Australian Economy – 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. This was in contrast to the rosier picture painted in the Westpac - Melbourne Institute Leading Index of Economic Activity, which is still predicting higher-than-trend growth over the short-term2.
Global Economy – Obviously the big story of November 2016 was the surprise victory of Trump, now president-elect. And despite Trump winning on a "Make America Great Again", it seems that most of the hard work on the economic front has already been done with unemployment continuing to fall (maybe his slogan should have been "Try not to break anything"). Across the Atlantic, growth in the UK following the Brexit vote seems to have been stable, which may be a good sign for the post-election economy of the US.
Investment Markets – One thing is for sure - markets like certainty, even if that certainty comes in the shape of a narcissistic, womanising billionaire. Most markets were up on the Trump win, with US and Australian equities up 3.4% and 2.3% respectively for the month3. Japan and China rallied over 5%. Europe, possibly fearing the surge in right-wing rhetoric, finished the month flat.
Outlook – Now that the US election is behind us, there may be a month or two of calmer waters. However, anti-trade and other isolationist policies are not likely to be good for the global economy as a whole, even if some jurisdictions or industries benefit. Most attention will now turn to Europe as Brexit negotiations get under way and other important elections loom.
S&P/ASX 200 – 12 months to 30 November 2016
Source: Core Equity Services
Footnotes: 1. Australian Bureau of Statistics; 2. Westpac-Melbourne Institute ; 3. Bloomberg data.