Australia: Developments in labour and housing markets warranted careful monitoring - ANZ

The research team at ANZ suggests that the competing challenges facing the RBA includes a labour market that still has spare capacity, set against ongoing price pressures in the housing market (with resulting implications for financial stability).

Key Quotes

“The bumper March employment figures that came out after the April meeting took place don’t change the equation all that much, since the jump in jobs was offset by a rise in participation that left the unemployment rate unchanged.”

“Having said this, the jump in employment for March is consistent with what a variety of indicators have been saying for some time. Namely, that the official data likely understate the true strength of the labour market.”

“It is possible that we are in for a period of stronger employment reports that close the gap between what surveys such as ANZ job ads and NAB business conditions are telling us and the official figures.  In which case, the market’s current flirtation with the pricing of some chance of a rate cut is unlikely to be sustained. Unless the housing market so happens to turn down sharply and so act as an offset to an improving labour market.”