Home > Stable interest rates, subdued employment growth indicated in new Rural Economics Monthly Report

Stable interest rates, subdued employment growth indicated in new Rural Economics Monthly Report

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Agribusiness banking specialist Rabobank presents the latest Rural Economics Monthly report for Australia and New Zealand.

The Rural Economics Monthly provides a useful overview of the key macro developments in the local and global economies while also covering specific economic developments relevant to the agricultural sectors of Australia and New Zealand.

Key highlights of the Rabobank Rural Economics Monthly report for May 2014 include the Reserve Bank of Australia reaffirming its view of a likely period of stability in interest rates; China’s manufacturing sector waiting for demand from the developed world to bounce back; overshadowing of the Australian dollar by the New Zealand dollar; and rural commodity prices easing through April but remaining well ahead of last year’s levels.

The Reserve Bank of Australia recently reaffirmed its view that on present indications, the most prudent course is likely to be a period of stability in interest rates. Despite the unemployment rate remaining steady at 5.8% in April, employment growth remains subdued, and insufficient to reverse the rising trend in long-term unemployment or keep the labour force participation rate from falling alongside strong population growth.

Citing growing inflationary pressures in the economy and the need to contain inflationary expectations, the Reserve Bank of New Zealand lifted the official cash rate by 0.25% for the second consecutive month in April to arrive at its present level of 3.0%.

Growing private investment is resulting in rising employment growth in the economy, which helped the unemployment rate to remain steady at 6.0% in Q1-2014.

Based on the latest manufacturing sector Purchasing Managers' Index (PMI) reading, the Chinese manufacturing sector is just keeping its head above water. Growth in imports of Chinese merchandise goods from the world's two largest economies have shown some improvement over the six months to March 2014 in line with rising demand in the U.S. and EU economies. 

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