Finance Blog number 1

U.K. consumer confidence dropped in June to the lowest level since the London riots that preceded Margaret Thatcher's downfall in 1990, as house prices fell across the nation.

An index of consumer confidence based on a survey of 2,001 people fell 5 points to minus 34, the lowest since March 1990, GfK NOP Ltd. said today. Property prices dropped 1 percent from May, the most since Hometrack Ltd.'s housing index started in 2001, the London-based researcher said in a statement.

Bank of England Governor Mervyn King said last week that economic growth needs to slow to contain inflation as policy makers consider whether to raise interest rates. With the threat of a recession looming, Prime Minister Gordon Brown's poll ratings a year after he took office are the lowest since World War II.

“With rising inflation, gloomy forecasts for interest rates and soaring fuel, utility and food prices dominating the front- page headlines, it's no surprise that confidence in the general economy is almost in freefall,'' Rachael Joy, a researcher at GfK NOP, said in a statement.

The Bank of England kept its main interest rate at 5 percent for the past two months after three reductions since December. Policy makers predict economic growth will slow to a 1 percent annual pace in the first quarter of 2009, the least since 1992, as inflation accelerates to more than twice the 2 percent target.

London Riot

The confidence gauge is only one point higher than in March 1990, on the eve of the country's last recession. On March 31, as Thatcher's government introduced a new local levy in England and Wales known as the poll tax, rioters rampaged in London's Trafalgar Square. She resigned that November after a leadership challenge by her former colleague Michael Heseltine.

Brown vowed on June 27 to help living standards improve after his Labour Party slumped to fifth place in a by-election. Labour trails the opposition Conservatives by at least 20 percentage points in national opinion polls.

The measure of confidence in the economic outlook dropped 6 points to minus 45, and for personal finances it fell 5 points to minus 9, GfK said payday loans lenders. Britons' attitude toward the economy and their own situation in the previous 12 months also deteriorated.

House prices in all 10 regions tracked in the Hometrack survey declined on the month, led by a 1.3 percent drop in the London region and a 1.1 percent decline in the southeast. The average value of a home now stands at 170,500 pounds ($339,000).

Mortgage Squeeze

The property market is cooling as Britons find it harder to get a mortgage. Bank of England data due today will probably show home-loan approvals fell to 51,000 in May, the lowest since at least 1999, according to the median forecast of 29 economists in a Bloomberg News survey.

King told lawmakers on June 26 that banks “are going to go a lot further than might have been expected initially'' in declaring losses as market turmoil continues. Total worldwide losses and writedowns at financial institutions from the collapse of the U.S. subprime mortgage market now exceed $400 billion.

“In the short term it seems inevitable that prices will continue to post modest falls until such time as confidence improves,'' Richard Donnell, director of research at Hometrack, said in the statement.

Accelerating inflation may prevent the central bank from helping by cutting interest rates. Crude oil rose above $141 a barrel for the first time June 27, while corn, wheat and rice prices have all reached records this year. Inflation reached 3.3 percent in May, the fastest in at least 11 years.

“The impact of the rise in energy and food prices means we all together, as a country, will see a pause in the growth of our living standards,'' King said. “I am confident we will bring inflation back to the target but I cannot tell you what level of interest rates we will need to set to do that.''

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Atlanta property owners will be spared a $40 million tax increase proposed last spring by Mayor Shirley Franklin.

The city council decided to scrap the controversial tax hike Friday, even though it will mean more spending cuts in a tight 2009 budget.

Council members voted unanimously to restore $19.8 million to Franklin's $583.9 million budget for the fiscal year that begins on Tuesday, including $15.3 million of the tax increase the mayor had recommended. The rest of the tax hike will become unnecessary because of increased revenues the city will realize from increased property assessments.

To make up for that $19.8 million in restored funding, the council approved an equal amount in spending cuts, including a 2.5-percent reduction in the city's general fund that will save $14.6 million.

After passing a huge four-year rate increase for Atlanta water-sewer customers last week, including a 27.5-percent jump effective July 1, council members were reluctant to approve higher property taxes.

"That's about the most we can ask citizens to pay extra this year," Councilman Ceasar (CQ) Mitchell said, referring to the water-sewer increase.

Barbara Payne, executive director of the Fulton County Taxpayers Foundation, praised the council for standing up to Franklin on the budget.

