Relief for exporters, investors and job hunters: Economy roundup

The good economic news keeps coming this week. Two days after the RBA signalled interest rates were on the way down, probably as early as September, exports woke up to the good news.

The good economic news keeps coming this week. Two days after the RBA signalled interest rates were on the way down, probably as early as September, exports woke up to the good news.

After trading around US95c for the majority of the last few months the dollar has slipped to US91c in the last few days as a result of speculation of interest rate cuts in Australia and falling commodity prices.

That’s bound to provide some relief for Australia’s beleaguered exporters, who have been battling soaring interest rates, fuel prices and input costs at home and deteriorating economic conditions in many key export markets.

Australian investors and super fund members haven’t had a great year, but there have been a few signs of hope in the last few days.

The benchmark S&P/ASX200 index increased 3.1% yesterday and Wall Street rose again overnight, with the Dow Jones industrial average up 40.30 points, or 0.35% to 11,656.07.

This morning’s trading has been mixed. After rising by around 1% in early trade, fresh investor concern about the banking and finance sector dragged the market down 6.9 points at 4962.2 by 11.00am AEST.

This big piece of economic news for the morning was employment data, with the unemployment rate remaining steady at 4.3% in June. What surprised economists most was that full-time employment increased by 53,700 jobs.

But AMP chief economist Shane Oliver says that’s not surprising, as employment is a lagging economic indicator.

“It usually takes a while for companies to turn around their HR programs from hiring to firing, but the closures and layoffs at Starbucks and a few other companies are likely to be a sign of things to come,” he says.

“As the weakness already evident elsewhere in the economy, particularly in retailing and housing, start to feed through, we expect much softer readings for employment in the months ahead and see the unemployment rate heading up above 5% by June next year.”

This morning’s performance of construction index from the Australian Industry Group and Housing Industry Association showed the sector contracting for the fifth consecutive month in July to 41.6, remaining below the 50 point level separating expansion from contraction.

There was one bright spot though – the huge pipeline of major infrastructure work helped the engineering construction sub-index rise 15.2 points in July to 51.9.