By Leith van Onselen Roy Morgan Research (RMR) has released its unemployment estimate for the month of February, which registered a 1.2% lift in the unemployment rate to 11.0% from 9.8% in January. However, unemployment was down 1.3% over the year (see next chart). The jump in unemployment in February was mostly seasonal, according to Gary Morgan: “Looking at the month-to-month Roy Morgan Australian figures shows the usual February patterns with full-time employment falling compared to a month ago – full-time employment has fallen in February in ten out of the last twelve years while...

By Leith van Onselen Former head of the Business Council of Australia (BCA) and Audit Commission chair, Tony Shepherd, has called on the Government to lift Australia's immigration intake in a bid to raise living standards and add $1.6 trillion to the economy. From The Australian: Tony Shepherd, has warned that the ­migration intake should be maintained at current levels and then rise in the years ahead to confront the challenges of an ageing population... In a sign that Australians will live healthier and longer lives, by mid-century there will be about 35,000 people over the age of 100. The...

By Leith van Onselen Yesterday's national accounts release for the December quarter confirmed that Australia's FIRE economy - Finance, Insurance and Rental, Hiring & Real Estate Services – continues to bath in sunshine, maintaining its record high 11.3% share of the Australian economy (see next chart). With finance and insurance doing especially well, hitting an all-time high 8.6% GDP share (see next chart). Since financial markets were first deregulated in the mid-1980s, the FIRE economy has grown at nearly twice the pace of the rest of the economy, sucking the life out of the...

By Leith van Onselen Australian Finance Group (AFG) has released its housing finance data for the month of February, which registered a massive increase in monthly mortgage applications, with both the number and value of applications also up strongly on the same time last year. The number of mortgage applications rocketed by 49.3% in February and were up 12.1% over the year to 9,799, whereas the value of applications jumped by 58.1% over the month and by 16.2% over the year to $4,368 million (see next chart). According to AFG: The $4.3 billion of mortgages processed in February included a...

By Leith van Onselen To add some perspective on why MB believes the Australian economy is so fragile, and why living standards are falling, I have once again taken the time to deflate three measures of the domestic economy, as provided in the December quarter national accounts (released yesterday), by the ABS' population data, in order to ascertain the underlying strength of the economy in per capita trend terms. The three measures chosen are: National Disposable Income (NDI), which is "considered a good measure of progress for living standards because it is an indicator of Australians'...

Cross-posted from The Conversation: ­ Scandals involving Australia’s financial advice sector and the regulation of it have continued into another month, the latest chapter of which has involved NAB’s financial advice division. But this is not the first time NAB has attracted attention for its behaviour and the oversight of it. There was the time when the Australian Investments and Securities Commission (ASIC) allowed NAB to review and massage ASIC’s own media statement about NAB malfeasance. And the controversy when it was discovered senior lawyers from NAB had been allowed into ASIC,...

By Leith van Onselen As summarised earlier, the Australian Bureau of Statistics (ABS) today released the national accounts for the December quarter, which registered a 0.5% increase in real GDP over the quarter and a 2.5% rise over the year. The result just missed market expectations of 0.6% growth over the quarter and 2.5% growth over the year. On a per capita basis, real GDP rose by just 0.2% and was up by only 1.1% over the year. More importantly for living standards, real national disposable income per capita was unchanged over the quarter and was down 0.9% over the year. According to the...

The Australian Bureau of Statistics has released December quarter GDP and the news is more weakness with a close to consensus 0.5% quarter-on-quarter and 2.5% year-on-year: DECEMBER KEY FIGURES Sep Qtr 2014 to Dec Qtr 2014 Dec Qtr 2013 to Dec Qtr 2014 % change % change GDP (Chain volume measure) Trend 0.4 2.3 Seasonally adjusted 0.5 2.5 Final consumption expenditure (Chain volume measure) Trend 0.7 2.5 Seasonally adjusted 0.8 2.6 Gross fixed capital formation (Chain volume...

From the AIG: The services sector expanded for the first time in 12 months in February, following generally stable conditions in January. The seasonally-adjusted Australian Industry Group Australian Performance of Services Index (Australian PSI®) improved again by 1.8 points to 51.7 points in February. Much of this growth was concentrated in the health and community and financial and insurance services sub-sectors. • The three-month moving average for the Australian PSI® also increased to 49.7 points this month. Recent results from the Australian PSI® suggest growth in Australian...

