MENU

Poor jobs data could guide RBA toward rate cut

Following the release of the worst jobs data in four years, analysts are convinced that the Reserve Bank will cut the cash rate when it meets in August.

The report, released by ANZ (ASX: ANZ) on Monday, revealed that job ads online and in newspapers had fallen 1.8% to just 131,000, making it the lowest number since July 2009 in the heat of the global financial crisis. It was also revealed that Western Australia was the most affected as the decline of mining boom quickens.

Commonwealth Bank economist Savanth Sebastion argued that the reliability of ANZ’s report is becoming less relevant as more and more jobs are advertised on social media. A more reliable measure will be released on Thursday when the Australian Bureau of Statistics releases official unemployment data.

Foolish takeaway

The banking sector is one industry that would benefit from a rate cut. A rate cut would likely boost confidence in the market to take out loans, and would also apply further downwards pressure on the Australian dollar.

Last month, analysts suggested that the banks could be $223 million better off as the dollar drops. ANZ would be the largest beneficiary with an additional $133 million as it is more exposed to international markets than its competitors, whilst Westpac (ASX: WBC), NAB (ASX: NAB) and Commonwealth Bank (ASX: CBA) could see an extra $21 million, $41 million and $28 million, respectively.

The Australian Financial Review says “good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit.” Get “3 Stocks for the Great Dividend Boom” in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading


Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.