Global economic data remains positive. Solid business and consumer surveys as well as strong jobs growth suggest that the global economy has considerable momentum in early 2018. While the Fed raised interest rates and cited a strengthening economic outlook, they cautioned that while inflation remained below their target level of 2%, future rate increases would be gradual. Major central banks in Europe and Asia, together with Australia all flagged they were comfortable with their current interest rate settings.
In Australia data releases have been mixed with solid job gains in February yet also a rise in the unemployment rate. Consumer sentiment sits just above the long term average. Business conditions as measured by NAB are the highest on record but confidence weakened slightly. Despite the mixed signals, the RBA expects the economy will grow faster in 2018 than it did in 2017 and Governor Lowe indicated that wage growth may have troughed as some employers note they are finding it more difficult to hire workers with the necessary skills.
But in markets that are becoming more volatile and reactions more pronounced to events, even a reasonably positive global outlook may be overshadowed by trade tensions or other controversies as we have seen in the past months..
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