Australian Economy

Viewing posts in the Australian Economy category

Actual capex in surprise lift

ScreenHunter_07 Apr. 05 12.46 By Leith van Onselen The Australian Bureau of Statistics (ABS) today released data on capital expenditures (capex) for the June quarter of 2014, which registered a surprise seasonally-adjusted 1.1%lift in capex over the quarter but a 4.0% decrease over the year. The result beat analyst’s expectations of a 0.9% fall over the quarter (see below table). While Houses and Holes has covered the more important capex intentions survey, which covers industry’s forward-looking capex plans over the coming years, below are some backward looking charts showing actual capex up to the June quarter...
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Expected capex still sees big cliff

imgres The Australian Bureau of Statistics has released the much admired Private Capex report today and it looks like Glenn Stevens is going to have to do a little more whinging. Estimate 7 for last year is weak and shows capex fell year on year. More importantly, after last quarter's strong rebound, expected capex is easing back: Estimate 7 for total capital expenditure for 2013-14 is $157,869 million. This is 1.7% lower (-$2,661m) than Estimate 7 for 2012-13. Estimate 7 for equipment, plant and machinery decreased by 8.9% (-$4,997m) while Estimate 7 for buildings and structures increased by 2.2%...
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UBS: Australian growth rebounding!

dvsd You've go to love the sell side, or is that the sunny side? From UBS today: Weekly SEEK job ads in August point to another modest ~2% monthly gain in the ANZ  job ads series (due 8 Sept, Figure 1), lifting its y/y to almost 8%, its best since 2011  (Figure 3). Despite the recent unemployment jump, this is consistent with a pick-up in  jobs growth to over 1½% by end-14, usually enough to lower the unemployment rate. The weekly BDO retail series – after forecasting the June retail rebound (Figure 2) –  points to a ‘flat’ July (due 4 Sept), and a modest ~½% m/m gain in August. This...
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It’s time to allow “grey” car imports (members)

ScreenHunter_29 Aug. 27 14.45 By Leith van Onselen The Productivity Commission's (PC) report into Australia's Automotive Manufacturing Industry recommends relaxing controls on so-called "grey" imports of second-hand cars, noting that Australian consumers are being fleeced, particularly when it comes to purchasing higher-end vehicles: It might be the case that some ‘premium’ vehicle segments (such as luxury European made motor vehicles) are characterised by larger profit margins and are relatively less competitive compared to overseas pricing because of the existence of fewer close substitutes. An increased supply of...
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S&P warns WA budget on iron ore

Travel-Warning From Standard and Poors this arvo: Standard & Poor's Ratings Services said today that its 'AA+/Stable/A-1+' issuer credit ratings on the State of Western Australia are not immediately affected by the recent fall in iron ore prices to less than US$90 per ton. The potential loss in the state's iron ore royalties would not by itself lead to a lowering of the ratings. We anticipate the Western Australian government's operating balance will remain in surplus after considering the potential earnings loss, at between 0% and 5% of operating revenues. At the same time, we project the state's...
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Mining unwind drags construction activity down

ScreenHunter_03 Jul. 23 09.31 By Leith van Onselen The ABS has released data on the value of construction work done for the June quarter of 2014, which registered a seasonally-adjusted 1.2% fall in total construction activity over the quarter and a 0.6% decline over the year. The result disappointed analysts' expectations for a 0.5% fall over the quarter. The 1.2% quarterly decline in construction activity was driven entirely by a 3.1% fall in engineering construction, which more than offset the 2.2% rise in residential construction and the 0.5% increase in non-residential construction (-1.5%): Residential...
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Labor’s NBN gold-plated

ScreenHunter_17 Aug. 27 10.44 By Leith van Onselen The Coalition's 196-page cost benefit review into the National Broadband Network (NBN) has been released and finds that Labor's plan for fibre-to-the-premises (FTTP) broadband is markedly ($16 billion) inferior to the Coalition's multi-technology mix (MTM) solution. The study compares four main scenarios: leaving things as they are with no further progress; an unsubsidised rollout of hybrid-fibre coaxial (HFC) and fibre to the node (FTTN); a full fibre to the premises (FTTP) rollout with wireless and satellite in high-cost areas; and a multi-technology mix...
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Car industry’s job losses will be worse than forecast (members)

