Australian Economy – 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. Retail turnover has also continued to grow well, up about 0.6% for the December 2015 quarter and 4% year-on year1.
Global Economy – US unemployment continues to hang around the 5% level, with good jobs growth being seen in retail, healthcare and manufacturing3. Despite the strong jobs environment, GDP growth for the December quarter came in on the weak side at 1% p.a.. Even though this was higher than the advance estimate released in January, this was still well below the 2% level reached in the September quarter and the 2.4% seen across the whole of 2015. In Europe, industrial production and construction both fell in January, and GDP growth for the December quarter came in at a steady 0.3% (1.5% for the year).
Investment Markets – Hopes of a bounce back from January lows seemed dashed as equity markets slumped again in February. A bounce-back in the second-half of the month was welcomed by investors, though most markets still ended the month in the red. The worst of the developed markets were European bourses (loss of over 3%) and Japanese equities (-8.5% loss)4.
Outlook – Despite no clear signs of danger on the near-horizon, the ongoing volatility of markets is a symptom of the unprecedented easy-money policies of central banks and fears of growing instability in the finance world. Though another global financial crisis is not expected in the near future, smaller shocks may become frequent and investor patience is likely to be tested.
S&P/ASX 200 – 12 months to 29 February 2016
Source: Core Equity Services
Footnotes: 1. Australian Bureau of Statistics; 2. Westpac-Melbourne Institute; 3. Dept of Labour, USA; 4. Bloomberg data.