Last week’s communications from the Reserve Bank of Australia again signalled that the RBA believes it is doing as much as it reasonably can be expected to support the transition in growth from mining to non-mining. Speaking in Adelaide last week, the Governor’s view was that the economy is performing consistently well compared to its global peers. This was reflected in last week’s GDP data which showed that the economy grew by 3.1% over the past 12 months.
A rise in unemployment would be a concern for the RBA, so the employment data for the next month will be the most important economic release this week (as well as in coming months). The unemployment rate rose from 6.0% to 6.4% in July and, although part of the rise was due to the ABS changing the definition of “actively looking for work”, it also reflected a softer labour market environment.
A further rise in the unemployment rate this week may re-ignite talk of another cut to official cash rates and push yields lower.