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From Westpac: The Westpac-Melbourne Institute Unemployment Expectations Index fell 5½% in Jan following a 4½% lift in Dec, a 2.7% rise in Nov, and a –3.9% fall in Oct. Recall that a lower (higher) reading from the index indicates reduced (increased) concern around the labour market. In trend terms, the index rose 0.5% in Jan from a 0.4% rise in Dec (revised from +1.6%) and a 1.1% rise in Nov. Last month it looked as if the worm had turned with a trend deterioration in expectations. This still holds in Jan 2015, but only just. In the year to Jan, unemployment expectations are down 1.1%....

Fresh from Bill Evans at Westpac: The Westpac Melbourne Institute Index of Consumer Sentiment increased by 2.4% in January from 91.1 in December to 93.2 in January. It is encouraging to at least see an increase in the Index. To be sure, the increase is not just reflecting a regular ‘holiday boost’ to sentiment that can be expected at this time of the year. The Index is seasonally adjusted so the rise indicates that sentiment has lifted over and above the rise normally seen in January. However, when assessed in the context of the sharp 5.7% fall in the Index in December it is not a...

From Peter Martin today: Who'd say no to the deal of a lifetime? Tony Abbott would, and it's our tragedy. The 10-year bond rate is the rate at which the government can borrow for 10 years at a fixed rate of interest. Right now it's just 2.55 per cent, an all-time low. By way of comparison in the 1970s it exceeded 10 per cent, in the 1980s it passed 16 per cent, in the 1990s it passed 10 per cent, in the 2000s 5 per cent, and until now in this decade it has usually been above 3 per cent. It dived below 3 per cent at the end of last year and is now just 2.55 per cent, the lowest in living...

From Forexlive: ANZ Roy Morgan weekly Consumer Sentiment, for the week ended January 18 …113.6 prior was 112 Up 1.4% on the week Now around its around its long-run average ANZ commentary on the data: Says there is often a temporary seasonal uplift in confidence in January (note that this data is not seasonally adjusted) Lower petrol prices haven’t delivered as big of a bounce to confidence as expected “Indeed, ‘household finances compared to a year ago’ the subindex most correlated to household consumption, fell to a four-month low last week. This suggests that it’s...

Cross-posted from Martin North's DFA blog: The ABS data for December, released today shows that the vehicle sales trend estimate of  92,618 decreased by 0.1% when compared with November 2014. The trend estimate has now decreased by 0.1% for five consecutive months, from a peak in 2012. When comparing national trend estimates for December 2014 with November 2014, sales of Sports utility and Other vehicles both increased by 0.5% respectively. Over the same period, Passenger vehicles decreased by 0.8%. The rotation towards Sports utilities continues. Five of the eight states and...

TD Securities monthly inflation for December is out and pulled a donut for the month and 1.5% for the year, crashing from 2.2% in November. The trimmed mean reading was 0.1% month on month  and +1.7% year on year: Inflation...

Happy New Year! MB does not do forecasts for the simple reason that we wouldn't believe them if we did. Putting hard number targets on market prices is a silly game that offers those that play it a false sense of control. Rather, MB is focused on trends, which are your friends, because they enable you to ignore market noise and allocate investment dollars based upon underlying themes. So, as you read on, bear that in mind. These cogitations are not hard number forecasts but my best guesses about the direction of certain markets for the next twelve months. One could be forgiven for...

From David Uren today: Estimates by consulting firm BIS Shrapnel show there will be some [infrastructure] recovery over the next four years, however, as a share of GDP spending will remain far below the average for the past decade. University of Wollongong research fellow Joe Branigan said the biggest barrier was the limits on state government spending. “State governments are hitting budget constraints, as is demonstrated by both Western Australia and Queensland losing their AAA credit rating,” Mr Branigan said. “NSW held on to their AAA rating because it has a more div­erse economy...

The SMH carried a well-structured, feel good article on the weekend by Tom Allard that argued Australia's economy will prosper this year: ...Confidence is the key to Australia emerging from the mining boom, says former Reserve Bank board member Warwick McKibbin. And the X factor for confidence could well come in the form of the dramatic slump in oil prices. The slump in world oil prices by more than half has led to a drop in the price at the bowser of 40¢ a litre since mid-2014. If sustained, it will be the equivalent of an interest rate cut of as much as 0.5 per cent, or a $1100 pay rise for...

Cross posted from The Conversation by Elizabeth Webster, Director Centre for Transformative Innovation at Swinburne University of Technology Commentators continue to call for new infrastructure to lift Australia’s flagging economic growth, yet there is a significant lack of awareness over what constitutes infrastructure. Infrastructure is not limited to bridges, roads and electricity poles. Australia needs more knowledge infrastructure: that is, public-private partnerships in research and technology to translate ideas from research into new products and processes for industry. Although...

Cross posted from The Conversation by Anna Mortimore Lecturer, Griffith Business School at Griffith University The Australian Automotive Association (AAA) recently stepped up its campaign against Australia’s Luxury Car Tax, arguing it means Australians are paying more than their Japanese or UK counterparts for the same cars. The AAA, which represents Australia’s motoring clubs, has blamed the 33% tax for higher car pricing payable on “every vehicle worth over $61,884”. There is no denying that the luxury car tax must be removed or reformed as Australia cannot pursue a free trade...

by Chris Becker As reported earlier, the ABS released its monthly Labour Force data for December 2014, with headline unemployment falling to 6.1% Here's a closer look at the results, starting with the long run employment vs participation rate with both still on downtrends: And then annual employment growth by type of job, where full time jobs are rising from a significant low, while part-time jobs are off the boil: Unemployment by state is a different picture with overall and major state trends:   The southeastern economies with the greatest populations show...

by Chris Becker I think they might be listening to the electorate for a change. From the ABC: Health Minister Sussan Ley has announced the Government will scrap plans to cut the Medicare rebate for short doctor visits. The rebate for GP consultations less than 10 minutes was due to be cut by about $20 from next Monday. However, the move was set to be struck down by the Senate. "As a result, I'm announcing today that the changes to level A and B Medicare consultation items will not commence on Monday as planned. "However, it remains critical that we implement changes to ensure quality...