ScreenHunter_10 Mar. 29 12.46 By Leith van Onselen The Productivity Commission has released a new report on the closure of the car industry. It concludes: Australia's automotive manufacturing industry is undergoing significant change. Motor vehicle producers in Australia have not been able to survive in the highly competitive global and domestic automotive markets — Ford, Holden and Toyota have announced they will cease local manufacturing before the end of 2017. Component manufacturers face ongoing adjustment pressure and rationalisation. It is estimated that up to 40 000 people may lose their jobs as a result...
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The politico-housing complex has turned on itself (members)

images Long term readers will recall that I see Australian property not as a "market" but a highly-distorted quango that has largely eaten the economy. Recall the 2011 post that laid out this view: When the baby-boomer generation first took power and reshaped Australia in the 1980s, the promise was for a new kind of meritocracy. The old “Australian Settlement” described brilliantly by Paul Kelly in the End of Certainty - a protectionist social contract between unions, industry, government and the people – was swept aside in favour of a neo-liberal vision. The new world demanded an open, more...
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Trade deficit to subtract 0.7% from Q2 GDP (members)

ScreenHunter_01 Jan. 25 13.29 From Westpac this afternoon comes analysis of today's preliminary June quarter estimate of Australia's international trade balance from the ABS, with Westpac estimating a 0.7% drag on GDP growth over the quarter - a sharp turnaround from the 1.4% positive contribution made in the March quarter: Australia’s international trade balance was a deficit of $4.69bn in the June quarter, a turnaround of $7.26bn on the revised March quarter surplus of $2.57bn. These figures are broadly in line with the monthly trade release, which reported a $7.74bn deterioration between Q1 and Q2. Export earnings...
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Coalition metadata targets innocent

ScreenHunter_07 Aug. 26 13.14 By Leith van Onselen The Australian has revealed today that the Attorney General's Department is seeking a wide array of powers in its bid to require telecommunications companies to store detailed information about the calls and internet use of its customers for two years: Confidential consultations with the companies — including Telstra, Optus and iiNet — commenced late last week with the circulation of a paper that has been obtained by The Australian... The paper, prepared for “preliminary discussions”, reveals the companies should retain records that would identify the names and...
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How are local muslims radicalised?

imgres From Crikey's Bernard Keane today (who does politics so much better than economics): "The best defence against radicalisation is through well-informed and well-equipped families, communities and institutions," the Prime Minister claimed this morning, announcing a package of over $60 million in measures targeting "young Australians being radicalised". Wrong, PM. The best defence against radicalisation is to avoid gratuitous military attacks on Muslim countries. Who says? Baroness Manningham-Buller: "By 2003/2004 we were receiving an increasing number of leads to terrorist activity from within...
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Weak Australian growth to go on, and on…

zvda One of the more bemusing elements of current Australian economic forecasting is the mysterious upturn that is expected by almost everyone at the end of 2015. The basic rationale for it is the rise of Abbott infrastructure spending, as well as the assumption that consumption will bounce back. That's what's driving many rising interest rate forecasts. All very questionable and there's no reason for me to repeat why, especially so since Alex Joiner of BofAML has done such a good job of illustrating that that outlook is highly optimistic, if not downright dubious... In Focus: Growth to remain mired...
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Why won’t the rationalists stand-up to privatisation?

ScreenHunter_06 Aug. 26 11.45 By Leith van Onselen The Australia Institure's Richard Denniss has produced a ripper article today in The AFR questioning why the economic rationalists of the 1980s and 1990s have gone silent on the privatisation of natural monopolies, which threaten to worsen outcomes for Australian consumers: Who could have foreseen however, that by 2014, their desire to privatise and cut taxes would see [economic rationalsist] supporting the creation of monopolies in order to “generate revenue” for governments... The whole point of economic rationalism was that the consumer was king... How far the...
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Australia’s budding youth jobs crisis

ScreenHunter_05 Aug. 26 10.29 By Leith van Onselen The Age has posted a sobering report today on the emerging youth jobs problem, which is fast approaching crisis levels: Youth unemployment has leapt to a 15-year high in Victoria... An analysis of youth unemployment data reveals that the situation has deteriorated in 12 of the state's 17 regions in the past year. Thousands of young Victorians from all backgrounds are finding themselves caught up in a spiral of unemployment, and the situation is particularly dire in socially disadvantaged suburbs of greater Melbourne and rural areas... The region of Warrnambool and...
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ANZ-RM consumer confidence rises

ScreenHunter_15 Mar. 18 16.24 By Leith van Onselen The ANZ-Roy Morgan Research (RMR) consumer confidence index has risen for the second consecutive week, increasing by 1.0 point (0.9%) to 113.5, taking it just above its long-run average reading of 113.2 (see next chart). This week's rise was driven entirely by an 11.1% bounce in household perceptions about their ‘financial situation compared to a year ago’. The below chart plots the most recent Westpac-Melbourne Institute Consumer Sentiment index against the ANZ-RM Consumer Confidence...
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Capex preview

imgres From Westpac comes a preview of tomorrow's capex release: The 2nd estimate for 2014/15 pointed to a decline in business capex, with a sharp downturn in mining only partially offset by a lift in services sector spending. These broad themes are likely to be restated. What policy makers will be looking for is some greater clarity around the likely magnitudes of these divergent trends. It's a craps shoot but for what it's worth I expect a disappointing report with some pull back on non-mining capex after the last very good report and a further deterioration in mining. Full report...
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South Australia’s Uber ban doesn’t hold water

