Jobs surge adds to rate pressure; oil prices drop to pre-war level; Musk no trillionaire
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What is the main topic discussed in this episode?
Welcome to Fear and Greed, business news you can use. Today, a surge in employment adds to the case for another interest rate hike. Brent crude prices fall back to pre-war levels, and Elon Musk loses his trillionaire status. Plus, the government tax legislation passes Parliament, becoming law, and Judo Bank's share price crashes nearly 40% as the economy hits its business. It is Friday, the 26th of June, 2026. I'm Michael Thompson, and good morning, Sean Aylmer. Good morning, Michael. Sean, the main story this morning, the economy added 40,300 jobs last month and the unemployment rate fell to 4.4%. That was down from 4.5% the previous month.
What does the recent surge in employment mean for interest rates?
The labour force data comes as new figures show that household spending jumped more than expected in May, along with the rise in underlying inflation that was revealed on Wednesday. What are we putting this into? The Mixmaster, the fear and greed blender? It all suggests that the economy might be traveling better than many of us feel, and that could actually mean higher interest rates.
How have Brent crude prices changed recently?
Taking employment first, the economy added around 5,000 full-time jobs, 35,000 part-time jobs last month. It was more than forecast in a reversal of the drop in April. The drop in the unemployment rate was expected. It's tracking higher than the Reserve Bank forecast, though. 4.4%, still very low by historical standards, probably pretty close to a neutral rate of unemployment where the labour market isn't really having a major impact on inflation. The household spending figures from the Bureau of Statistics, it rose 1.3% last month, reversing a decline in April, much higher than expected, driven by consumer spending on hotels, cafes, restaurants and clothing.
What impact does new government tax legislation have?
It was the fifth highest monthly jump in three years in household spending. While consumers say they're concerned about the cost of living, their spending suggests that doesn't mean they're pulling back.
How do you make sense of all of this? If you put it all together, it seems like the local economy is traveling okay, even if it doesn't actually seem like that to many of us who are kind of living through it. And if that's the case, then the Reserve Bank has room to lift interest rates if it needs to, if it thinks that inflation isn't under control. The next meeting of the Central Bank isn't until the 11th of August, I think. So there is time. before a decision needs to be made.
Yes, and that means there'll be more data around the place and we'll understand better how higher fuel prices, thanks to the war in the Middle East, has fed through to other prices in the economy.
Why did Judo Bank's share price crash nearly 40%?
Even if oil prices have come off now, we still have this impact of it feeding through. Reserve Bank Deputy Governor Andrew Houser was speaking on Wednesday. He actually made the comment that the three interest rate hikes this year have only had limited labour market damage. So that doesn't sound like they're too worried about rate hikes hitting the employment market. Bottom line, I think, well, according to market economists, there are so many different opinions out there at the moment. Broadly, inflation is still a problem. So people think that. Notwithstanding yesterday's data, the economy is weakening somewhat, though probably not drastically. So that does open the door to another rate rise unless inflation falls.
And that's not expected given the impact of the oil price surge hasn't fully made its way through the economy. It depends on which economist you talk to because there is such a disparity of views in what's going to happen on interest rates. That's pretty unusual because let's say the 10 or 15 that I read fairly regularly, some are saying two rate hikes, others are saying let's look for a rate cut. Pretty extraordinary.
Yeah, they're about as far apart as you can possibly get, right? And the thing that always amazes me is that everyone's looking at pretty much the same data. And of course, like some of the banks, Commonwealth Bank, for instance, have access to a lot more
What are the implications of Elon Musk losing his trillionaire status?
kind of household spending and credit card data and all of that.
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Chapters
6 chapters
1
What is the main topic discussed in this episode?
0:06–0:50
2
What does the recent surge in employment mean for interest rates?
0:50–1:15
3
How have Brent crude prices changed recently?
1:15–2:00
4
What impact does new government tax legislation have?
2:00–2:56
5
Why did Judo Bank's share price crash nearly 40%?
2:56–4:17
6
What are the implications of Elon Musk losing his trillionaire status?
4:17–18:17
Speakers
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