FIG AVENUE INVESTMENTS

The current interest rate hiking cycle is slowly coming to an end...

Another good month for markets as global uncertainties start to become more clear...

It took the Australian economy a little under 12 months to regain the ground loss due to the initial pandemic panic. Data in June also highlights that along the way the economy has added jobs at a speedy pace, leading to a level of unemployment not seen since prior to the global financial crisis in 2008.

Despite a global pandemic, the Australian economy was able to push ahead over the 12 months to April 2021, up about 1.1%. This is not far off the annual growth rate that we experienced prior to Covid-19, highlighting the benefits of having plenty of fiscal firepower to ward off economic perils. Accordingly, the unemployment rate is near 10-year lows and the current account surplus (driven by unbelievably high iron ore prices) is at all-time highs1.

The Australian economy continues to roll on, with most indicators pointing to a strong level of activity. Unemployment has recovered back to pre-pandemic levels, with job advertisements at levels not seen for over a decade1.

A big drop in the unemployment rate was a good sign for the Australian economy as it continues to push through its Covid-19 recovery1. The growing budget deficit and economic growth is not coming at the expense of prices, with inflation remaining below the 2-3% target rate monitored by the RBA.

GDP growth for the last quarter of 2020 of 3.1% showed the resilience of the Australian economy in rebounding from the Covid economic slump1. This was accompanied by an equally impressive drop in the unemployment rate from 6.4% to 5.8%, with the total number of employed persons almost back to pre-pandemic levels.

Australian economic indicators continue to improve, with unemployment slowly dropping and trade picking up. This is against the backdrop of virtual elimination of Covid across the country, along with the start of the vaccine roll-out.

With Covid cases, for the most part, remaining close to zero Australia started the year with some semblance of normality. Unemployment dropped to an 8-month low of 6.6% with inflation remaining subdued.

As expected, data for the third quarter of 2020 showed the Australian economy pushing out of its Covid recession. This was backed up by a 90,000 rise in employed persons in the month of November.

Whilst the Australian economy seems to be recovering from the lows of 2020, data in October was not clear about how fast the rebound by be.

Australia's GDP fall of 7% for the June quarter was of no real surprise, but it did mean that Australia's run of over 28 years without a technical recession finally came to an end.

Business conditions in Australia remained very weak over the past month, with the unemployment rate ticking up to 7.5% and the NAB index of business confidence pointing to more economic pain1.

As more pandemic-related data filters through, it is becoming more evident that the impact of Covid-19 will be deep, with a lengthy healing process.

To no-one's surprise, economic growth for the first quarter of the year in Australia saw a fall of 0.3%, whilst the unemployment rate jump another percent higher1.

The Australia economy has finished its remarkable recession-avoiding run, which lasted almost 30 years. This has been driven by a number of factors including our large resources sector (that has often been a reliable counterbalance), good demographics (based on a solid labour force built through natural population growth and immigration), and strong foreign investment flows (especially into resources industry and property). Due to the global nature of the current economic downturn, it will be at least 30 years until any other developed economy might be able to surpass this feat.

Australia has weathered the current health crisis better than most other developed economies. As expected, most of the data out in April showed early signs of the economic devastation to come from Covid-19.

Australia saw a drop in the unemployment rate in February while GDP for the last quarter came in higher than expected at 0.5%.

There were some mixed signals throughout the month of February, though on the whole, economic data continued to look sluggish. Activity in services expanded, while there was a rise in job advertisements.

The Aussie dollar took another dip down against the USD over the month, heading towards lows not seen since 2009. While business confidence and overall activity continues to slow, the unemployment rate did improve in the last month, dipping back to 5.1%1.

The lead up to Christmas saw a number of worrying data points released regarding the Australian economy. Factory activity saw contraction, whist job advertisements continued to fall1.

The Australian economy continues to show signs of weakness, with the unemployment rate edging back upwards and construction activity remaining sluggish.

Interest rates have moved closer to zero, with the RBA cutting rates to 0.75% in October. Continuing sluggish employment, retail sales and low inflation have given the RBA the room to err on the side of caution, along with seeming in action on the fiscal front.

Over the past year, the Australian economy grew at its lowest rate since the end of the dotcom bust. Growth was slower than during the Asian crisis of the 90s and as low as what we saw during the GFC.

