Unemployment rate edges up as more start looking for work


The labour market continued to surprise with its strength, adding 38.5k jobs in July. Annual job growth picked up to 2.1%, which was the strongest since mid-2011. 

The unemployment rate edged up from a revised 6.1% in June to 6.3% in July. However, the jump was largely due to more people looking for work. 

On balance, an improving labour market should be seen as a positive, and reduces the likelihood the RBA will lower the cash rate again.  We continue to expect the RBA will leave official interest rates on hold until late 2016.

Share Markets: 

A night of disappointing corporate earnings and fear over a US rate hike sent markets into reverse. Uncertainties surrounding tonight's US jobs report also kept some investors on the sidelines.

In the US, the Dow fell 0.7%, the S&P fell 0.8% and the Nasdaq was down 1.6%. In Europe, the losses were smaller.

The Euro Stoxx index fell 0.2%, the FTSE100 was down 0.1% and the Dax fell 0.4%.

Interest Rates: 

The 'risk off' tone of the equity market saw government 10 year bond yields fall (prices rise) in the US, Germany and the UK.

Movements were modest with the US long bond yield falling 5 basis points to 2.22%.

In Australia there was little change with the 10 year government yield, implied by futures, edging up 2 basis points to 2.82%.

Three year government bond yields were unchanged at 1.97%

Foreign Exchange:

The USD and the euro traded sideways with little change overnight.

The Bank of England (BOE) inflation report and the minutes of the BOE monetary policy meeting (see below) saw the UK pound weaken overnight as comments suggested the a UK rate hike was further away than previously expected.


Oil prices continued to slide on ample supplies.

West Texas crude fell 1.1% to $US44.7 per barrel.

Gold was little changed closing at $US1089 per ounce. Copper was steady as was the price of iron ore.


No major data released.


German factory orders jumped 2.0% in June, after declining a revised 0.3% in May. In the year to June, factory orders surged 7.2%, up from 4.5% in May.

This was far stronger than consensus expectations.


The leading index beat expectations in June, rising to 107.2 from 106.2 in May.

The modest increase in the indicator suggests a slightly more positive outlook for the Japanese economy in the near-term than was previously expected. 

New Zealand:

No major data released.

United Kingdom:

The Bank of England announced its policy rate was unchanged as expected.

However, for the first time, it also accompanied that with a release of the minutes of the meeting and the inflation report. These were more dovish than expected, only one member voting for a hike.

The inflation forecast for 2015 was downgraded from 0.6% to 0.3%. The BOE still expects rates to rise but at a slower pace than in previous cycles.

UK industrial production fell 0.4% in June to be up just 1.5% over the year.

United States:

US initial jobless claims at 270k were similar to the previous week's 267k and close to expectations.

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