Aus employment

Very interesting data out today. The monthly employment net change fell to scarcely above zero and has slowed dramatically, as your eyeballs can tell in the graph on the bottom right.

The unemployment rate is still very low and below most estimates of what is sustainable, and hence further monetary tightening is likely. But that rate of change, outlined above, suggests that small increments are wise from here. A pause might also be prudent.

The cracks are starting to show in retail (noting Baby Bunting’s downgrade from lower demand, greater competition, and the impacts of the weaker AUD), and the employment data, combined with tighter policy, will likely continue to weigh on domestic cyclicals.

We are fairly defensively positioned in our direct equity portfolios, and finding places to hide is challenging but required.

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