There have been plenty of positives for the Australian economy amidst the current climate of geopolitical turmoil. The top of these has been the expanding trade surplus, which is keeping the economy from flat lining1.

With concerns over the medium-term condition of the Australian economy, the RBA has moved to add some stimulus to the economy by cutting interest rates to the ultra-low setting of 1%.

The RBA started its next round of rate cutting since pausing in August 2016. This was on the back of poorer employment data and a worse-than-expected 0.4% GDP growth rate for the first quarter of the year1.

A surprise victory for Scott Morrison saw the rejection of Labor's tax policies. The stock market reacted positively to this outcome, even though economic dark clouds had been growing. Unemployment jumped back up to 5.2%1, even with exports running at all time highs and twice as much as was sent abroad just 10 years ago.

Australia's trade surplus posted in April would have been record save it were for the previous month's surplus being revised upward. This has been driven by the large jump in materials exporting, which has risen by about 50% over the last 3 years, whilst overall imports have only increased by about 20%.

The unemployment rate in Australia hit 8 year lows in March, with the number of unemployed dropping by 11,700. The economic picture in Australia is being driven by record exports of raw materials, which has seen the trade surplus near record highs.

Business confidence (NAB survey) was up a little bit into February, but remained below the long-term average. The unemployment rate released in February also improved, with the economy adding another 39,000 jobs.

Australian exports continue to be assisted by the weaker Australian dollar, with the trade surplus for the past 12 months coming in at over $22 billion (more than double the 2017 surplus and one of the highest on record).

According to the Westpac-MI Leading Index report, the latest economic data is pointing to slower growth for Australia in 20191.

With the unemployment rate remaining at medium term lows and the inflation rate under control1, it would seem that the Australian economy is in good shape.

A large drop in the Australian unemployment rate to 5.0% (a 6.5 year low) was not enough to save the Australian share market from taking a beating in October1.

The Australian economy has seemingly defied most predictions, seeing a relatively high rate of acceleration in growth in the half of the year. GDP growth for the year ending June 2018 was at 6 year high, while the unemployment rate stayed at 6 year lows1.

Another year, another Prime Minister. With polls showing the electorate might be cooling off on Malcolm Turnbull, the right-wing factions of the Liberal party seized their opportunity to get rid of their centrist leader and caused a leadership spill.

The RBA has now left interest rates on hold at 1.5% for 2 years. The unemployment rate over the same time has remained steady in the 5.4 to 5.8% range1, and the Aussie dollar has hovered around the US 75c level.

Australia's unemployment rate improved slightly in the previous month, and has hovered around the 5.5% level now for over a year1.

Budget night came and went with most taxpayers only marginally affected. A surplus was also predicted to be achieved earlier than forecast, with the Australian economy set to be in a healthy growth state for the next couple of years.

Although the long-term trend in unemployment is downward, a slight rise in the unemployment rate to 5.6% might be signalling a softening of economic growth1.

GDP figures for the last quarter of 2017 showed a slowing economy, with GDP growth coming in less than expected1.

The RBA has now kept interest rates on hold at 1.50% for 1 year and 7 months, which matches the previous longest streak, set in 1995/96, when rates were stuck at 7.50%.

According to the most recent Westpac-Melbourne Institute Leading Index score, the Australian economy is set to continue its rate of modest growth for the next 3-9 months, and perhaps even accelerate.

Another quarter and yet another positive GDP figure with Australia's economy growing by 0.6% from July to September1.

Seasonally-adjusted unemployment figures were favourable, with the rate dropping to 5.4% and the number of employed persons rising by 37001.

Data in October was somewhat mixed with good unemployment numbers offset by flat readings on many of the key economic indicators1.

The Australian economy produced good GDP figures for the June quarter, strengthened particularly by exports and government spending.

With the downward trend in the unemployment rate continuing throughout 2017, the Reserve Bank of Australia once again left rates on hold at 2.5%.

The current rise in the AUD seems to be putting the brakes on the recent jump in Australia's trade surplus, with exports down about 1%1.

With GDP growth of 0.3% for the March quarter1, Australia will officially take the title of the longest run of consecutive quarters without a technical recession (defined as back-to-back quarters of negative GDP growth).

There was some more good data for the Australian economy in May with the seasonally-adjusted unemployment falling to 5.7% and the trade surplus staying strong at over $3B.

