Australia | Nov 06 2006
By Greg Peel
There was on balance no change to prices in October according to the TD Securities-Melbourne Institute monthly inflation gauge. September didn’t change either, while August was up 0.6%. For the year-ending October, prices have increased 3.2% – still above the RBA’s 2-3% comfort band.
But the trend has flattened. Banana prices, we’re sorry to say, remain stable.
A breakdown of the figure confirms that which we all know anyway – petrol prices are down but fruit & veg is up. Also up were holiday accommodation and financial services, while rents (surprisingly) and alcoholic drinks (yay) fell.
TD Securities’ Stephen “Kooky” Koukoulas commented that while petrol prices dragged the headline numbers down, the RBA is still most likely to raise tomorrow. What the data does point to, however, is that the December quarter CPI, released in January, may well show a flat result. This will help to make November the last hike for some time.
ANZ’s job ad survey for September showed only 0.3% growth, but October has surged with a 5.8% result. Job ad growth in the year ending October stands at 25.3%.
The job ad figures are to be a lead indicator of employment numbers – by several months. What this number shows is that frenetic employment growth has finally begun to cool.
Newspaper publishers would have been happy that for once, their ads grew by 1.8% – the first rise in four months. The year-on-year number is still minus 2.9% however, and ANZ notes that smoothing shows the newspaper trend to be continuing down. NSW jumped ahead with 8.4%, while job ads in the Territory market fell 4.3%.
Internet ads grew by 6.3% in October, with the monthly trend relatively stable at 1.2% growth.
From an interest rate point of view, this is heartening stuff. Will it be enough to change the RBA’s mind? No, says ANZ. There might now be indications that the extraordinary employment growth of late has plateaued, but the market remains very tight.
Thus most economists are still backing a rate rise decision tomorrow, with consensus forming that 2007 will remain stable.