The AFR goes all bear porn today: Highly regarded Australian Ethical Investment portfolio manager Mason Willoughby-Thomas warns "the risk of capital loss once monetary conditions eventually normalise could be significant as investors rush for the door en masse." ...Baillieu Holst equity analyst and author of market newsletter Sunset Strip Mathan Somasundaram is also comparing current stock market conditions to what happened prior to the 1987 stock market crash and GFC, which saw the stock market nearly halve in value. ...Pete Wargent, property buyer and co-founder of AllenWargent property...

By Leith van Onselen Fairfax's Peter Martin is reporting today that the Australian Chamber of Commerce and Industry (ACCI) has called on the text of the Trans-Pacific Partnership (TPP) - the US-led trade agreement between 12 Pacific rim nations (including Australia) - to be opened and negotiations monitored in real time by the Productivity Commission (PC): The ACCI wants negotiating drafts to be shown to community and business groups who would then be under an obligation to keep them confidential. Negotiators would retain their power to conclude deals without reference to the parliament but...

Exclusively for MB paying members from Gerard Minack of Minack Advisors. Australia enjoyed two booms over the past 20 years: the well-known once-in-a-century mining boom, as well as an unprecedented boom in banking, borrowing and buying houses.  The economy is now struggling with the end of the mining boom.  The bear case for Australia is that a mining bust bursts the banking boom. Australia’s 24 year expansion has run on the back of two booms, in mining and housing/banking.  Exhibit 1 shows the rising share of real GDP for both sectors.  This under-states the impact of their growth.  For...

Cross-posted from The Conversation: Australia’s Parliamentary Joint Committee on Intelligence & Security (PJCIS) last week endorsed the data retention bill, which means we’re all suspects now. The Telecommunications (Interception and Access) Amendment (Data Retention) Bill 2014 provides for mandatory retention by internet service providers (ISPs), phone companies and other entities of telecommunications metadata -– data that in aggregate provides a picture of our lives. The data will be accessible by a wide range of law enforcement and other bodies, potentially extending from the...

By Leith van Onselen Within today's data dump of partial measures that feed into tomorrow's national accounts release for December was the important news that Australia's terms-of-trade has fallen another 1.7% (seasonally adjusted) and 1.9% (trend) over the quarter to be down by 10.6% (seasonally adjusted) and 9.5% (trend) over the year (see below charts). As you can see, we are fast approaching the GFC low with much further still to fall. And since the terms-of-trade measures the price received for Australia's exports relative to the price paid for imports, the sharp fall in the...

Ironically, we refer to Craig James today on Australia's net foreign debt which is growing exponentially as both public and private balance sheets leverage into the mining bust: Our high level of foreign debt represents a risk – if export income was to dry up it would constitute a problem. But exports continue to rise, resulting in our debt servicing ratio improving to the best levels in almost 30 years. Of further comfort in the current environment is the fact that the current account deficit improved markedly in the past quarter. And while the terms of trade fell, increased volumes of...

From SBS: The economy is struggling to grow because Australians get too much pay, too much annual leave and are too hard to fire, an American economist says. Bob Baur, chief global economist at Principal Global Investors, says the local labour market is in need of reform if the economy is going to shift from its dependance on mining for growth. Mining investment is dwindling and iron ore isn't fetching the prices that it used to, but other sectors have yet to step up to fill the breach. Dr Baur says Australia needs to start making things again, and exporting its services, like...

Cabinet has approved the Turnbull plan for an Australia Post doom loop: The reforms will allow Australia Post to introduce a "regular" and "priority" letters service. Letters send with a "regular" stamp will arrive an average of two days later than they do currently, with mail within metropolitan areas to arrive a day later than the current timetable. Australia Post is expected to apply to the Australian Competition and Consumer Commission to increase the cost of a "regular" stamp from 70 cents to $1 when the new regulations come into effect. ...Australia Post will be able to charge what it...

