Aus econ


Aus employment data was out, yesterday.

Firstly, unemployment, which remains at generational lows.

Secondly, the employment change bounced sharply, to 64K new jobs, and well above historical averages.

Third, nearly everyone is being drawn into the labour market, pushing participation to record highs.

Our thoughts:

Either the economy stays strong, like the below suggests, in Australia, in which case the banks will do fine, and with NIM tailwinds probably do more than fine, or, rising rates will derail growth, in which case everything else does worse first.

I’m not super confident in that logic (particularly as the banks have leverage) but it’s a reasonable approximation.

We are slightly OW the banks, not viewing it as a slam dunk. But we should see retail stocks tank before BDD’s rise (again, I think, what/how else could it be otherwise).

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