Strong Side: Australian Jobs

The job market down under has been remarkably resilient so far … this morning’s unemployment report hammered home another win for Glenn Stevens and co., who continue to manage monetary policy the way that the objective economists out there admire.

The Australian markets received a bullish surprise in October’s employment numbers which saw a 34,000 increase while official Unemployment registered unchanged at 4.3%.

With a cooling global market for metals and energy commodities, no one seriously expects that unemployment levels won’t rise in the coming months. In a statement today Deputy Prime Minister Julia Gillard acknowledged the positive job data but cautioned that "while we are better placed than most other countries, Australia is not immune from the global financial crisis. The global crisis will impact on growth and employment here, and the government does expect to see unemployment rise."

We are long Australia via the EWA ETF. Despite the reality of slowing demand for commodities and a volatile currency environment we continue to think that the market there is among the strongest in the developed world.

If you have been reading our work since we started, you know that we have been fans of central bank chief, Glenn Stevens, for a long time now. Under Steven’s management the Reserve Bank held rates high while the Australian economy experienced the biggest market boom in decades. Now, with metal and energy prices slashed back to 2007 price levels, Stevens has room to maneuver that poorly prepared market students like Ben Bernanke do not. So far, his recent rate cuts appear to be providing a soft landing down under.

Keith McCullough & Andrew Barber
Research Edge LLC