Australia’s labour market will have to change gear yet again – ANZ

Anil Panchal FXStreet

Analysts at the Australia and New Zealand Banking Group (ANZ) cite further challenges for the Aussie labour market despite witnessing a strong Australia Job Vacancies for three months to November, published during Wednesday’s Asian session.

Key quotes

Caution about being in public places and staff shortages are stifling household spending. ANZ-observed data show spending in early January resembled lockdown conditions, particularly in Sydney and Melbourne.

Currently, we expect the economic effects from Omicron will be temporary. Resilient consumer confidence in financial conditions points to a rapid recovery in spending once health risks ease.

Assuming this is correct, once cases fall to much lower numbers, we still expect labour underutilisation to fall in 2022, putting upward pressure on wage growth.

Data revisions suggest closed international borders have had a smaller effect on Australia’s labour supply than previously thought, adding to the argument that demand has been the key driver of the recovery.

But the record high job vacancy rate means that more Australian and overseas workers are needed in productive jobs to realise potential employment and economic growth.

There are some positive signs for wage growth, including more workers expecting to change jobs and higher inflation expectations, but Omicron could delay the acceleration.

While reported difficulty finding labour remains elevated, there is still significant room to reduce spare capacity in the form of underemployment across several industries.

Also read: AUD/USD: Bulls pause around previous support of 0.7220 on downbeat China inflation, US CPI eyed

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

AUD/USD leans on a China prop that's quietly buckling

The Australian Dollar spent Monday trying to talk itself into a recovery, and the tape was not buying it. AUD/USD has ridden a China-and-commodities narrative for months, one that conveniently glossed over how shaky both legs of that trade have become, and Friday's Nonfarm Payrolls print finally forced a reckoning. US employers added 172K jobs against a consensus near 85K, with roughly 93K of upward revisions to prior months and the unemployment rate steady at 4.3%.

USD/JPY: Japanese Yen ignores every reason it has to strengthen

There is a strange disconnect running through the Japanese Yen right now, and USD/JPY parked just above 160.00 captures it perfectly. By any domestic reading the Yen should be firming: first-quarter Gross Domestic Product beat expectations over the weekend at 0.5% on the quarter, the Bank of Japan is widely expected to raise rates at its meeting on June 18, and authorities have spent the past week jawboning a currency they clearly want stronger.

Gold edges lower below $4,350 as Fed rate hike expectations grow

Gold price trades with mild losses around $4,325 during the early Asian session on Tuesday. The precious metal remains on the defensive near its lowest since March 24 amid uncertainty in the Middle East and rising bets of a US interest rate hike.

Strategy resumes BTC accumulation with 1,550 Bitcoin purchase, adjusts STRC dividend schedule

Bitcoin treasury firm Strategy bought 1,550 BTC last week for roughly $101.3 million, according to a Form 8-K filing on Monday. The purchase, made at an average price of $65,332 per Bitcoin, was funded through proceeds from the company's at-the-market equity offering program.

$1.75 trillion: Is SpaceX the most popular IPO in history, or the most engineered?

On June 12, the largest initial public offering (IPO) in history is set to hit the tape, and almost nobody is asking whether the price is right, because almost everybody already wants in.

The US economy defies the rules: 100 days into the Oil shock and the recession signal is still missing

More than three months after the start of the Iran war and the resulting disruption to global energy markets, the US economy continues to display remarkable resilience. The conflict has triggered a sharp rise in Oil prices, reignited inflationary pressures and fueled widespread concerns about a potential economic slowdown.