Australian Economy – 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. However, a fall in the Westpac-Melbourne Institute Leading Index to -1.53% highlighted the fact that the economy may not be gearing up for robust growth just yet2. A surprising fall in consumer prices was more evidence of subdued growth in the near future.
Global Economy – The job picture in the US continues to remain promising, with another 215,000 jobs added in March3. A major concern continues to be the low growth in wages and sliding productivity, which may be a potential deflationary signal. GDP in Europe showed renewed signs of life, up 1.6% year-on-year, and unemployment in the region was also fractionally lower. Preliminary March quarter GDP results from China showed promising growth of 6.7% for the year, albeit without any real signs that the deceleration of the economy will stop anytime soon.
Investment Markets – Following a good bounce back in March, equity markets were reasonably flat in April. Australian shares were some of the best performing, up over 3%, whereas Japan and China both saw small falls for the month4.
Outlook – A sustained rise in commodity prices has raised hopes of a pick-up in global demand. Jitters over China and US rate rises seem to have subsided for now, though they may be replaced by fears of a world run by politically-insensitive megalomaniac.
S&P/ASX 200 – 12 months to 30 April 2016
Source: Core Equity Services
Footnotes: 1. Australian Bureau of Statistics; 2. Westpac-Melbourne Institute; 3. Dept of Labour, USA; 4. Bloomberg data.