The foundation waged petition and letter-writing campaigns in recent weeks opposing any additional taxes.

"They got handed a monstrosity of a budget," Payne said cash advance loans. "The fact that they've worked in favor of the taxpayers is amazing."

After Friday's vote, Franklin announced that the additional spending cuts would force her to impose another round of employee layoffs. A huge wave of layoffs already hit the city work force early last month.

"To balance the budget on the backs of employees is irresponsible, when (the council was) offered an alternative of a modest tax increase in an effort to preserve gains in public safety and to maintain core services," the mayor said in a prepared statement. "It is an unwise business decision and represents one of the worst public policy decisions I have seen in my 20-year professional career."

To address Franklin's concerns about layoffs, the council approved an 11th-hour amendment Friday giving her the flexibility to make the cuts within the general fund rather than assigning them equally across city agencies.

"This council does not want to adversely impact departments that have already been cut," Mitchell said.

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The U.K. economy grew less than previously estimated in the first quarter, dragged down by the weakest services expansion in 12 years.

Gross domestic product rose 0.3 percent in the three months through March, the least in three years, the Office for National Statistics said in London today. The result was lower than the 0.4 percent reported on May 23, which was the median forecast of 32 economists in a Bloomberg News survey. From a year earlier, the economy expanded 2.3 percent.

Falling house prices, stumbling consumer confidence and a contraction in services from banks to airlines have already hurt the popularity of Gordon Brown, who marks his first year as prime minister today. Bank of England Governor Mervyn King said yesterday that economic growth must ease to contain inflation, stoked by record oil prices.

“There are clearly signs that growth will slow sharply,'' said Amit Kara, an economist at UBS AG in London who formerly worked for the Bank of England. “The second quarter will be even weaker. Household spending is holding up but it's just a matter of time before that cracks.''

Financial institutions worldwide have lost or written down $400 billion following the collapse of the U.S. subprime mortgage market. Shareholders of HBOS Plc, the U.K.'s biggest mortgage lender, yesterday approved a 4 billion-pound ($7.8 billion) rights offer to raise funds. Barclays Plc and Bradford & Bingley are also turning to investors to replenish their balance sheets.

Stock Losses

The U.K.'s benchmark FTSE 100 stock index has dropped 15 percent this year, and was little changed today at 5,510.20 as of 10:44 a.m. in London.

Confidence among European executives and consumers dropped more than economists forecast this month, and European retail sales plunged in June, reports showed today. French gross domestic product rebounded less than initially estimated in the first quarter, the French statistics office said.

Services increased 0.3 percent in the quarter, the least since the final three months of 1995. Gross fixed capital formation fell, led by a 3.9 percent drop in dwellings, the biggest decline since 2000.

King said on May 14 that the country may experience the “odd quarter or two'' of contraction. The bank predicted that the annual rate of economic expansion will drop to around 1 percent early next year, the lowest since 1992.

Consumer Spending

Household spending, which drove the fastest expansion in three years in 2007, is set to slow, King said easy payday loan. Higher fuel prices and the dearth of credit pushed consumer confidence to the lowest level since Margaret Thatcher was ousted from office in 1990, GfK NOP Ltd. said May 30.

Still, household spending rose 1.1 percent in the quarter, the most since the end of 2006. Retail sales unexpectedly rose the most in two decades in May, the statistics office said.

“If growth doesn't slow enough, the Bank of England will engineer what's required,'' said Matthew Sharratt, an economist at Bank of America Corp. in London. “We'll see a sharp cut in disposable incomes because of oil prices. Growth could stall.''

Consumers may have financed spending by digging into savings. The savings ratio dropped to 1.1 percent in the first three months of the year, the lowest since the final quarter of 1959. Real disposable incomes fell by 1 percent in the quarter, the weakest since 1999, the statistics office said.

Interest-Rate Vote

Central bank policy makers voted 8-1 to keep the benchmark interest rate at 5 percent in June, with David Blanchflower in favor of a reduction. Four other policy makers said yesterday they considered an increase because of concerns about inflation.

Consumer prices jumped 3.3 percent in May from a year earlier, the most in more than a decade, and King said yesterday the rate may exceed 4 percent later this year. The bank aims to keep the inflation rate at 2 percent.

“The economic slowdown will need to be sufficient to ensure that inflation does not persist above the target,'' King said yesterday. “But at the same time, we need to avoid a slowdown that is so pronounced that it would pull inflation down, not just to the target, but below.''

