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Aussie Job-Market Slack Deepens as Participation at 10-Year Low

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Aussie Job-Market
  • Aussie Job-Market Slack Deepens as Participation at 10-Year Low

Australia’s labor-market slack deepened in October as the participation rate slumped to the weakest level in a decade, reinforcing a lack of inflation highlighted by record-low wage gains.

The data represent a conundrum for a central bank trying to look through weak price pressures and focus instead on the headline rates of unemployment and economic growth to justify leaving interest rates unchanged at 1.5 percent.

Key Points

  • Employment rose 9,800 from September, when it dropped a revised 29,000; economists forecast a 16,000 gain in October
  • The jobless rate held at 5.6 percent; economists forecast 5.7 percent
  • Full-time jobs jumped by 41,500, rebounding from a 74,300 plunge in September; part-time employment fell by 31,700
  • Participation rate was unchanged from a revised 64.4 percent; economists predicted 64.6 percent
  • The Australian dollar bought 74.78 U.S. cents at 12:44 p.m. in Sydney from 74.90 cents before the report

Australia’s labor market has suffered a slump in participation this year, signaling more spare capacity than improved hiring and unemployment data suggest. The central bank, meanwhile, has cited the jobless rate and solid economic growth — although largely fueled by population gains and surging resource exports — as reasons for optimism on the outlook. It’s essentially waiting to see which way the economy breaks, particularly after a rebound in commodity prices that’s injecting additional cash.

Economist Takeaways

* “The bottom-line is that there will be no change in interest rates anytime soon,” said Craig James, a senior economist at the securities unit of Commonwealth Bank of Australia. “The economy softened mid-year due to Brexit and the federal election. And recently there was caution ahead of the U.S. election.”

* “Sizeable revisions to September’s figures meant that the annual rate of employment growth fell to a two-year low of 0.9 percent year-on-year,” said Kate Hickie, an assistant economist at Capital Economics. “This will do little to allay growing concerns about the health of the labor market.”

Other Details

At a state and territory level, unemployment either held steady or fell everywhere except Western Australia, the center of the nation’s mining boom that’s been hit hard by falling resource investment. Central bank Governor Philip Lowe says the boom is now 80 percent unwound, so the drag on the state should ease.

Unemployment fell to 5.8 percent from 6.2 percent in Queensland, heartland of the nation’s coal industry that’s enjoying a price bonanza; the state is also heavily geared to tourism that’s booming amid a weaker currency.

The southeastern state of Victoria, which is recording the country’s fastest population growth, added the most jobs in October with 20,500. The state, which is recording the country’s fastest population growth, also saw the biggest gains over the past six months.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Energy

Unlocking Investments into Africa’s Renewable Energy Market

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green energy - Investors King

The African Energy Guarantee Facility (AEGF) is launching a virtual roadshow of free webinars allowing a deeper understanding of risk issues for renewable energy projects on the continent, and conversations around risk mitigation solutions. The first webinar will take place on Thursday, 23 September from 14:30-16:00 hrs. EAT. 

The session will be oriented on how to get more energy projects from the drawing board to the grid. While the energy demand in African economies is expected to nearly double by 2040, and although the potential for renewable energy is 1,000 times larger than the demand, only 2GW out of almost 180GW of this new renewable power were added on the African continent.

Clearly not good enough! To improve the situation within the next two decades, new solutions need to be implemented urgently. De-risking and promoting private sector investments will play a crucial part of it.

In this 90-min interactive session, AEGF partners: the European Investment Bank (EIB), KfW Development Bank, Munich Re and the African Trade Insurance Agency (ATI) will share their experience and provide valuable insights on how they were able to come together and design practical solutions for investors and financiers of green energy projects in Africa aligned with SDG7 objectives.

Across Africa, the complexity of renewable energy projects and their long tenors hold back crucial energy investment. Tailored to the specific needs and risk profiles of sustain­able energy projects, AEGF will tackle the investment challenge by providing underwriting expertise and capacity tailored to market needs.

The AEGF will significantly boost private investment in sustainable energy projects, both expanding access to clean energy and contribute to achieving UN Sustainable Development Goals. The scheme supports new private sector investment in eligible renewable energy, energy efficiency and energy access projects in sub-Saharan Africa.

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Energy

Shell Signs Agreement To Sell Permian Interest For $9.5B to ConocoPhillips

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Shell profit drops 44 percent

Shell Enterprises LLC, a subsidiary of Royal Dutch Shell plc, has reached an agreement for the sale of its Permian business to ConocoPhillips, a leading shales developer in the basin, for $9.5 billion in cash. The transaction will transfer all of Shell’s interest in the Permian to ConocoPhillips, subject to regulatory approvals.

“After reviewing multiple strategies and portfolio options for our Permian assets, this transaction with ConocoPhillips emerged as a very compelling value proposition,” said Wael Sawan, Upstream Director. “This decision once again reflects our focus on value over volumes as well as disciplined stewardship of capital. This transaction, made possible by the Permian team’s outstanding operational performance, provides excellent value to our shareholders through accelerating cash delivery and additional distributions.”

Shell’s Upstream business plays a critical role in the Powering Progress strategy through a more focused, competitive and resilient portfolio that provides the energy the world needs today whilst funding shareholder distributions as well as the energy transition.

The cash proceeds from this transaction will be used to fund $7 billion in additional shareholder distributions after closing, with the remainder used for further strengthening of the balance sheet. These distributions will be in addition to our shareholder distributions in the range of 20-30 percent of cash flow from operations. The effective date of the transaction is July 1, 2021 with closing expected in Q4 2021.

Shell has been providing energy to U.S. customers for more than 100 years and plans to remain an energy leader in the country for decades to come.

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Crude Oil

Oil Gains 1 Percent on Possible Tight Supply 

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Oil prices - Investors King

Oil prices rose on Tuesday as analysts pointed to signs of U.S. supply tightness, ending days of losses as global markets remain haunted by the potential impact on China’s economy of a crisis at heavily indebted property group China Evergrande.

Brent crude gained 95 cents or 1.3% to $74.87 a barrel by 0645 GMT, having fallen by almost 2% on Monday. The contract for West Texas Intermediate (WTI) , which expires later on Tuesday, was up 91 cents or 1.3% at $71.20 after dropping 2.3% in the previous session.

Global utilities are switching to fuel oil due to rising gas and coal prices, and lingering outages from the Gulf of Mexico after Hurricane Ada that imply less supply is available, ANZ analysts said.

“While slowing Chinese economic growth and uncertainty around the (U.S.) Fed’s tapering timetable weighed on market sentiment, other developments still point to higher oil prices,” ANZ Research said in a note.

Still, investors across financial assets have been rocked by the fallout from heavily indebted Evergrande (3333.HK) and the threat of a wider market shakeout in the longer term.

“Evergrande’s woes are threatening the outlook for the world’s second-largest economy and making some investors question China’s growth outlook and whether it is safe to invest there,” said Edward Moya, senior market analyst at OANDA.

While that view of the state of China’s economy is weighing on markets, the U.S. Federal Reserve is also expected to start tightening monetary policy – likely to make investors warier of riskier assets such as oil.

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