8 May 2017

Over the past week Australian shares were 1.5% lower. Shares in developed countries were 1.0% higher and the US market was 0.6% higher. Shares in emerging markets were unchanged. The Australian dollar was 0.9% lower at 74.24 US cents. The 10 year bond yield in Australia was 0.07 higher at 2.65% while in the US, the 10 year bond yield closed 0.07 higher at 2.35%. The oil price lost 6.3% to 46.22 US dollars per barrel.

How has Australia’s economy been performing? The charts below frame the picture.

2017-05-08_weekly image
Australia’s economy continues to travel reasonably well:

  • Gross domestic product (GDP), the main measure of economic growth, is solid.
  • Inflation has lifted a little from very low levels which wouldn’t be considered a bad outcome.
  • The unemployment rate has risen a little from 10 year lows. This is because more people are looking for work meaning a higher participation rate and new jobs are still being created.
  • The Reserve Bank of Australia (RBA) has left the official cash rate at a historically low level of 1.5%.

There are clearly risks to the economy, most notably housing and its impact on the consumer, and a China weakness scenario. However there are also positives such as historically low interest rates and a more positive global economic outlook.

Signing off

David Bell

Past performance isn't necessarily an indicator of future performance.
All data sourced from Bloomberg, RBA and ABS.