House prices declined by the most this year in June as buyers shunned the market, Rightmove Plc said this week. Services contracted for the first time in five years, a report by the Charted Institute of Purchasing and Supply showed June 4.

The 12 percent decline of the pound against a basket of trading partners may help manufacturers weather the slowdown. Exports rose 0.6 percent in the first three months of the year.

The current account deficit shrank to 8.4 billion pounds ($16.5 billion), the least in almost three years, driven by 7.9 billion pounds in banking losses from overseas companies, the statistics office said in a separate report today.

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Visa Inc. debuted its Visa Business Network on Facebook Tuesday, to connect small business owners on the social networking site.

Visa (NYSE: V) will award a total of $2 million worth of Facebook advertising credit as part of the initiative. The first 20,000 U.S.-based small businesses to each get $100 in advertising credit to us on Facebook.

The move is also a plus for closely held Facebook by attracting Visa and its huge marketing budget to the social-networking site.

San Francisco-based Visa designed its Visa Business Network to help connect small business owners with a global network of peers and advisers from among the more than 80,000 small businesses already on Facebook.

Visa says its network on Facebook will help small business owners expand their customer base, manage their business better and exchange ideas with other businesses and advisers free credit reports.

"Working with Facebook, Visa is breaking new ground by harnessing social networking to connect business owners," said Antonio Lucio, chief marketing officer at Visa.

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Tennessee reported 24 mass layoffs in May and 2,418 initial claims for unemployment insurance, both up significantly from the prior year, according to numbers released Friday by the U.S. Department of Labor.

That compares to 13 mass layoffs and 705 initial claims in May 2007. The number of mass layoffs decreased from eight in May, affecting 570 workers.

A mass layoff is described as an unexpected layoff of at least 50 people at one company.

The figures are not seasonally adjusted.

There were 1,626 mass layoffs in the U.S. in May, seasonally adjusted, involving 171,387 workers. The number of mass layoff events in May increased by 318 from April, and the number of associated initial claims increased by 37,473. The national unemployment rate was 5.5 percent in May, seasonally adjusted, up from 4.5 percent a year earlier, 5 percent in May 2007 free credit report instantly.

Tennessee’s unemployment rate rose one percentage point in May to 6.4 percent, up from 5.4 percent in April and 4.7 percent in May 2007, according to the Tennessee Department of Labor and Workforce Development.

Seasonal adjustment is the process of estimating and removing the statistical effect of regularly recurring seasonal events such as changes in the weather, holidays and the beginning and ending of the school year.

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Consumer spending in the U.S. probably rose in May by the most in six months as the government's tax rebates gave households the means to overcome soaring fuel bills, economists said before reports this week.

Spending increased 0.7 percent, the most since November, according to the median estimate of economists surveyed by Bloomberg News. Other figures may show home sales were the third- lowest on record and property values kept dropping, signaling no end to the real-estate recession.

Americans didn't hoard the rebate money last month or use it just to pay for gasoline, indicating rising unemployment and declining home equity have yet to spark a need to save. Federal Reserve policy makers, meeting this week, are projected to keep interest rates unchanged as concern over inflation mounts and anxiety over the immediate prospects for growth wanes.

“Spending has increased because of the rebate checks, and there's more to come,'' said Ken Mayland, president of ClearView Economics LLC in Pepper Pike, Ohio. “Fed officials have stepped up the rhetoric on inflation.''

Consumers used some of the almost $50 billion in rebates received through May to fill up their autos' gasoline tanks and purchase groceries, clothing and electronics. Retail sales jumped 1 percent last month, twice as much as forecast, government figures showed.

The Commerce Department's June 27 report on spending will also include figures on purchases of services, such as utilities and medical care, not tracked by retail sales. It may also show personal income rose 0.4 percent in May following a 0.2 percent gain the prior month, according to the Bloomberg survey.

More on the Way

The bulk of the tax rebates will probably be spent from July through September, giving third-quarter growth a lift, before the economy decelerates again in the last three months of the year, according to the median estimate of economists polled by Bloomberg earlier this month.

“After the rebate impact fades, we expect weak consumer fundamentals to cause spending to soften significantly,'' said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities in New York http://pay-day-home.com.

