An interesting week for Australian economy. Employment change data disappointed but percentage of housing starts increased. The Australian currency exchange rate versus sterling remained stable.
Below is Peter's summary for week ending 17 June 2011.
It's been a mixed week in Australian economic data.
On the one hand, employment change figures disappointed, resulting in just 7.8k jobs created last month, compared to forecasts of 25.0k. On the other hand, housing starts increased 3.3% in the first quarter 2011, compared to predictions of a -0.6% decline. These mixed results mean that, in short, the GBP to Australian dollar exchange rate has been stable.
Let's look at the figures in more detail then.
Starting positive, housing starts increased 3.3% in the 3 months of 2011 according to data from the Australian Bureau of Statistics, compared to forecasts of a -0.6% drop. This indicates that the number of houses on which construction began beat forecasts.
Furthermore, in reports that might benefit the Australian currency in coming months, governor of the Reserve Bank of Australia Glen Stevens has that he might soon increase interest rates. Speaking at a meeting of the Economic Society of Australia in Brisbane, Stevens said that inflation looks set to spike further in coming months, necessitating a rise.
This could benefit the Australian dollar, given that higher interest rates mean better returns on investments, prompting people to purchase the dollar.
However, there have also been several disappointing releases in the last week, as mentioned. Employment change data increased just 7.8k last month according to the Australian Bureau of Statistics, beneath forecasts of a 25.0k increase. This indicates that, though Australia's labour market is buoyant, with unemployment at just 4.9%, conditions are not improving further.
Furthermore, consumer confidence figures from Westpac proved disappointing last month too, declining -2.6% compared to a -1.3% decline the month before. Explaining this decline, economists pointed to a preference among consumers for saving.
Looking ahead last of all, concern across the international markets that Greece could soon default on its debts is causing trepidation, prompting investors to favour safe currencies like the US dollar. This has put pressure on both sterling and the Australian dollar, and could continue to do so as long as the crisis remains.
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