ABE Weekly: BHP Strike Risk Puts Wage Pressure Back in Focus

Market Insights

• BHP workers set to strike for the first time in 40 years
• US payrolls miss, but the economy holds firm
• Eurozone PPI accelerated to 5.9% YoY
• German investment rebound strengthens Eurozone growth outlook

Key Points

• Australia: The RBA left the cash rate unchanged at 4.35% p.a. at its June meeting. May CPI eased to 4.0% p.a., while Trimmed Mean rose to 3.60% p.a. from 3.4% p.a. in April.
• United States: The Federal Reserve left the federal funds rate unchanged at 3.50%–3.75% p.a. at its June 2026 meeting. The latest U.S. CPI inflation rate was 4.2% p.a. as of May 2026, while Core CPI was more contained at 2.9% p.a.
• United Kingdom: The Bank of England held Bank Rate steady at 3.75% p.a. CPI for May was 2.8% p.a., with Core CPI slowing to 2.6% p.a.
• Eurozone: The European Central Bank increased its key deposit facility rate by 0.25% to 2.25% p.a. Recent data show inflation in the euro area increased to 3.2% p.a. in May, up from 3.0% in April.

Here are the latest monetary-policy and inflation figures for key economies:

BHP Workers Set to Strike for the First Time in 40 Years

For the first time in more than 40 years, workers at BHP’s Port Hedland operations are set to strike after negotiations between BHP (ASX: BHP) and unions broke down over a new enterprise bargaining agreement. Between 150 and 200 workers are expected to stop work at the world’s largest iron ore export port.

The strike is expected to involve workers across port and maintenance operations, making it significant for one of Australia’s most important bulk export hubs. While BHP has indicated it remains open to further negotiations, the dispute has drawn market attention due to the strategic importance of Port Hedland to Australia’s iron ore supply chain.

Port Hedland handles over 500 million tonnes of iron ore a year, making it Australia’s largest bulk export port. The vote itself returned a decisive mandate, with the Electrical Trades Union reporting 100% support from its members and the Australian Manufacturing Workers Union recording around 89%–90% support, following roughly six to seven months of stalled enterprise bargaining. Industry estimates put the cost of a full stoppage at around $110 million–$126 million per day to BHP and roughly $6.85 million per day in lost royalties to the WA government. BHP says it has contingency plans in place to keep exporting through any disruption, including drawing on contractor labour.

Why this is important: This dispute highlights a broader structural challenge facing the Australian economy, where wage growth continues to outpace productivity. The result is higher unit labour costs, reduced international competitiveness and more persistent inflationary pressures. Weaker productivity growth is weighing on Australia’s long-term growth potential, while persistent inflationary pressures support a higher interest rate environment and more attractive bond yields for fixed-income investors.

US Payrolls Miss, But the Economy Holds Firm

US nonfarm payrolls rose by 57k in June, decelerating from 129k in May, which was revised from 172k, and below expectations of 113k. April’s figure was also revised down by 31k to 148k, leaving the two-month combined revision 74k below what had originally been reported. The below-expectations June payrolls print lowered the probability of a September Fed rate hike to 62% from 79%.

The result points to a moderation in hiring momentum, rather than a sharp deterioration in labour market conditions. This is important because the Federal Reserve is closely watching whether employment is cooling enough to reduce inflation pressure without materially weakening the broader economy.

The unemployment rate dipped to 4.2%, though largely because the labour force participation rate fell 0.3 percentage points to 61.5%, its lowest level since March 2021. This means the improvement in headline unemployment reflects people leaving the workforce rather than stronger hiring. Leisure and hospitality was the biggest drag on the month, shedding 61k jobs, while professional and business services led gains with 36k, followed by social assistance at 25k and health care at 22k. Average hourly earnings rose 0.3% to $37.64, up 3.5% year-on-year, still running above the pace the Fed would consider consistent with its inflation target.

Despite softer hiring, the labour market remains resilient, supporting corporate earnings and credit fundamentals.

