Statistics point to economy on mend
Published in the Geelong Advertiser, June 2015 by Dale Gillham
Are you a "glass half full" kind of person, or is your glass "half empty"?
Your reaction to the latest unemployment data could well depend on the direction of the level in your glass. Is it up or down?
This week the Bureau of Statistics released the latest unemployment data, showing a drop, and very importantly, a fall to the lowest level in 12 months.
If your glass is half full you may view this positively. You may also consider how our lower dollar makes exports more attractive, housing starts and finance are pointing up, and business confidence is slowly improving, all of which are positives for our economy, even if some data is still below trend.
All we need now is greater investment in infrastructure.
However, if your glass is half empty, you may view this with scepticism, questioning whether it is temporary, and I can understand if you think this way, as data is often short term and can therefore jump quickly either way.
In my opinion, this recent result is positive and fits with my view on the share market over the past few years - that we are in a period of "improving earnings".
And yet many people are still reluctant to invest, suffering a hangover from the GFC, which probably knocked the water out of the glass of even the most positive "buy and hold" investors.
So what can we expect?
Last week the Australian market fell about 295 points to close at 5506.
I did indicate that if the All Ordinaries Index was to fall again this month it was likely to stabilise above 5500 points, which is what we may be seeing now.
Though the market has moved higher this week towards 5600 points, let's not count our chickens too early, as an upward day or so is not enough to confirm the start of the next rise.
Remember, the more you become familiar with the market the more you will notice how the All Ordinaries Index will often be down in May and/ or early June before rising again. Indeed, some of the best rises have occurred around July, August and through to September.
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