ScreenHunter_3920 Aug. 25 14.12 By Leith van Onselen The South Australian Government has joined the other mainland states in banning Uber's ridesharing service on public safety grounds. From The Canberra Times: Treasurer Tom Koutsantonis says the service could put vulnerable passengers at risk. "People get into taxis and hire cars late at night, they may have had a bit to drink (or) they may have had a very, very big night," he told ABC radio on Monday. "It's a very dangerous option to take an Uber service - you don't know who's driving the car. "You don't know if the car has been checked and, most importantly, we...
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Why have Australian firms failed to globalise?

imgres From the AFR: Australian companies, wracked with fear, are stifling their growth by confining themselves to the domestic market, said Goldman Sachs Asset Management’s head of Australian equities, Dion Hershan. Mr Hershan criticised investors, public company management teams and boards of directors for being obsessed with the fear of looking offshore for growth in a note he distributed to GSAM’s institutional clients, including industry and for profit superannuation funds. “I happen to think companies have squandered an opportunity over the last few years; we’ve had elevated currency...
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Demand for 457 visas falls as unemployment rises

ScreenHunter_3916 Aug. 25 08.27 By Leith van Onselen The Australian has reported today that the number of 457 skilled worker visas granted in Australia fell by 39% in the 2013-14 financial year as the labour market weakened, although the number of migrant workers already in Australia rose slightly: The number of foreigners ­applying for a four-year work visa fell below 50,000 during 2013-14... Thousands of migrant workers flocked back to their home countries during the year, triggering the cancellation of nearly 29,000 work visas... Despite the slump in new ­applications, the number of ­migrants already working in...
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The great confidence delusion (members)

confidence The rise and rise of Pasconomics, otherwise known as the worship of the confidence fairy, is fast choking off the flow of oxygen to the Australian brains trust. Following the RBA's refrain in Parliamemt last week, the whining about confidence has reached fever pitch across the media. In just one example entrepreneur Josh Liberman appeared at The Australian to claim: “Government should be identifying what competitive ­advantages Australia has as a ­nation. And, based on that, backing industries where we have that competitive advantage as a world leader,’’ he tells The Weekend...
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How the mining boom juiced the economy (members)

ScreenHunter_3904 Aug. 25 07.20 By Leith van Onselen The Reserve Bank of Australia (RBA) has released a new paper attempting to estimate the impact of the mining boom on Australia's economy. The broad impacts are best summarised in the below chart: The mining boom is estimated to raise household income through several different channels... As of 2013, the population is about 1 per cent larger than in the counterfactual, reflecting the response of net migration flows to relative job opportunities and higher real wages. Employment is 3 per cent higher, largely due to the boost to aggregate demand. Real consumer wages are...
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Ross Gittins ducks the blame

imgres Ross Gittins is a survivor. Today from the venerable grey beard: Now we're emerging from the decade-long resources boom it's easier to view the process with greater insight and make a more sober assessment of its costs and benefits. What happened was a huge jump in the world prices of coal and iron ore as China's period of rapid economic development of heavy industry and infrastructure caused global demand to outstrip global supply. The surge in China's demand caught the world's mining industry unprepared. Like miners in other countries, our largely foreign-owned miners lapped up the huge...
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Is NAPLAN testing just ‘juking the stats’?

ScreenHunter_3892 Aug. 22 10.33 By Leith van Onselen Roland 'Prezbo' Pryzbylewski: I don't get it. All this so we score higher on the state tests? If we're teaching the kids the test questions, what is it assessing in them? Grace Sampson: Nothing. It assesses us. The test scores go up, they can say the schools are improving. The scores stay down, they can't. Roland 'Prezbo' Pryzbylewski: Juking the stats. Grace Sampson: Excuse me? Roland 'Prezbo' Pryzbylewski: Making robberies into larcenies. Making rapes disappear. You juke the stats, and majors become colonels. I've been here before. Grace Sampson: Wherever you...
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Mad Adam pumps the confidence fairy

fairy By Leith van Onselen Business Spectator's Adam Carr has fired another shot across the bow of us 'doomsayers' who believe that the unwinding of the biggest commodity price and mining investment booms in the nation's history will cause income growth to decline and weigh on living standards. Instead Carr argues that recent weak wages growth is all because of a "crisis of confidence": According to the UN, Australia currently enjoys an extremely high standard of living... On the income side, Australia actually scores very well... A decade ago 12 of the top countries’ GNI per capita was...
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