Market Watch, Sept. 25
Market Strategist Evan Lucas reviews Australia's Q3 economic performance.
It is a much quieter time on the economic front this week, however it is the end of the quarter on Friday – so what have we learnt in Q3 from an Australian prospective?
- Economic growth across the Australian economy is materialising – July through September saw positive trade balance data, year highs in spot iron ore, copper and coal prices, while spending habits were also up year-on-year with the likes of new car sales making four year highs.
- The labour market is really firing – 2017 is on track to be the best year of job creation since 2005, and Q3 saw an average of 41,000 new jobs added per month. Participation is on the up, unemployment is holding at 5.6 per cent, and full-time job creation overtook part-time for the first time since 2012.
- Business conditions - hit a record high twice in Q3, with back-to-back record highs in July and August. Business confidence also expanded solidly, however it did come under pressure in September on the back of geopolitics and government intervention.
- The Australian dollar - continued to rise through Q3 on the back of positive commodity price movements and economic growth – however this is a headwind to further growth and corporate profit expansion.
- Inflation - still stagnate, however it was showing signs of expanding – just not at the rate the RBA expected. Looking at key data from Q3, core inflation is likely to find 2 per cent achievable.
- Wage growth – a key concern for inflation growth and future economic expansion. It also fed into the release of the household expenditure survey released in September showing ‘basics' (housing, health, energy, education and food) now make up 59 per cent of weekly expenditure.
- Consumer confidence – three consecutive months of pessimism (10 consecutive months over all), with household debt, finances and wage growth the key issues and the prospect of a rate rise in 2018 also weighing.
On a net-net look – Q3 is likely to be the best quarter of 2017 to date.
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