Australian Economy – 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. These figures were offset by both a drop in the labour participation rate, as well as a fall in overall GDP growth to an anaemic 0.2% for the December quarter1.
Global Economy – Unemployment in the U.S. has dropped back down to a rate of just 3.8%. While this is low, it is still only the 8th lowest among the G20 (or the 13th worst) with large economies like Japan, Germany, China and India all with lower rates of unemployment. Underemployment, which is probably a better, but less available measure of unemployment is likely to be much higher. This would be especially true for countries that are posting full employment figures without any real pressure on wages (for example, previous times when the U.S. unemployment rate has been this low, wages were growing at closer to 10%, which is far higher than the current 4%)1.
Investment Markets – Equity markets maintained their early year gains in March, with most markets edging higher. Chinese stocks were among the best performing, up over 5% for the month and almost 30% for the quarter. Australia finished flat, whilst the US and Europe were up almost 2%. Japanese equities have continued to underperform and finished down for the month2.
Outlook – The upcoming election in Australia may have some affect on sentiment across consumers, businesses and investors, however, the overall direction of the economy is generally indifferent to the political divide. With Brexit being delayed for at least the short-term, and the Mueller investigation winding down, there seems to be a small window for markets to take a little breath.
S&P/ASX 200 – 12 months to 31 March 2019
Source: Core Equity Services
Footnotes: 1. TradingEconomics; 2. Bloomberg data .