mining sectors.

Share Markets: 

Share market bourses in Europe and the US strengthened, after the European Central Bank (ECB) and the Bank of England signalled looser monetary policy ahead. 

The US S&P 500 index rose 28 points or 0.2% and the US Dow Jones jumped 235 points or 1.3%. 

Major European bourses also finished higher overnight; the UK FTSE 100 led the way with a rise of 2.3%. 

The improvement on world share markets overnight echoed a lift in appetites for risk. 

Interest Rates: 

The US 10-year treasury yield fell from 1.52% to 1.47% and the US 2-year treasury yield fell from 0.64% and 0.58%. 

Market pricing for US monetary policy slipped a little, continuing to imply the US Federal Reserve is likely to stay on hold this year and next. 

US and core European bond yields also fell amid comments from BoE Governor Carney that policy easing in summer will be needed. 

There was also a Bloomberg article citing unnamed UK officials who claimed a loosening of quantitative easing rules was being considered.

Foreign Exchange:

The euro fell on speculation that the ECB is considering loosening the rules for quantitative easing so as to carry out additional stimulus. 

The S&P credit ratings agency also downgraded the European Union to AA from AA+ on the back of Brexit.

The pound also experienced a sharp fall overnight against key currencies, after BoE Governor Mark Carney said the central bank may need to loosen monetary policy as it tries to contain the fallout from Britain's decision to exit the European Union. 

Against such a backdrop, the USD index appreciated.

The AUD largely stuck to a narrow trading range of US$0.7420 and US$0.7430, ahead of the Federal election tomorrow and the Reserve Bank board meeting next week.

Commodities: 

The CRB index of commodities fell overnight, but still finished the month and quarter higher.  Oil also declined overnight and for the month of June, but the fall failed to dent the biggest quarterly advance in the oil price in seven years. 

Falling US supply has added to speculation that the surplus of oil around the world is easing.

Europe: 

The increase in the annual headline harmonised (HICP) rate, from -0.1% to +0.1%, was a bit sharper than the consensus forecast of a rise to zero. 

The acceleration in headline inflation was primarily driven by oil prices, but underlying inflation remains range-bound.

Ratings agency Standard & Poor's cut the European Union's credit score on Thursday, citing concerns about the unity of the bloc after Britain's decision to leave. 

Standard & Poor's cut its rating to "AA" from "AA+", saying in a statement that it had "reassessed its opinion of cohesion within the EU" and that the bloc may have less budget flexibility after Britain's departure.

Japan:

Industrial production contracted by 2.3% in May, after a rise of 0.5% in April.  Production plans suggest output is likely to contract in the June quarter. 

The Japanese yen has appreciated after the Brexit referendum.  If this appreciation is sustained, it will put pressure on Japanese exports on production in coming months.

Housing stats grew by 9.8% in the year to May, well above consensus expectations for a rise of only 4.8%.  In the previous month, housing starts had expanded at an annual rate of 9.0%.

New Zealand: 

Building permits fell 0.9% in May, after an increase of 6.8%. 

The NZ business confidence index rose to 20.2 in June, from 11.3 in May. 

This gauge is the highest since December.  Investment intentions and profit expectations increased while employment intentions were flat.

United Kingdom: 

The GfK survey of consumer confidence remained at minus 1 this month, but the measure of how consumers view the twelve-month outlook slipped to minus 14 from minus 13, down 18 points from a year earlier. 

The survey was conducted in the two weeks through June 15, suggesting tht sentiment was already becoming gloomier before the referendum on June 23.

BoE Mark Carney signalled the BoE could cut the benchmark interest rate in coming months as the central bank tries to shield the economy from the impact of Brexit. 

In his second televised address since the country voted to leave the European Union, the Governor said that officials won't hesitate to act and will also continue its liquidity auctions for banks on a weekly, rather than monthly, basis and consider a host of other measures.

United States: 

US jobless claims rose from 259k to 268k in the latest survey week ending June 25 (vs 267k expected). 

Claims are averaging 267k so far in June, compared to 276k in May, 259k in April and 265k in March.

The Chicago PMI rose from 49.3 in May to 56.8 in June, which marks the highest reading since January 2014. 

The report suggests improving manufacturing conditions in the US Rust Belt, but the thorn in the report was the employment component.


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