Weekly Updates

In Australia, the RBA cut its cash rate target by 25bps to 3.60%, as expected, and downgraded its productivity and GDP growth estimates. Data-wise, Australian wages growth held steady in Q2, which was followed by a rebound in employment growth and a slight decline in the unemployment rate in July. NAB business conditions deteriorated in July, but business confidence improved.

In Australia, the household spending indicator growth in June missed market expectations but was still decent. The Melbourne Institute inflation gauge pointed to a rise in headline inflation in July, amid lower energy bill relief payments. Living cost indexes rose at a slower pace for most household types in Q2. The goods trade surplus widened in June.

In Australia, the Q2 CPI report confirmed that annual trimmed mean inflation is heading towards the mid-point of the target range, paving the way for a cash rate cut in August. Retail trade growth in June and Q2 surprised to the upside, mainly supported by the EOFY sales. Dwelling approvals bounced more than expected in June, followed by another rise in the Cotality home value index.

In Australia, RBA minutes confirmed that the July decision not to cut the cash rate target was about the timing, not direction. However, during her speech at the Anika Foundation, RBA Governor Michele Bullock said that a rate cut in August is not warranted.

In Australia, employment growth was virtually flat for the second month in a row in July, while the unemployment rate climbed to a 3.5-year high. Westpac consumer sentiment improved in July, despite no cut from the RBA, while Melbourne Institute consumer inflation expectations declined a little.

In Australia, the RBA unexpectedly kept its cash rate target unchanged at 3.85% this week, advising it would like to receive more information to confirm that underlying inflation is coming back to the mid-point of the target range. Data-wise, NAB business conditions and confidence improved markedly in June, following weakness in the previous month.