Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Wednesday, 11 February 2015

Pushing on a string?

Strongest US job openings since January 2001

The US Bureau of Labor Statistics released its job openings or "JOLTS" data which showed a strong expansion in job openings.

The seasonally adjusted result of 5.028 million was a material increase on November's 4.847 million and a huge 28.5 percent leap on the prior year equivalent figure.

December's result was the highest level of job openings seen in the US in nearly 14 years since January 2001.

Increased job openings tend to be seen as a positive signal for the economy.

Perhaps as significantly, this accelerated the job openings rate increased to 3.5 percent, which is also a rate not seen since long before the "Great Recession".

There was an increase in the number of Americans voluntarily quitting their jobs in December to 2.7 million from prior year equivalent figure of 2.3 million, which may be reflective of increased confidence in the labour market.

There has been a great deal of debate as to whether the US experiment with quantitative easing would work or whether it would be akin to Keynes' pushing on a string, causing more damaging distortions than benefits to the economy.

Given that this result comes off the back of the strongest US employment growth in 17 years it seems that the asset purchasing programs have had the desired effect on the labour market.

Housing finance today

Meanwhile back on home soil, later this morning the ABS will release its Housing Finance data for the month of December 2014.

My analysis of the November 2014 data showed that despite misleading media analysis of "falling housing finance figures" (the monthly figures were down a notch) over the past quarter the data has been shattering all kinds of records.

In particular, the pace of investment housing lending has been ramping up at an exuberant pace over the past year.

This has particularly been so in Sydney, where investor lending is smoking records by the month.

There is a fair chance that this morning's December figures release may be softer from such elevated levels, but this of course is retrospective data which pre-dates another interest rate cut in February.

Anecdotally mortgage brokers have reported a renewed surged in activity this week, but such hearsay will not be confirmed or otherwise by the official data for a couple of months.

With easier monetary policy still likely to follow - and average mortgage rates falling anyway as previously fixed loans originally written pre-2013 are refinanced - it is too early to write off this property market cycle.

The up-cycle looks to have legs left in it yet, as the Reserve Bank hopes to spark a boom in consumption via rising prices.