Best Buy Co., the largest U.S. electronics retailer, last week said first-quarter profit fell 6.8 percent as consumers bought less profitable video games and laptop computers. Purchases of flat-panel televisions also contributed to a 13 percent increase in sales, the Richfield, Minnesota-based retailer also said.

`Very Early'

“It is very early in what we still expect to be a volatile year for the consumer,'' Chief Financial Officer Jim Muehlbauer said on a June 17 conference call with analysts and investors.

The spending increase will reinforce Fed Chairman Ben S. Bernanke's assessment this month that “the risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.'' He also pledged to “strongly resist'' any surge in consumers' inflation expectations.

The central bank's rate decision is due June 25. Investors almost universally project the Fed will keep the benchmark rate unchanged at 2 percent, according to futures trading.

Meanwhile, the housing contraction shows no letup. The Commerce Department may report on June 25 that new-home sales fell to an annual pace of 512,000 in May, close to a 17-year low, according to the survey median.

The following day, the National Association of Realtors may report purchases of existing houses rose in May to an annual pace of 4.96 million, the survey median showed. April's 4.89 million rate was the lowest since records began in 1999.

Prices Dropping

Weak demand is depressing prices. The S&P/Case-Shiller index of property values in 20 U.S. metropolitan areas was probably down 15.9 percent in April from a year earlier, the most since records were first published in 2001, the survey showed. The report is due on June 24.

The government's revised figures for the first-quarter growth, due on June 26, may show the economy grew at a 1 percent annual rate, up from the 0.9 percent estimated last month, according to the Bloomberg survey.

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OncoVista Innovative Therapies Inc. has bolstered its ownership stake in AdnaGen AG in Hanover, Germany, the company said Wednesday.

San Antonio-based OncoVista (OTCBB: OVIT) now owns over 95 percent of the issued and outstanding shares of the company, up from 85 percent. Financial terms of the private stock purchase were not disclosed.

"The increase in our ownership of AdnaGen to over 95 percent allows OncoVista to fully realize the revenues resulting from the sale of test kits as well as have control over the use of the AdnaTest technology."

AdnaGen's core expertise is the development of tumor diagnostic kits based on its proprietary technology. The kits can detect biomarkers in circulating tumor cells. The German company has kits for breast, colon and prostate cancer. A kit for ovarian cancer will be available soon.

OncoVista is a biopharmaceutical company engaged in the development and commercialization of targeted cancer therapies and diagnostic equipment payday advance lenders. The company's focus is discovering new treatments that are more effective and less toxic than current cancer treatments on the market.

AdnaGen was founded in 1999 as a privately held biotechnology research and development company. OncoVista acquired a stake in AdnaGen in order to help introduce the tests in the United States.

Web sites: www.oncovista.com, www.adnagen.com

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Finance ministers from the world's richest nations face another week of inflation headlines after signaling concern that the global economy risks a dose of stagflation as commodity prices soar.

Officials from the Group of Eight ended talks in Osaka, Japan, on June 14 by saying record fuel and food costs threaten to spur inflation. They also pose a “serious challenge'' to growth, eclipsing the credit squeeze, the ministers said.

“Commodity prices have powered ahead of the financial crisis to become the number one priority of international policy makers,'' said Marco Annunziata, chief economist at Unicredit Markets and Investment Banking in London. “Stagflation is clearly the underlying, unspoken concern.''

After acknowledging policy making is “more complicated,'' the ministers' apprehension about an inflation outbreak may mount this week. Economists forecast reports to show consumer prices last month rose the most since 1997 in the U.K. and the fastest in 16 years in the euro area, while U.S. producer prices are predicted to have gained 1 percent from April.

The G-8 officials didn't propose any new policies, apart from promising to take “appropriate actions.'' They repeated their call of the past four years for producers to pump more crude and consumers to use it more efficiently.

`Strong Dollar'

The absence of central bankers meant there was no mention of currencies in their statement, although U.S. Treasury Secretary Henry Paulson backed a “strong dollar.''

The ministers met after the price of oil doubled in a year to an unprecedented $139.12 a barrel on June 6. Costs of foods such as wheat and rice have set records this year.

More expensive commodities create a dilemma for officials by sapping growth and spurring inflation, forcing them to decide which problem to address. The Organization for Economic Cooperation and Development this month predicted the weakest growth since 2002 this year and the fastest inflation in seven years.

