Retail spending is on the up, but not by much
RETAIL spending rose a disappointing 0.3% in January to be up 4.0% over the year.
The 10 year average for annual growth in retail spending is 4.5%. Annual sales growth was strongest in the ACT (8.5%) and weakest in Western Australia (1.2%).
A pick-up in retail spending will require ongoing solid job growth and would be assisted by firmer wages growth, a declining unemployment rate and possibly by a lower household savings rate.
A STRONGER than expected US payrolls report lifted sentiment on Friday night, providing some impetus to equities. A rise in the oil price was also supportive for the stockmarket.
The Dow rose 0.4%, the S&P 500 gained 0.3% and the Nasdaq edged up 0.2% for the session.
US government bond yields rose, with the positive impact from a strong rise in non-farm payrolls muted by a decline in wages for the month.
The US 10-year government bond yield rose 4 basis points to 1.87%, while the 2-year government bond yield rose 2 basis points to 0.86%.
Recent volatility in German bond yields continued as investors speculated on the degree of monetary easing they expect from the European Central Bank this week.
The German 10-year bond yield rose sharply on Friday night, retracing Thursday's decline.
Australian bond yields (implied by futures) also rose on Friday night, following the move in US bonds.
The US dollar index weakened overnight, despite the lift in payrolls, with a fall in wages allaying investor concerns about Fed rate hikes.
The British pound gained ground as concerns over a potential "Brexit" eased. GBP/USD rose from 1.4186 on Friday morning, to trade at 1.4218 at the time of writing.
The Euro also gained ground against the US dollar, with EUR/USD rising from 1.0963 on Friday morning, to 1.099 this morning.
The Yen weakened against the US dollar, with improved risk appetites leading to a reversal of safe haven flows.
Improved risk appetites boosted the Aussie dollar which rose from 0.7361 US dollars on Friday morning, to 0.7408 this morning.
AUD/USD hit an eight-month high of 0.7443 on Saturday morning.
The oil price rose US$1.40 to US$35.90 per barrel, boosted by strong US jobs growth and a lower US oil rig count.
China's National People's Congress announced a new GDP growth forecast of 6.5 to 7 percent in 2016, down from the 2015 forecast of about 7 percent.
It is aiming for consumer inflation of around 3 percent in 2016. The government budgeted a 2016 fiscal deficit of 3 percent of GDP (a record), up from a budgeted 2.3 percent in 2015. Premier Li warned that "downward pressure on the economy is increasing."
The Eurozone Markit retail PMI rose to 50.1 in February, from 48.9 in January.
Non-farm payrolls rose by 242k in February, beating consensus expectations for an increase of 195k.
Additionally, payrolls in the previous two months were revised up by a net 30k. The unemployment rate held steady at an eight-year low of 4.9%, as expected, with more job seekers entering the labour market.
The workforce participation rate rose to 62.9% in February, from 62.7% in January.
The only disappointing part of the economic data was average hourly earnings, which slipped 0.1% in February, after rising 0.5% in January.
For the year to February, average hourly earnings increased by 2.2%, down from a pace of 2.5% in the year to January. The average workweek fell to a two-year low of 34.4 hours in February, from 34.6 hours in January.
The US trade balance widened by more than expected, to a deficit of US$45.7bn in January, from a deficit of US$44.7bn in December. In January, imports slipped 1.3%, while exports fell by 2.1%.