Weekly Market Update | 04 July 2023

 

Key economic releases last week

  • Australian monthly CPI indicator fell to 5.6 per cent in May from 6.8 per cent in April, lower than consensus expectations of 6.1 per cent. The decline was led by a fall in the more volatile categories of fuel and holiday travel. Excluding volatile items inflation fell modestly to 6.4% YoY.
  • Australian retail sales rose by a stronger than expected 0.7%.
  • US economic releases were strong over the week, with consumer confidence, durable goods orders, and new home sales surprising to the upside. Growth in gross domestic product was also revised upward for the first quarter.
  • US Core PCE inflation, the Fed’s preferred gauge of inflation rose by 4.6% YoY vs expectations of 4.7%. The headline number was up 3.8% YoY

Key releases for the week ahead

  • RBA cash rate decision
  • US jobs data

USA: Companies hoarding labour while earnings are weak

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The US labour market’s continued strength has confounded economists. Although the unemployment rate increased to 3.7% in May, it remains historically low, indicating a tight labour market. The recent NFIB Small Business Survey could shed light on this phenomenon. The survey consistently shows a close relationship between a firm’s earnings outlook and its hiring plans in the coming months. After experiencing severe staff shortages during the pandemic recovery, it seems that small businesses are now holding onto workers they may not currently need, out of fear of facing shortages again. The duration and severity of any earnings decline will determine whether these companies can weather the economic slowdown or if they will be forced to reduce their workforce, leading to the desired slackening of the employment market sought by the Fed and economists.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Tuesday 07 July 2023, 2pm

For more information on the above please contact Bentleys Wealth Advisors directly or on +61 2 9220 0700.

This information is general in nature and is provided by Bentleys Wealth Advisors. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decision based on this information.