French Finance Minister Christine Lagarde said today in Jeju, South Korea, that while the G-8 officials didn't discuss stagflation there is a “paradoxical challenge'' as policy makers “need to combat inflation and stimulate growth.''

“The predominant concern is the inflationary effect that oil in particular and also food prices are having,'' U.K. Chancellor of the Exchequer Alistair Darling said. Deputy German Finance Minister Thomas Mirow said oil's rise means “an enormous withdrawal of purchasing power.''

Letter to Darling

The global inflation picture may deteriorate this week. U.K. consumer prices probably jumped 3.2 percent in May from a year earlier, according to economists surveyed by Bloomberg News. That would be enough for Bank of England Governor Mervyn King to pen a letter of explanation to Darling, as required by law.

In the euro area, inflation is forecast to violate the European Central Bank's target of just below 2 percent for a ninth month by clocking 3.6 percent http://payday-badcredit.com.

Meantime, the U.S. Labor Department is predicted to say producer-price inflation accelerated, after it estimated last week that consumer prices increased 0.6 percent from April to May, more than economists anticipated. Canadian May household inflation is projected to rise the most since January.

“Inflation is the key theme this week,'' said James Knightley, an economist at ING Financial Markets in London.

Expansion Falters

At the same time, the global expansion is faltering. The World Bank last week predicted growth of 2.7 percent this year, a percentage point less than in 2007. The G-8 officials said “downside risks persist,'' citing declines in U.S. house prices and financial-market strains. Paulson said the cost of oil “risks prolonging the U.S. economic downturn.''

Central banks are increasingly choosing to focus on inflation after 10 months of supporting growth amid the credit squeeze. The Bank of Canada last week unexpectedly followed its U.K. counterpart in leaving its main interest rate unchanged. The Federal Reserve is predicted to hold its key rate at 2 percent next week after seven cuts since September. The European Central Bank may raise its rate next month by a quarter point to 4.25 percent.

Such wariness of inflation means few, if any, economists see a return to 1970s-style stagflation when unemployment and inflation entered double figures. Deutsche Bank AG said this month the fact that bankers won't let prices spiral and increased competition are reasons to consider the chance of stagflation is “fairly low.'' Prices often lag behind a slowdown of growth, they said.

Financial Markets

The G-8 ministers also indicated they are less worried that tight credit poses an obstacle to growth than they were when they met in April, noting conditions in financial markets have improved. Lagarde said there was also some “surprise'' at how resilient economic growth had proved.

The officials disagreed on what's propelling oil and told the IMF to study the topic. Paulson and Darling blamed constrained supply and robust demand, rebuffing Italian Finance Minister Giulio Tremonti's argument that speculation is behind it.

Ministers were also split over whether the dollar's 30 percent decline in trade-weighted terms since 2002 explains the surge in commodity costs. Lagarde and Russia's Alexei Kudrin suggested investors are buying oil and food as a hedge against the weaker dollar. Paulson said oil's gain had outpaced his currency's dive.

The dollar today ended a two-day gain against the euro after the G-8 stopped short of calling for it to strengthen. The U.S. currency traded at $1.5404 per euro at 12:28 p.m. in Tokyo from $1.5380 late June 13.

“The lack of any foreign exchange language may come as a slight disappointment for the dollar,'' said Sophia Drossos, a currency strategist at Morgan Stanley in New York.

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Shares of The Greenbrier Cos. fell nearly 7.5 percent Thursday, a day after billionaire investor Carl Icahn said he will no longer pursue combining the railcar maker with rival American Railcar Industries Inc.

The Lake Oswego-based company’s (NYSE: GBX) shares closed at $21.37 cents per share, a 7.45 percent drop from the close of the market Wednesday.

On Feb. 4, Icahn announced he had acquired 1.5 million shares, or a 9.5 percent stake, in Greenbrier, saying the company’s shares were undervalued. He said at the time he wanted to merge Greenbrier with St. Charles, Mo.-based American Railcar (NASDAQ: ARII), of which he owns 53.7 percent.

But in a late Wednesday filing with the Securities & Exchange Commission, Icahn said the merger is no longer being discussed "as a result of certain unresolved issues." Icahn may "at any time dispose of all or some" of his Greenbrier shares, according to the document easy payday loans.

