Views from the banks on whether the Reserve Bank of Australia will cut rates again in March
HSBC's chief economist Paul Bloxham:
- Last week's RBA cut and official statements showed that the central bank has become more downbeat on the outlook for growth and sees little risk of rising inflation
- Now expecting a cut in March (previous forecast for a cut "probably in May")
- "Following last week's cut, we shifted our view to expecting that the RBA would deliver another 25bp cut in coming months. History shows that the RBA rarely delivers just one rate cut. Given today's weaker than expected employment data, we now expect that another 25bp cut is likely to arrive in March"
- Although other timely indicators of the labour market - such as job advertisements, job vacancies and business survey measures of hiring conditions - have painted a more positive picture of the labour market, the official data remain weak
ANZ:
- New labour demand is holding up
- Not enough ... to offset retrenchments in particular industries such as mining and manufacturing or to keep up with the flow of new workers into the economy
- Expect a further rate cut in H1 2015, most likely ... in March
RBC Capital Markets:
- An element of payback from a strong December and reasonably firm quarter
- ... It is a soft labour market
- Fits more broadly with the sub-par pace of growth, the weakening in domestic demand and what is a probably challenged outlook for the economy
- We have the next cut in May ... Numbers like this suggest the risk is sooner
Westpac:
- Stepping back from the monthly volatility, the three month average change in total employment was +24.7k in Jan, +33.8k in Dec, +14.2k in Nov.
- January was a softer than expected print but not startlingly different from the pace we saw around the end of 2014
- Annual pace of employment growth has eased to 1.6%yr from 1.9%yr in December ... leading indicators had been suggesting that total employment growth should be around 2.0%yr at the end of 2014 and into early 2015
- While the current pace of 1.6% is not far from this, the recent lift in the employment indicators from the business surveys suggest that a pace between 1.5%yr to 2.0%yr can be held at least into Q2
- The breakdown was also on the soft side
- While some volatility going forward is to be expected ... upside risk to our current forecast
- Hours worked differed rising 0.5% in the month
- However, hours worked were very weak in the last quarter of 2014 and the annual pace is now -0.2%yr from 0.4%yr in December
CBA:
- ... the shocking part of the numbers was the strong lift in the unemployment rate to 6.4 per cent
- We think it's a clear sign that the RBA will (cut) in March
TD Securities' Annette Beacher:
- This report follows three consecutive "stronger than expected" prints
- RBA ... is highly unlikely to react to "one report"
- The smoothed employment profile is +25k (3mma, a fairly healthy pace)
- The (unemployment) trend is not ... a 14yr high
- The recent RBA statement of monetary policy clearly stated that the Bank expects the unemployment rate to be higher for longer, so this report remains within the bounds of prior expectations
- Wait and see is prudent here
NAB:
- We know that job advertisements and some other leading indicators suggest that there is some employment growth, but that was overstated, particularly in the December numbers, so we've got some payback from that
- We've still got employment growth but not enough to cap the unemployment rate
- The headlines are obviously pretty negative and the market's reacted quickly to that so it's probably a bit of an overreaction in the short term
- But it's very much the thematic the RBA applied when they cut rates
