The Reserve Bank of Australia (RBA) didn't disappoint market expectations when it conducted its last board meeting for 2017.
The Australian central bank kept the official cash rate where it had been since August 2016, at a record low 1.5%.
The December statement on monetary was much like in the other months - positive and optimistic on global and domestic growth, hopeful over a lift in wages and wages and, uncertain over the outlook for household consumption and high household debt levels.
This uncertainty could soon clear if the RBA's added sentence in its December statement - "There are reports that some employers are finding it more difficult to hire workers with the necessary skills." - pan out according to the dictates of economic theory.
This would prompt employers to offer higher wages to attract "workers with the necessary skills" that should eventually spill over to the rest of the working population, lifting household spending and aiding in the reduction of household debt.
The latest AiG performance indices offer good tidings, i.e. further improvement in the labour market. The AiG performance of manufacturing index jumped to a reading of 57.3 in November from 51.1 in the previous month for its 14th straight month of expansion. The performance of services index increased to 51.7 from 51.4 in October - the ninth consecutive month that it's been above the 50 expansion/contraction line.
Similarly, retail sales data released yesterday showed that retail spending lifted by a stronger than expected 0.5% in the month of October following the previous month's 0.1% lift.
All good, except ... the latest data only took the year-on-year growth in retail sales up to 1.8% from 1.4% in September - both of which remains the slowest since June 2013, and still not strong enough to reverse the trend decline in the annual growth rate in retail sales.
Also, while the optimism over wages cannot be faulted given Australian employers' difficulty in finding workers with necessary skills, the US experience is instructive (perhaps, ominous).
The latest US Beige Book report published on the 29th of November revealed the same findings in the Fed's 12 districts:
"Most Districts reported employers were having difficulties finding qualified workers across various skill levels, and several Districts reported that an inability to find workers with the required skills was a key factor restraining hiring plans."
Still, "Wage growth was modest or moderate in most Districts." Data on US average hourly earnings confirm this. US average weekly earnings increased by 2.4% in the year to October, down from 2.8% in the previous month - the lowest annual growth rate since February last year and below the 3% - 3.5% annual growth rates recorded before the GFC.
This, despite the US unemployment rate dropping to a 17-year low of 4.1% in October and had been at or below the pre-GFC low of 4.4% for seven months running.