How bad is the coming Australian recession?

With an Australian recession now locked in let’s explore how bad it’s going to get. Our starting point is yesterday’s capex figures: That’s pretty scary stuff! And it will be almost as bad the year after, taking capex back to 2004/5 levels. It’s enough I’d guess to push the unemployment rate to 7.5% by the end

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Construction won’t save employment, DEEWR

By Leith van Onselen The Department of Employment yesterday released a report looking at Australian construction employment, which is says is the third largest employer in Australia, employing 1,055,200 workers or 9.1 per cent of total employment. The industry has also experienced strong employment growth over the past decade, growing by 221,400 (26.6%) over the


Coalition members pursue beef with TPP

By Leith van Onselen Several Coalition members have stepped-up their resistance to the Trans-Pacific Partnership (TPP) trade agreement, vowing to oppose giving potentially contaminated US beef access to Australia in exchange for Australians receiving increased sugar access. Liberal Senate agricultural committee member, Bill Heffernan, has been particularly outspoken against the TPP, with The Land reporting


Daily LNG price update (spot cometh)

The Brent oil price rebounded last night to$6.85 as I write. The major reason was another draw on US crude inventories:   Even though production took off again: The Saudis were also bearish, from Reuters: Saudi Aramco may raise the number of its oil and gas drilling rigs to as high as 250 next year


Daily iron ore price update (rejection)

Here are the iron ore price charts for May 28, 2015: Spot rejected new highs. Singapore dancing on a pin. Dalian eased but fell sharply overnight to 422. Rebar average resumed its slide into the abyss. Texture from Reuters: “At the moment, if you have any medium to high-grade material from Brazil or Australia, it will


China stocks crash for a day

Cross-posted from Investing in Chinese Stocks. I had a feeling the A-share market had to be peaking, at least in the short-run, when people who don’t know the difference between an A-share, an H-share and a time share started asking me if ASHR was a good buy. Coverage of the market’s 6.5% plunge on Thursday


Links May 29, 2015

Macro, Markets & Investing Questions arise about banks’ role in FIFA bribery case – Reuters…not the banks, surely?… OPEC sees rivals boosting oil output despite weak prices – Reuters Norway’s Oil Fund to Exit Coal–Energy Journal – WSJ Hedge Funds Have Taken a Shine to Silver – WSJ The Tanker Market Is Sending a Big


ASX at the close

Chris Weston, Chief Market Strategist at IG Markets Asia equity markets really are beating to their own individual drum at present, with such interesting and compelling market and economic thematics unique to the geography. Equity markets in China, Japan, Australia and Korea are exerting such limited correlations it is, in theory, making investors’ geographical preference


Yet more capex reactions

From around the web.: JPMorgan economist Tom Kennedy Weak numbers across the board. It looks like capex is going to be a bit more of a drag on GDP than we had pencilled in. We had 0.5 per cent and we are in the process of adjusting it. I would say there is some downside risk.


Labor’s hack on capex

From the Kouk: Whoops! Private sector capital expenditure fell again in the March quarter. Down 4.4 per cent after a fall of 1.7 per cent in the December quarter. In trend terms, business investment has fallen for 11 straight quarters, something that has not been seen since the early 1990s recession. Since the Federal election


Interest rates are going to 0.75%

There’s lot’s of material floating around the media on today’s capex numbers most of which is like this from ANZ: “Today’s Capex release provides further evidence that the transition toward investment in the non-mining sectors remains quite some time away,” ANZ economists Felicity Emmett and Daniel Gradwell said. “The further decline, from an already weak outlook,


Private capex outlook screams recession warning

The ABS has release the all important Private Capex survey for the March which contains the second estimate for the 2015/16 year ahead. The news is…well…disastrous: Estimate 2 for total capital expenditure for 2015-16 is $104,033m. This is 24.6% lower than Estimate 2 for 2014-15. The main contributor to this decrease is Mining (-34.9%). Estimate


Australia’s highly combustible ghost cities

By Leith van Onselen Australia’s new found fondness for expensive highrise shoeboxes has taken a potentially deadly turn, with ABC’s 7.30 Report last night running a segment on the cheap combustible cladding that has covered potentially thousands of buildings across Australia, which last November sent a Docklands building into a towering inferno: LEIGH SALES, PRESENTER:


Goldman destroys iron ore cartel dreaming

From Goldies: Voluntary production cuts are appealing in theory… The role that low cost expansions in Australia and Brazil are playing in driving iron ore prices lower has come into focus among investors, corporates and even policy-makers. With government receipts under pressure and the commercial viability of smaller producers at risk, many voices have asked for a change of


Cross-benchers propose huge boomer bribe

By Leith van Onselen Independent senators Jacqui Lambie, Glenn Lazarus and Nick Xenophon yesterday called for the Government to extend the Pension Loans Scheme – a state-run reverse mortgage scheme that allows eligible retirees to borrow against their homes to receive payments from the Government equivalent to the full age pension – to all retirees.


The China steel scraptastrophe

From Citi: The long-term threat of steel scrap to Chinese iron ore demand remains underestimated, and this point was the greatest area of pushback from last year’s iron ore book (Global Iron Ore – Vive La Différence!). However, as Chinese steel demand has slowed even faster than forecast, the medium and longer term threat posed by scrap to iron


Measuring the great Australian dumbening

The IMD World Competitiveness Index is out today and the story is poor for Australia.  From CEDA: Australia has dropped another place in world competitiveness rankings, falling further in economic performance and government efficiency rankings, raising concerns about our competitiveness as a smart economy. In releasing the Australian results of the IMD World Competitiveness Yearbook which


The Salt of contradiction

By Leith van Onselen KPMG’s Bernard Salt is an interesting beast. For years he has been an “unabashed supporter of a bigger Australia”, producing reams of articles pushing rapid population growth and warning that to not follow this path would lead to an economic and fiscal catastrophe. Yet, over recent months, Salt has made contradictory