From Andrew Hanlon at Westpac: Q4 net exports: +0.7ppts Net exports will make a sizeable positive contribution to Q4 GDP growth of 0.7ppts. That met our expectations (mkt median +0.6ppts, Westpac +0.7ppts) Exports advanced, up 1%, centred on expanding capacity in the resource sector. Imports were weak, contracting by 2.5%, against the backdrop of patchy domestic demand. Q4 public demand, +0.3% Public demand managed a rise of only 0.3% in Q4, coming on the back of a sharp fall in Q3. That was softer than we expected, (Westpac +0.7%). The surprise was public investment, which was...

By Leith van Onselen The Australian Bureau of Statistics (ABS) has released dwelling approvals data for the month of January. At the national level, the number of dwelling approvals rose by a seasonally adjusted 7.9% to 19,282. The overall surge was driven by the volatile unit and apartment segment, which jumped by 19.6% in January. By contrast, the more stable house approvals segment was relatively flat, rising by just 0.4% over the month. The result beat analysts’ expectations, who had expected a 2% fall in approvals over the month. In the year to January 2015, dwelling approvals rose by a...

Fresh from the ABS: DECEMBER KEY FIGURES Sep Qtr 2014 Dec Qtr 2014 Sep Qtr 2014 to Dec Qtr 2014 $m $m % change BALANCE ON CURRENT ACCOUNT Trend estimates -11 757 -11 279 4 Seasonally adjusted -12 130 -9 588 21 BALANCE ON GOODS AND SERVICES Trend estimates -3 526 -3 911 -11 Seasonally adjusted -3 899 -2 430 38 NET PRIMARY INCOME Trend estimates -7 689 -6 832 11 Seasonally adjusted -7 688 -6 621 14 LEVELS AT END OF...

By Leith van Onselen The ANZ-Roy Morgan Research (RMR) consumer confidence index rose for the second week in a row, rising by 1.7 points to 112.5 in the week ended 1 March, to be tracking just below the long-run average (see next chart). The rise in confidence was driven by an overall improvement in the outlook of consumers for the next 1 to 5 years and an improvement in the answer to the “time to buy a major household item” question. Nevertheless, ANZ chief economist, Warren Hogan, remains unconvinced that confidence will continue improving over coming months, noting that the labour...

By Leith van Onselen Sometimes you read a piece that makes you want to punch the screen. Today's effort comes from The Australian's Nick Carter, who has penned an extraordinary attack on welfare recipients, particularly those on unemployment benefits: 11.6 per cent. That’s the budgeted rise in real spending in social security and welfare between last year and 2018, and the minister will have to crack the whip night and day just to keep to it... Since state welfare provision is, in essence, the socialisation of risk, moral hazard is unavoidable. Put bluntly, any means-tested welfare payment...

With warnings suddenly flying thick and fast, the history of bubbles has never seen the likes of what is unfolding in Australian property now. Some bubbles have sprung from unlikely sources such as tulips. Others have inflated around bright ideas that held little reality such as the South Sea Company. In stock markets bubbles have certainly been destructive but equity can handle that and they have also left historic legacies of technological advancement. The Roaring Twenties was one, built upon expanding railroads. The millennial tech bubble was another, launching the internet. On the other hand,...

By Leith van Onselen A comprehensive review of the proposed Trans-Pacific Partnership (TPP) trade agreement - the US-led trade deal between 12 Pacific rim nations (including Australia) - has found that the agreement would force-up Australian medicine costs, stop some Australians from taking their medicines, and make it harder for the Government to regulate against tobacco and alcohol. Here's Fairfax's Peter Martin: The so-called health impact statement, compiled by the Centre for Health Equity Training Research and Evaluation at the University of NSW relies on leaked texts of draft chapters of...

By Leith van Onselen The Australian Bureau of Statistics (ABS) today released its Mineral & Petroleum Exploration data for the December quarter, which revealed rises in both minerals and petroleum exploration expenditure. Nationally, expenditure on minerals exploration rose by a seasonally-adjusted $6.4 million (1.5%) over the December quarter. The rise was driven by Queensland, where exploration expenditure rose by $9.1 million (10.6%): The various components, presented below in non-seasonally adjusted raw terms, rose over the quarter by $4 million or 0.9%. Iron ore exploration...