Jobs data on agenda as signs point to cooling inflation

All eyes will be on jobs data this week as Australians hope for more positive signs before the Reserve Bank’s first rate decision of the year.

A slowdown in jobs growth is expected to show up in the Australian Bureau of Statistics’ December labour force report, scheduled for release on Thursday.

CommSec economists Ryan Felsman and Craig James say some correction is expected after a larger-than-expected growth in jobs, with 61,500 added in November.

Though it remains extremely low compared to historical averages, the unemployment rate has edged higher over recent months, increasing by 0.1 percentage points from October to 3.9 per cent in November.

A soft labour force release would encourage households praying for an end to interest rate rises following a surprisingly sharp slowdown in inflation.

The ABS on Wednesday reported the November consumer price index rose 4.3 per cent, down from 4.9 per cent in October and its lowest level since January 2022.

Economists had been expecting a 4.4 per cent rise in prices, prompting many to predict the Reserve Bank will keep the cash rate unchanged at its first board meeting of 2024 in February.

The rates market is predicting a near-zero chance the RBA will hike interest rates again this cycle, with two cuts priced in by the end of the year.

Nevertheless, an upside surprise when all-important quarterly CPI figures are released later this month would seriously test the market’s confidence.

NAB senior economist Taylor Nugent still reckons the central bank has one last hike in it for February to “better balance the risks around the return to at-target inflation in a reasonable time frame”.

The economic week will kick off with job ads data from ANZ and Indeed along with CBA’s household spending insights on Monday.

The ABS will also release migration statistics on Tuesday and building activity data on Wednesday, which will provide further insight into how the construction industry is placed to supply Australia’s growing population with new homes.

About 40,000 dwellings were started in the June quarter – just two thirds of what is needed each quarter to meet the Albanese government’s target of 1.2 million new homes over five years.

Across the Pacific, US reporting season will accelerate in a week shortened by the Martin Luther King Jr holiday, with Australians set to wake up to earning results from big names like Goldman Sachs and Morgan Stanley on Tuesday.

Alumina giant Alcoa will also reveal its earnings on Wednesday, a week after it announced the closure of its Perth refinery.

The Australian share market’s benchmark S&P/ASX200 index on Friday finished 7.7 points lower at 7,498.3, a 0.1 per cent drop but up by about the amount for the week.

The broader All Ordinaries fell 6.3 points, or 0.08 per cent, to 7,730.5.


Kat Wong and Jacob Shteyman
(Australian Associated Press)


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