It was a month of mixed data with signs of continued growth in resources and exports offset by sluggish inflation and employment numbers.

Australia has moved a big step closer to taking the record for longest streak without a recession. The Dutch did 103 quarters without having 2 consecutive quarters of negative growth and Australia is now at 101 thanks to a big jump in economic activity in the December 2016 quarter.

Fair employment numbers continue to highlight a steady level of economic activity. The trade surplus hit an impressive $3.5b thanks to rallying commodity prices and steady production1.

Inflation continues to hover at the lower end of the spectrum, coming in at 1.5% for 20161. Some of this was due to a slightly weaker $A, higher oil price and large jump in tobacco prices.

Despite a good pick up in overall employment numbers, Australia's unemployment rate ticked up a fraction to 5.7%1.

The medium-term improvement in employment trends seems to be flattening, with the jobless rate steady at 5.6% for the month1. October also saw a large drop in building approvals along with a drop in construction for the September quarter.

A fall in the unemployment rate distracted from relatively weak employment numbers1. A drop of 53,000 in full-time jobs was only partially offset by a rise in part-time jobs and the participation rate fell to 64.5%.

A strong consumption expenditure reading helped to keep Australia's GDP in positive territory for the 3 months ending June1.

A better than expected fall in the trade deficit and strong employment data continued to show a relatively stable economic picture1.

Despite a slight increase in the unemployment rate, the Australian jobs landscape continues to look positive.

A strong GDP result of 1.1% for the March quarter began the month of June in high spirits1.

More good news on the jobs front, with headline unemployment dropping to 5.7%1. A major driver (and perhaps benefactor) of the strength seen in employment over the recent past has been construction, which saw a big jump in activity in May.

A gain of 26,000 employed persons and a dip in the unemployment rate was welcome news to those looking for signs of a sustained recovery in the Australian economy1.

After dipping below 70c earlier in the year, the $A made impressive gains during March, up 7.2%. This rise was mainly driven by the weaker picture coming out of the US, but was also helped by good data out of Australia.

Data out in February pointed to a steadily growing economy. The unemployment rate dropped marginally to 5.8%, following a rise of about 12000 new jobs in January.

Despite a reasonably healthy set of jobs numbers for the month, other economic data seems to be pointing towards a decelerating economy1.

The month kicked off with a strong GDP reading of 0.9% for the September quarter1. A further drop in the unemployment rate to 5.8% was another encouraging sign for the Australian economy.

On the data front, November was a good month for the Australian economy. The unemployment rate dropped back below 6% and retail sales were up1.

Another hold on interest rates from the RBA did not stop the banks from making their own rate decisions. With Westpac leading the way and sighting overseas credit pressure, the banks raised mortgage rates effectively reversing the cut by the RBA in May.

An encouraging reading on construction activity and a lowering of the unemployment rate1 might be signs that the economy has bottomed out.

A poor jobs reading (unemployment rate up to 6.3%) saw talk of a possible recession beginning to grow1.

The continuing depreciation of the $A is starting to be more of a worry than a benefit, with concerns over inflationary risks rising.

Lower interest rates and a falling $A may be helping to put a halt to the deceleration of the broader economy as indicated by the marginal decrease in the unemployment rate to 6.0%1 and a rise in business confidence.

The second drop in interest rates in less than 6 months came as little surprise to most.

Data for the month continues to highlight a sluggish local economy. Unemployment remains somewhat high and business confidence is well below the long-term average1.

GDP figures released early in the month showed that the economy continues to perform below trend at 2.5% year-on-year1.

In a surprise to some, the RBA decided in its February meeting to cut the target cash rate to a record low of 2.25%.

The $A went into free fall with dovish comments from the RBA almost guaranteeing an impending rate cut. Though wage growth and inflation look benign at best, the healthy employment data1 for the month seemed to highlight the resilience of the overall economy.

Economic data for the country continued to remain subdued in the run up to the end of the year.

There were some signs of job growth with both job advertisements and total employment showing improvement1.

Mixed data for the month of October with construction and new home sales providing a healthy picture against poor manufacturing and employment news1.

A massive jump in jobs had most commentators questioning the accuracy of the ABS data, with many taking the record 121,000 increase1 in employment with a grain of salt and as correction to August's disappointing numbers.

A large jump in the unemployment rate up to 6.4%1, as well as a plummeting iron ore price, provided some gloom in the month of August.

