cptradingeducation

Australia – the big picture

April 8, 2014

I spy with my little eye something that starts with „A“!
Yes, you guessed it right – of course I am talking about Australia.

Every time I watch a nature program from TV it seems that every animal or a bug on that continent is so venomous that if you happen to meet one, the chances are that it will be the last thing you’ll ever do. Fortunately (or unfortunately) I am thousands of miles away from Australia and I do not have to worry about getting my leg bitten off by some huge bug and instead I can focus on their economy which in contrast of their venomous wild life is looking warm and friendly.

On Wednesday we are going to see the releases of Australian unemployment data and employment change. If you look at the unemployment rate, it actually looks quite nice, only 6% (compared to EZ 12%) but the fact is that it has been firmly rising since mid-2011.

One of the reasons why the unemployment in Australia is trending upwards is the fact that the Real GDP Growth Rate is lower than it used to be. Here’s a chart:

growth rate

It shouldn’t be a suprise to anybody because Australia’s biggest export partner is China and Chinese economy is slowing down. Hence, same happens in Australia. However, there are good signs that job creation is getting back up on its feet and that should stabilize the situation in the job market.
Another thing that should not go unnoticed is the fact that Australian population has been growing for a long period of time. Here’s a chart:

population

Which may indicate that the local job market is just slowly adjusting to the new work force and the creation of jobs for everyone simply takes time. So, I’d say there is nothing to be worried about.

The claim, that all the Aussies may be perfectly calm about the situation is supported by still growing exports and fairly nice inflation.

exports
inflation

The overall picture of Australian economy can be described with one word: beautiful. If they could get the unemployment rate back on a downward path, I’d say the picture may change from beautiful to perfect.

Thank you for reading and goodbye.

Capital Properties FX Team
8.04.2014