Australian Employment Surprises

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Alan Penny

23 January 2020

2 min read

Australia

  • Serious questions on effect of China-US trade war and wildfires
  • Employment Change much better than anticipated
  • Unemployment Rate falls

The Australians released employment figures early on Thursday, Sydney time. These contribute to one of the most important variables when it comes to figuring out the strength or weakness of the economy.

clearly, employment will continue to attract a lot of attention

There are a lot of questions as to whether or not the China-US trade war has inflicted serious pain on Australia, not to mention the wildfires that have been so destructive over the last several weeks. Ultimately, there are a lot of crosscurrents out there when it comes to the Australian economy, but clearly, employment will continue to attract a lot of attention.

The announcements came out strong

The announcements coming out at 12:30am GMT were very strong and caught the market off guard. The Employment Change figures were initially expected to be 12,200 jobs added in Australia for the month of December, but the announcement came out at a very surprising 28,900 job additions.

Furthermore, the Unemployment Rate fell from the 5.2% that was expected, reading 5.1% for the month. This was a pleasant surprise considering there are so many concerns over the effect of the China-US trade war slowing down demand for Australian commodities.

A huge part of the Australian economy is directly connected to exports to Asia, mostly in the form of Chinese construction and manufacturing. However, the recent global slowdown has had an effect on Australia itself. Remember, Australia has not seen a recession for decades, and that is something that causes a lot of angst.

With wildfires raging throughout Australia, there are also concerns about the destruction of businesses and/or employment. So far, that has certainly not shown itself to be the case, and the markets reacted almost at once.

The most obvious reaction was in the Australian dollar, as it gained 0.4% against the US dollar almost immediately.

Concerns still abound

After these announcements, it’s obvious that the markets will continue to walk on eggshells, as there are still concerns about the Chinese economy, especially following the ongoing virus outbreak.

One of the biggest concerns with the Aussie dollar and Australian equity markets in general was the potential fallout from the trade war and the wildfires. However, this is clearly not affecting the employment sector.

The results from the employment sector should have people thinking less about an interest rate cut from the RBA. In general, this should be good for all things Australian, be it the currency or the equity markets. Some of the winners from the ASX 200 immediately following the releases revolved around consumer goods in Australia, as the stock market celebrated the good news.

Ultimately, things in Australia must be getting much better than originally thought, and this should be priced in when it comes to Aussie bonds, equities, and its currency. This should be good for global markets in general.

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Written By
Alan Penny

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