Weekly Market Recap

Employment gains

23/11/2020

Week in review

Unemployment rate rose to 7.0% in October
Policy minutes set out dovish stance of RBA
Preliminary retail sales rise 1.6% m/m for October

Week ahead

Eurozone composite PMI
U.S. composite PMI
Australia capital expenditure for 3Q

Thought of the week

Australia is gaining some favourable tailwinds. Last week the positive news came from the labour market. Even as the unemployment rate ticked up from 6.9% to 7.0%, this was due to more workers returning to the labour market rather than a fall in the number of employed. In fact, employment increased by 178,000 compared to an expectation of close to a 30,000 decline. This sets up a good outlook for the final three months of the year, as much of the employment has returned sooner than expected. There was also positive news when it came to the number of hours worked, which increased over the month. This labour market metric has gained importance as a measure of spare capacity in the labour market, given many workers were still considered employed but on zero hours during the pandemic. However, the unemployment rate is likely to rise in the coming months as the impact of government subsidies fades from the data. Nor does this one report change the long road back to pre-pandemic levels of economic activity.

Employment and hours worked
Change year-over-year

Source: FactSet, MSCI, J.P. Morgan Asset Management, all returns in local currency unless otherwise stated.
Equity price levels and returns: Levels are prices and returns represent total returns for stated period.
Bond yields and returns: Yields are yield to maturity for government bonds and yield to worst for corporate bonds. All returns represent total returns. AusBond Comp is the AusBond Composite 0+ Yr, AusBond IG is the AusBond Credit 0+ Yr both provided by Bloomberg.
Currencies: All cross rates are against the Australian dollar. An appreciation of the foreign currency against the Australian dollar would be positive and a depreciation of the foreign currency against the Australian dollar would be negative.

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