Eurozone PPI Accelerated to 5.9% YoY

Eurozone producer price inflation accelerated to 5.9% YoY in May from 5.0% in April, the strongest annual increase since early 2023. Producer prices are closely watched because they capture cost pressures faced by businesses before those costs potentially flow through to consumers. A renewed rise in PPI suggests that inflation pressure may still be building earlier in the supply chain, particularly across energy and industrial inputs.

The pressure was broad-based rather than energy-driven: prices for intermediate goods rose 1.4% month-on-month, the strongest contributor, while capital goods and durable consumer goods rose 0.2% and 0.3% respectively. Energy prices fell 1.0% for the month, yet producer prices excluding energy still rose a solid 0.7%, pointing to underlying pipeline pressure building even as energy costs ease. Across the broader EU, producer prices rose 0.2% month-on-month and 5.7% year-on-year, indicating the pressure is not isolated to the currency union.

Combined with still-elevated global supply chain pressures, the data strengthen the case for the ECB’s recent interest rate increase and suggest policymakers are likely to remain cautious about declaring victory over inflation.

German Investment Rebound Strengthens Eurozone Growth Outlook

After several years of weak capital spending, Germany’s investment cycle may be approaching a turning point, according to Marc Schattenberg, Senior Economist at Deutsche Bank. He expects stronger public investment to catalyse a broader recovery in private fixed investment during the second half of 2026. Deutsche Bank forecasts fixed investment to rise by nearly 4% in 2027, helping lift German GDP growth to 1.3% p.a., up from 0.5% in 2026.

This would mark an important shift for Germany, where weak investment has weighed on growth and industrial momentum in recent years. Stronger public investment could help improve business confidence and encourage private-sector spending across infrastructure, manufacturing and broader industrial activity.

The fiscal shift underpinning this call is sizeable: a roughly €1 trillion public investment package, equivalent to about 23% of German GDP, split between defence and infrastructure spending, following a 2025 reform that eased Germany’s constitutional “debt brake.” The Bundesbank’s own forecast points in a similar direction, expecting calendar-adjusted GDP growth of around 0.7% in 2026 and 1.2%–1.3% in 2027, driven by rising government investment, an export recovery, and a labour market improvement feeding through to consumption. German GDP has already edged back into growth after two years of recession, driven mainly by household consumption and government spending, according to the Federal Statistical Office.

Why it matters: Germany is the Eurozone’s largest economy. Stronger investment would improve the Eurozone’s growth outlook, supporting a higher-for-longer interest rate environment and putting upward pressure on European government bond yields.

Economic calendar

World Economic Calendar

Scheduled economic releases and policy events for 14 Jul – 17 Jul 2026.

Highlighted rows indicate key AU/US releases and major market-moving events.

Date / Time	Country	Event	Period	Survey	Prior
Tue, 14 Jul10:30 AM	AU	Westpac Consumer Conf SA MoMPeriod: Jul	Jul	—	-2.90%
Tue, 14 Jul10:30 AM	AU	Westpac Consumer Conf IndexPeriod: Jul	Jul	—	80.6
Tue, 14 Jul11:30 AM	AU	NAB Business ConfidencePeriod: Jun	Jun	—	-14
Tue, 14 Jul11:30 AM	AU	NAB Business ConditionsPeriod: Jun	Jun	—	3
Tue, 14 Jul10:30 PM	US	CPI MoMPeriod: Jun	Jun	-0.10%	0.50%
Tue, 14 Jul10:30 PM	US	CPI YoYPeriod: Jun	Jun	3.90%	4.20%
Wed, 15 Jul12:00 PM	CH	GDP YoYPeriod: 2Q	2Q	4.50%	5.00%
Thu, 16 Jul10:30 PM	US	Retail Sales Advance MoMPeriod: Jun	Jun	0.30%	0.90%
Thu, 16 Jul10:30 PM	US	Initial Jobless ClaimsPeriod: 11-Jul	11-Jul	—	—
Fri, 17 Jul7:00 PM	EC	CPI YoYPeriod: Jun F	Jun F	—	2.80%
Fri, 17 Jul7:00 PM	EC	CPI MoMPeriod: Jun F	Jun F	—	-0.10%

Source: Economic Calendar Data.

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