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Australia & New Zealand


Australia Labour Market (Jul. 2022)

We wouldn’t read too much into the first drop in employment since last year’s lockdowns. Indeed, the continued tightening of the labour market should encourage the RBA to press ahead with another 50bp rate hike next month.

18 August 2022

Australia Wage Price Index (Q2)

Wage growth surpassed its pre-virus peak in Q2 and will jump above 3% this quarter due to a surge in the minimum wage and a tightening labour market. Asia Drop-In (25th Aug.): What’s the economic impact of a weak yen? What does the latest China-Taiwan flare-up mean for decoupling? How ugly are conditions in China’s real estate sector? Join economists from across our Asia services for this regular briefing on the region’s big investment stories. Register now.

17 August 2022

Higher migration not enough to cool labour market

An increase in the permanent migration programme will help to alleviate labour shortages. But the rapid tightening of the labour market in recent months has been driven by strong labour demand rather than a shortfall in supply. The upshot is that the RBA would still have to tighten policy further.

16 August 2022
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International Trade (Jun. 2022)

The surge in Australia’s trade surplus to yet another record-high in June suggests that net exports will boost Q2 GDP growth by around 1%-pt though that tailwind will fade before long.

RBA will cut interest rates next year

The Reserve Bank of Australia revised up its inflation forecasts sharply when it lifted the cash rate by 50bp today and we expect it to hike rates more aggressively over coming months than most anticipate. However, we expect the Bank to start cutting interest rates next year as GDP growth grinds to a halt.

Australia CoreLogic House Prices (Jul.)

Allowing for seasonal swings, house prices in July fell as much as they did at the height of the 2017-2019 downturn. With soaring mortgage rates weighing on affordability, prices will continue to fall sharply over coming months.

Economy to slow more sharply than Treasurer expects

While we expect the economy hold up a bit better than the Treasurer in the near-term, aggressive policy tightening by the Reserve Bank of Australia will exacerbate the ongoing housing downturn. Accordingly, we expect GDP growth to slow more sharply in the coming financial year than the government is anticipating. Meanwhile, the mulled easing of China’s export ban on Australian coal imports won’t provide a big boost to the economy.

Australia Retail Sales (Jun. 2022)

The sixth consecutive rise in retail sales in June underlines that households are weathering the headwinds from falling house prices, soaring inflation and surging mortgage payments well and we reiterate our long-held view that consumption will rise more sharply this year than most anticipate.

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