Citi forecast an RBA rate cut in August
Following the plunge in the 'employment' component of the NAB business survey, and ahead of today's jobs data, Citi on the Reserve Bank of Australia
- ICYMI - Australian business confidence 0 (prior -1) and conditions 3 (prior 7)
- More from the NAB business survey (on jobs and the RBA)
And, for today, due at 0130GMT:
- Employment Change: expected 15K, prior 25.7K
- Unemployment Rate: expected 5.0%, prior 5.0%
- Full Time Employment Change, prior was 48.3K
- Part Time Employment Change, prior was -22.6K
- Participation Rate, expected is 65.7%, prior 65.7%
- Australian labour market report due Thursday 16 May 2019 - preview
OK, on to Citi:
- NAB business confidence in April is flat and the lowest reading in over 4 years though some of the weakness may be related to pre-election uncertainty (Federal election is held this Saturday).
- Most importantly though for the RBA, employment conditions are negative for the first time since August 2015.
And what it means for the RBA:
- the last time business confidence was at this level, the RBA cut the cash rate by 25bps.
- this data on its own is unlikely to promote policy action
- RBA will want to see what happens to the unemployment rate
- there is the prospect of post-election fiscal stimulus worth around ¾pp of GDP
- expect the RBA to cur in August, 25bps