The growing unease over Russia’s adventures in and around the Ukraine will be enough to get the Reserve Bank sitting on its hands at the March board meeting today.
The market volatility yesterday and last night will help the bank do nothing for the time being.
The rises in the prices of gold and oil tell us the speculators are starting to see both as hedges in a time of rising tensions in Europe – and the possibility that world energy markets could be disrupted if there’s any outbreak of hostilities.
And that in turn could result in a big boost to Australian export income if the trouble in and around the Ukraine intensifies and sets off a surge in commodity prices.
It will be enough to intensify the caution already prevailing at the bank about the economy.
So the economy will head to the backseat, and that’s probably a good thing given the mixed nature of the news yesterday.
Job advertisements rose by more than 5% in February to their highest level in eight months, according to the monthly survey from the ANZ Bank.
The rise was a big surprise to markets, coming as it did after the unemployment rate hit 6% in January, its highest level in a decade.
Job ads rose by 5.1% last month no movement in ad numbers in January (previously reported as a fall of 0.3%).
However the ANZ cautioned that the figures may have been influenced by what it called "seasonal adjustment challenges," and for that reason may be overstated.
Internet job ads rose 5.3%, seasonally adjusted in February, while newspaper job ads declined modestly (-0.5% month on month).
Newspaper job ads, however, account for less than 5% of overall ANZ job ads and tend to be more volatile on a month to month basis.
The trend in newspaper job ads, however, has been improving and rose a modest 0.2% in February, according to the ANZ.
Seasonally adjusted 131,189 jobs were advertised last month, but the trend series showed a rise of only 0.6% to 127,441, which seems more accurate.
RBA to leave interest rates untouched
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Meanwhile, Australian manufacturing activity slightly improved in February – but not by much.
The Australian Industry Group’s Australian Performance of Manufacturing Index (PMI) improved slightly to 48.6 points in February, from 46.7 the month before (a figure below 50 indicates a slowdown, a figure above indicates expansion).
Interestingly, the survey showed production was in expansionary territory at 51.5 points and new orders were steady at 50. But employment, stocks and supplier deliveries slowed in February.
And the recent rise in house prices slowed last month, according to RP Data’s Home Value Index.
Home values across the major capital cities recorded no change over the month, with Sydney, Hobart and Darwin the only capitals to show a rise. That ended eight months in a row of rising home prices.
And finally, the December quarter data yesterday was a bit better than expected.
Real private non-farm stocks were weaker than the market had forecast – falling 0.5% quarter on quarter (which will be negative though, but it is positive in that it shows there is not a build up of inventories). The market had no change as the consensus forecast. But offsetting that, real sales (production) picked up to 0.7% from the September quarter, the fastest in over 2 years.
On the income side, the nominal wages rose 1.1% quarter on quarter – the fastest in a year – contrasting flat jobs and lower hours. And nominal profits rose 1.7% quarter on quarter and were up 10.7% year on year, the fastest rise since 2010 thanks it seems to the strong rebound in the profits of the big mining companies, especially iron ore.
Today the December quarter’s current account and government finances data will be released.
