Good news from China, especially in iron ore imports and trade generally, plus a better than expected jobs report for April combined to send the Aussie dollar and stockmarket higher yesterday.
The Chinese trade data again made monkeys out of the doomsters and gloomsters who keep telling us that China is stuffed and we will be hurt – especially those who claim to be able to forecast the demand for iron ore on the basis of the current weak global price for the ore (see separate story).
The dollar jumped to close to 94 US cents in afternoon trading, up around half a cent on the day’s lows reached before the jobs report was issued at 11.30 am, and then the Chinese trade data which came out two hours later.
The jobs report confirmed the growing feeling that the labour market is starting to improve, with increased suggestions the jobless rate might have peaked.
But despite the obvious ‘good news’ in the figures, they shouldn’t be allowed to hide the fact that the labour market remains weak.
As the Reserve Bank Governor, Glenn Stevens said this week, ”it will be sometime yet before unemployment declines consistently".
The data from the Australian Bureau of Statistics showed employment rose for a fourth straight month in April.
It was a development that supported the Reserve Bank of Australia’s view the jobless rate could be close to peaking.
So far we have had a dip in building approvals, a slowdown in retail sales and car sales (the latter because of the the late Easter), and the trade surplus was a touch lower than expected.
But iron ore imports are booming, hitting new highs, especially to China in March and April.
Employment data is supposed to be a lagging indicator – so the slow stabilising of the labour market evidence since January, is telling us that the economy is doing better.
The big obstacle is next Tuesday’s budget and its slew of new taxes, charges and cost cuts.
That could have an adverse impact on business and consumer confidence. The latest measures of both are out next Tuesday and Wednesday respectively.
A total of 14,200 jobs – almost twice as many as forecast – were added in April from March, when the number of new jobs rose by an upwardly revised 22,000 (18,100 originally reported).
That left jobless rate steady at 5.8%. Economists had tipped a jobless rate of 5.9% and around 8,800 new jobs created.
Unemployment rate steady
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The seasonally adjusted labour force participation rate eased by less than 0.1 percentage points to 64.7% in April, which was a mild negative, as a fall in the seasonally adjusted aggregate hours worked, which were down 39.9 million hours to 1,572.6 million hours.
The ABS said the increase in total employment "was due to increased male full-time employment and female part-time employment".
Full-time employment increased by 14,200 people to 8,045 million people, and part-time employment was unchanged at 3,527 million.
The number of people unemployed dipped 400 to 713,400 in April, seasonally adjusted.
On a trend basis (which tries to smooth out the month to month fluctuations, the number of new jobs rose by around 30,000, unemployment rose by around 7,000 and the jobless rate was steady on 5.9%.
