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August 20 2021

1. Detail in the data…

Despite the unemployment rate dropping to 4.6% in July, the lowest rate since 2008, it was almost entirely due to reduced labour force participation in NSW. National employment rose 2,200 m/m in July while employment in NSW fell 36,400 m/m.

The RBA’s near-term statement of monetary policy forecasts are being questioned due to the worsening COVID situation – we will have to wait to see if there is a delay on the tapering of their bond purchase program, along with the US Fed.

2. The trees are falling…

Lumber has been a good case study for transitory inflation, as futures prices have finally settled following a 400% price move over the last ~15 months. The perfect storm came together with ultra-easy monetary policy, generous fiscal policy, supply-chain problems, and changing consumer preferences shaped by Covid.

3. Back to the green revolution…

In non-Covid news, Bloomberg NEF released their latest electric vehicle (EV) sales forecasts, with global sales of EVs forecast to rise from 3.1m units per year in 2020 to 68.2m in 2040, and EV market share increasing from 4% to 70%. They also reckon we are past peak sales of internal combustion engine (ICE) vehicles.

The forecast assumes EV uptake will be driven mainly by economics, with no additional policy measures introduced to achieve carbon reduction targets. As a reminder, EVs can use up to 3.5 times as much copper compared to an ICE car.