The news led equity analyst Art Hatfield of Morgan Keegan & Co. Inc. to downgrade Greenbrier from "outperform" to "market perform" status. In a client note released Thursday, Hatfield said the merger made sense for American Railcar, which could have bought Greenbrier for $30 to $34 per share.

Shares of Greenbrier opened at $20.34 on Feb. 4 and rose to nearly $29 per share in both mid-February and mid-March.

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Australia unexpectedly lost jobs in May, ending a record 18 months of gains and sending the nation's currency lower on speculation the central bank may not raise interest rates again.

Companies cut 19,700 workers after adding a revised 37,500 in April, the statistics bureau said in Sydney today. The median estimate of 22 economists surveyed by Bloomberg News was for a 13,500 gain. The jobless rate held at 4.3 percent.

The biggest decline in employment since September 2005 is the strongest signal yet that the Reserve Bank's two rate increases this year may be enough to cool the economy's 17-year expansion and damp inflation. Australian employers are mirroring job cuts in the U.S. and U.K. as oil prices surge to a record and global growth slows.

“The Reserve Bank is firmly on hold for the remainder of the year,'' said Helen Kevans, an economist at JPMorgan Chase & Co. in Sydney. “Businesses have put off or ceased their hiring for the time being. We'll have to wait and see whether this is a sign of more to come.''

The number of full-time positions declined 10,400 in May and part-time jobs dropped 9,300, today's report showed. About half of the nation's 21 million people are employed.

Australia's dollar slumped to 93.82 U.S. cents at 1:03 p.m. in Sydney, the lowest since May 16, from 94.63 cents before the report was released. The yield on the two-year bond shed 9 basis points, or 0.09 percentage points, to 7.01 percent. The benchmark S&P/ASX Index of stocks fell 2.2 percent to 5,348.70.

Airlines, Carmakers

Qantas Airways Ltd., Australia's largest carrier, said this month that it will slash services to Japan, shift other Asian routes to low-cost unit Jetstar and cut jobs in response to surging fuel costs. Crude oil climbed to a record $139.12 a barrel last week.

General Motors Corp.'s Australian unit, Holden, said last week that it will end production of four-cylinder engines at its Melbourne factory, where more than 500 people are employed. The company also cut 600 jobs at its Adelaide factory in March.

“Some loosening in the drum-tight labor market will be welcomed, and should help keep the Reserve Bank sidelined,'' said Su-Lin Ong, a senior economist at RBC Capital Markets in Sydney. Still, given there's a shortage of skilled workers, most “employers are unlikely to turn around and shed labor after only several months of moderation in activity.''

Mining Boom

China's growing appetite for natural resources has seen companies including Rio Tinto Group expand mines, railways and ports, helping stoke 18 months of job gains through April that generated 456,000 positions in Australia low fee cash advance.

The mining boom has driven expansion in Australia's $1 trillion economy, helping it weather the global credit crunch.

Reserve Bank Glenn Stevens and his board raised the benchmark interest rate to a 12-year high of 7.25 percent in March on concern a shortage of skilled labor would drive up wages and stoke inflation, already at the strongest since 1991.

Steven left the rate unchanged last week for a third month.

The chance of another quarter-point rate increase by September fell to 48 percent from 74 percent before the jobs report was released, according to 30-day interbank contracts traded on the Sydney Futures Exchange.

The slump in Australian jobs follows reports that show the U.S. unemployment rate gained the most in more than two decades in May, and the U.K. jobless rate rose to a seven-month high.

`Vengeance'

“Employment data is always the last to turn in an economic slowdown, but when it does turn it usually does so with a vengeance,'' said Clifford Bennett, chief economist at Sonray Capital Markets Ltd. in Sydney. “The Australian economy is in a precarious state.''

Adding to signs the economy is moderating, consumer confidence slumped to the lowest level in almost 16 years in June, home-loan approvals dropped for a third month in April, and businesses were pessimistic for a fifth consecutive month in May, reports this week showed.

The participation rate, which measures the labor force as a percentage of the population aged over 15, fell to 65.2 percent in May from 65.5 percent in April, the figures showed.

The report “is a sign that the Reserve Bank is on track, and their tightening is delivering the right amount of pain,'' said Matthew Johnson, an economist at ICAP Australia Ltd. in Sydney. “A looser labor market cuts wage negotiating power, and thereby reduces the risk that high inflation will become embedded in the wage-price mechanism.''

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