More bad than good amongst the main data points for the month with lower export prices weighing on our trade balance and unemployment back to 6%1.

Mainly stronger news for the month, including a surge in March quarter exports, GDP for the quarter at a better-than-expected 1.1%1 and a rise in job ads, helped contribute to growing consumer and business confidence.

The main talking point of the month was Joe Hockey's first budget and the relatively large backlash against some of the harsher measures.

Whilst the PM was abroad signing some free trade agreements with our Asian partners, there was more good news on the employment front at home in April, with the unemployment rate dropping back to 5.8%1.

Much of the data out in March pointed to an improving economic landscape at home, with jobs1 up by 50,000, the trade surplus1 back above $1B and the December quarter GDP growth figure1 coming out at a better-than-expected 0.8%.

Somewhat mixed data with Australia's trade balance1 surging back into surplus, retail sales1 strong and business confidence near 3 year highs2, but contrasted with a slip in construction activity1 and a jump in the unemployment rate1 to 6.0%.

Spending on homes and retail goods are providing the economy with some stability in the midst of the continuing manufacturing slump and unemployment worries.

We saw mostly weak data for the Australian economy in December, apart from a rise in retail sales and construction activity.

A reasonably quiet month on the economic front. The RBA left interest rates on hold at record lows, but has increased their "jawboning" over reference to the still-too-strong $A.

A post-election surge in confidence has not been all that evident so far with only minor improvements in retail spending and a modest lift in inflation.

After a non-surprising election result to start the month, September gave us a few positives from a sputtering economy.

A reasonably quiet month on the economic front as focus turned to the soon-to-be-held elections.

Mainly weak data has pointed to softer conditions continuing throughout the economy. The main worry is jobs, with falling vacancies causing a lowering of business and consumer confidence.

With GDP growth figures for the first quarter coming in at the lower end of expectations, overall conditions remained subdued but far from dire.

The winding down of the commodities boom has so far been handled relatively well by the economy as a whole. Employment surprised with over 50,000 jobs added the previous month and trade and housing data was reasonably good.

A reasonably quiet month on the economic front with no real surprises and the picture of moderating growth becoming more defined.

A reasonable GDP figure and a surprisingly good employment number should have given the Government an extra boost in their economic management credentials, but the in-house leadership battle (or "non-battle") turned media attention to the overall party disfunction.

Somewhat mixed signals on the domestic front in February. Positives were seen on the confidence front with business sentiment, consumer sentiment and house prices all up.

A reasonably quiet month on the economic front with mostly soft data washing through the headlines.

Looser policy settings from the Federal Government and the Reserve Bank came as somewhat of an expected Christmas present.

The RBA surprised again on Melbourne Cup day, this time suppressing the urge to loosen rates another 25bps. Their job hasn't been helped much by the stream of mixed signals coming from the economy.

A rate cut from the RBA was expected early in the month, especially with a string of softer data piling up. Jobs numbers in particular have become somewhat weaker along with sluggish growth elsewhere.

Overall data for the month was on the soft side with job numbers weak (even with unemployment rate falling), trade deficit widening and consumer confidence waning.

Some early signs of strength (unemployment rate dropping, business confidence high, house prices rebounding) were all but forgotten by the end of August with mining companies starting to signal a potential end to the boom.

There was more surprise data out this month with both GDP and jobs impressing much more than expected. And this again came against the backdrop of a rate cut by the RBA.

Good retails sales figures and a drop in the unemployment rate early in the month seemingly impugned the RBA's earlier decision to slash rates.

Though the employment figures surprised on the upside, data released throughout the month pointed to continuing weakness in the overall economy.

The mining tax is finally through. Compared to other resource nations, especially those in the developing world, who change ownership laws, local content laws and royalties at the drop of a hat, miners are probably quite pleased that the final version took 3 years and is somewhat watered down.

In what some saw as a surprise move, the RBA decided to leave rates on hold for another month. This was somewhat justified by a couple of good numbers released through the month including a drop in the unemployment rate back to 5.1% and a tick up in consumer confidence and business sentiment.

Weakness in some areas of the economy still have many expecting the RBA to continue to loosen its monetary stance.

December saw the second straight month of interest rate cuts by the RBA in an attempt to aid the struggling retail, manufacturing and service sectors.