Economic numbers add up to a February rate rise
As expected The Reserve Bank of Australia did not raise interest rates following its regular monthly meeting on Wednesday, which had a positive effect on domestic bond yields that have fallen to a three-week low.
Economic figures released this week should ensure solid consumer sentiment and therefore spending as yesterdays housing finance data came in at levels not seen since 1994. An extract from Commonwealth Bank Research shows:
We tend to agree with the overall view that this rise in activity reflects a desire to beat the GST, which is due to begin on July 1, 2000.
The NSW manufacturing sector is also running out the year on a high as evidenced by the Australian Business-Colonial Bank Survey of manufacturing for NSW. Seen as reflective of the sector for much of the country, capacity levels are at their highest in five years. Stronger demand, higher raw material costs are cited among factors for higher selling prices particularly for those manufacturers producing for consumers and housing related activities.
But the surprise packet came in the form of unemployment figures for November released only today. The jobless rate fell further than most expected to 6.7%.
With wages growth at just 0.9% we feel that a rate rise early next year is more than imminent and likely to be February. Which all but ensures that the markets, their respective participants & consumers will be able to concentrate on their Christmas shopping lists rather than their monetary policy checklists.