It’s time for another edition of my Economic Data Roundup. For today, let’s focus on the latest reports from the land of my look-alike Hugh Jackman… Australia!
As I mentioned in my review of the RBA interest rate statement, Australia has seen its share of strong and not-so-strong economic data recently. Here’s a rundown of how growth, employment, consumer spending, inflation, and trade activity turned out so far:
The latest GDP release was good news for the Aussie, as the Q1 report showed a 1.1% expansion versus the estimated 0.9% growth figure. This is Australia’s fastest pace of growth in two years, confirming that RBA monetary policy is working like a charm.
Components of the report showed that exports were up by 4.8% during the first quarter, contributing 1.1% to overall GDP growth. Meanwhile, housing investment saw a 4.7% gain and added 0.2% to the GDP.
A few weeks ago, Australia released a stronger than expected jobs report for the month of April. The economy added 14,200 jobs during the month, almost twice as much as the estimated 7,500 increase, while the previous month’s reading was upgraded from 18,100 to 21,900.
This marked the third consecutive month that the Land Down Under released a higher than expected employment change reading. The latest hiring gains in April were enough to keep the jobless rate steady at 5.8%
While consecutive employment gains tend to lead to higher consumer spending, this didn’t seem to be the case for Australia. For April, retail sales posted a mere 0.2% uptick instead of the estimated 0.3% gain. This followed a weaker than expected 0.1% increase for March and a lower than estimated 0.2% rise in February, marking the third consecutive monthly disappointment in consumer spending.
Perhaps improvements in the labor market just weren’t enough to spark optimism among Australians. Consumer confidence, as measured by ANZ, has shown a 2.9% increase for April but the component measuring perceptions of financial condition marked a 3.1% decline.
Not only is domestic economic activity looking weak, but it appears that external demand might also be hitting a road bump. The latest trade balance showed that Australia’s previous 0.90 billion AUD trade surplus turned into a deficit of 0.12 billion AUD.
Apparently the large decline in coal exports is to blame for the shortfall. Aside from that, gold exports fell by 131 million AUD while sales of rural goods slipped by 208 million AUD. Meanwhile, imports surged by 8% or 400 million AUD, driven mostly by a surge in purchases of consumption goods.
In a nutshell, Australia’s growth and employment have shown strong figures while spending and trade activity have lagged. Do you think this is enough to keep the Australian dollar supported for the next few months or is it likely to see more weakness?