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The Australian dollar took a tumble after the country’s central bank warned that the domestic labour and housing markets warranted “careful monitoring” over coming months.
The Reserve Bank of Australia today released the minutes from its April meeting, at which it had noted a weakening in the national labour market and the continued rise of property prices. The minutes reveal some additional detail around the RBA’s concerns.
However, data released in the wake of the April 4 meeting showed a bigger-than-expected jump in the number of jobs added during March, which initially seemed at odds with the RBA’s dimmer view.
The Bank said earlier this month the labour market had “softened”, evoking more concern that previous months when it had described conditions as “mixed”.
The minutes today fleshed out a more downbeat view, noting that:
Although forward-looking indicators of labour demand continued to suggest an increase in employment growth over the period ahead, this had been true for some time without leading to an improvement in labour market conditions.
The RBA said of its other big concern – housing – that “growth in housing credit continued to outpace growth in household incomes, suggesting that the risks associated with the housing market and household balance sheets had been rising”, but that it would take some time to assess the impact of recently-introduced macroprudential measures aimed at taking some of the heat out of the market.
The Australian dollar was down 0.4 per cent at an intraday low of $0.756.