The inflation genie just won’t get back in the bottle. The TD Securities-Melbourne Institute monthly inflation gauge showed headline inflation surging by 4.3% in the year to April, after rising by 0.5% in the month of April.
It is the highest year-end figure in the five-year history of the gauge, and economists who confidently predicted the next rate movement would be down may have to think again.
In another sign of the economy’s apparent strength, ANZ’s job advertisement series rebounded in April, with the number of online and newspaper job ads rising by 3.1% in April to an average of 275,390 per week. This follows a 0.7% fall in March. The total number of advertisements in April is 20.8% higher than 12 months ago.
But ANZ deputy chief economist, Tony Pearson, argues the jobs market is continuing to soften. “The increase in job advertisements in April follows two months of declines. In broad terms the total number of job advertisements is now back to the levels of January this year, pointing to a plateauing of job advertisements in the early months of 2008 after consistent growth through 2007. This slowing in momentum is supported by trend data, which show a slowing in the trend rate of growth over the past five months. We would expect this to foreshadow a slowdown in the monthly trend rate of growth in employment.”
The confusing economic data would not be making the job of preparing the budget any easier for Wayne Swan and his advisers. Balancing the twin priorities of managing inflation and supporting low and middle income earners is difficult at the best of times, but the slowing economy makes it that much tougher. Wayne’s got a big week ahead.