Australian Economy – The main talking point of the month was Joe Hockey's first budget and the relatively large backlash against some of the harsher measures. Data for the month was mixed with employment up 14,200 people and the unemployment rate staying steady at 5.8%1, but with consumer confidence and business spending falling.
Global Economy – Consistent 200,000+ monthly job creation2 along with robust factory output data continues to point to a sustained recovery in the US. Figures out of Europe were much more of a mixed bag, with most hoping it is following the US's recovery trajectory (i.e. patchy for the couple of years, sustained moderate growth thereafter). The UK continues to be a standout with a falling unemployment rate and good GDP growth. In the east, Japan is still trying to adapt to the higher sales tax, whilst Chinese output is hopefully signalling a bounce from the recent slow-down.
Investment Markets – Most of the worlds key markets saw decent gains in May, with the US and Japan up over 2% and Europe up almost 1.5%3. Australia was the main laggard with no real growth in the main equity index, as good returns from utilities, property and consumer staples was offset by falls in banks and resources.
Outlook – Separatists in Ukraine and a military coup in Thailand have provided some cause for concerns throughout global markets, but this gloom has been mainly offset by the cheers for Modi's electoral victory in India and his pro-economic policies for the world's second most populous country. A steadying China seems to be the last piece in the puzzle of posterity, but with markets fully priced for perfection any slips could prove painful.
S&P/ASX 200 – 12 months to 31 May 2014
Source: Core Equity Services