As we were discussing yesterday in light of the continued flow of weak economic data out of Australia and lower than expected out of China, chatter is increasing of a May 7 RBA interest rate cut.
The RBA are wanting to see a ‘transition’ from mining investment activity into other areas of the economy. Evidence for the transition, though, is becoming increasingly scant. An argument from the RBA to ‘wait and see how the cuts last year flow through to the economy’ is looking less persuasive.
This week in Australia we’ve seen:
- Manufacturing PMI in April at 36.7 (the worst reading since the GFC days of 2009)
- Data for building approvals for new dwellings (March) released yesterday showed the biggest fall in eight months, down 5.5%
Today we get services PMI. Further weakness here is going to exacerbate calls for RBA action next Tuesday.
More here at the Australian Financial Review (may be gated): Rate cut chances firm on new data