Cross posted from The Conversation by James Laurenceson Deputy Director and Professor, Australia-China Relations Institute (ACRI) at University of Technology, Sydney Wayne Swan couldn’t do it. Joe Hockey has tried and failed. Getting the budget back in black is proving to be mission impossible. But it could be a whole lot worse. The Commonwealth Government’s bottom line has been getting a boost from an unappreciated source. That source is China. These days China is more often painted as a villain in the budget saga. Take the Mid-Year Economic and Fiscal Outlook (MYEFO) released last month as...

by Chris Becker The ABS Labour Force data for December 2014 has just been released with unemployment falling to 6.1%! Employment +37.4k (+3.8k) Unemployment 6.1% (6.3%) FT +41.6 PT -4.2k Participation 64.8% (64.7%) Aussie dollar goes straight up to 82 cents on the release: More detailed analysis to...

Cross posted from The Conversation by Fabrizio Carmignani, Professor, Griffith Business School at Griffith University Judging from the first week of campaigning, the 2015 Queensland election is going to be very much about economics – and jobs in particular. On the one hand, Premier Campbell Newman and his Liberal National Party stress that under their “strong economic management”, 1100 new jobs are being created every month and Queensland is on track to become the fastest growing state economy in Australia. On the other hand, the Labor opposition, led by Annastacia Palaszczuk,...

Cross posted from The Conversation (this is very relevant given this week's "rubbery" unemployment figures from the ABS) by Rose-Marie Stambe Provisional PhD Candidate at The University of Queensland and David Fryer Honorary Associate Professor at The University of Queensland With monthly unemployment figures due out this week, the usual attention will be paid to fluctuations up and down. In last year’s Mid Year Economic and Fiscal Outlook Treasurer Joe Hockey predicted that unemployment could reach 6.5%, which is 0.25% higher than was predicted in the federal budget. How the...

by Chris Becker The ABS just published the November housing finance figures and recorded a surprise drop in both owner occupied and investment housing, with expectations of a lift (+1.7%) squashed: Trend estimates Seasonally adjusted estimates Nov 2014 Oct 2014 to Nov 2014 Nov 2014 Oct 2014 to Nov 2014 Value of dwelling commitments(a)(b) $m % change $m % change Total dwellings 29 225 0.6 29 003 -1.0 Owner occupied housing 17 248 0.5 17 282 -0.2 Investment housing - fixed...

by Chris Becker Today's chart comes via Bloomberg, chronicling the fall in WTI crude, the Aussie 10 year bond yield (as I reported in a recent COTD post here)  and the not-often mentioned Aussie 3 year inflation swap: What does it all mean and are we just confusing correlation with causation here? No, as any non-biased observer of the Australian economy will tell you, the country's fortunes are completely linked with that of the speculative commodity complex. What the interest market is confirming, via the swap (a fixed rate swap for future change in CPI) and bond yield curve, is is...

by Chris Becker Might be a bit early to get excited about the so-called construction boom. The AIG Performance of Construction Index (PCI) for December 2014 continues to contract. From AIG: The national construction industry contracted at a slightly steeper rate in December, with the Australian Industry Group/Housing Industry Association Australian Performance of Construction Index (Australian PCI®) dropping 1.0 point to 44.4 points (index readings below 50 points indicate a contraction in activity, with the distance from 50 points indicating the strength of the contraction). Two measures...

by Chris Becker The ABS has released its final data for November retail trade turnover, with only a slight increase of 0.1% (seasonally adjusted), following a solid 0.4% rise in Octobers:   RETAIL TURNOVER, Australia Here are the key points: In seasonally adjusted terms food retailing rose 0.6 per cent or $56.3 million in turnover. Other industries which experienced rises were cafes, restaurants and takeaway food services (0.8 per cent) and household goods retailing (0.6 per cent). Department stores remained relatively unchanged (0.0 per cent). This was partially offset by falls in...

by Chris Becker The employment survey by Roy Morgan's has captured a record high in unemployment for December: The findings are sobering, and although there is a significant gap with the official (albeit very volatile) ABS figures, the trend is self-evident: 1,402,000 Australians are looking for work (10.9% of the workforce, down 9,000 since December 2013); 1,246,000 Australians are under-employed (working part-time and looking for more hours – 9.7%, up 154,000 since December 2013). 2,648,000 Australians are unemployed or under-employed – a new record high (20.6% of the...

by Paul D. Egan & Philip Soos Australia’s private debt dynamics have been thoroughly explored elsewhere, but less well understood is the country’s position relative to the OECD and BRIC nations. Thankfully, the Bank for International Settlements (BIS) provides a useful database of unconsolidated household, non-financial business and total sector debts to enable a meaningful comparison. The difference between consolidated and unconsolidated debts is an important consideration. The former constitutes debt that is netted out within the sector, and only records debts owed to other sectors,...

by Chris Becker The ABS just released the Building Approvals data for November and while the headline seems sharp (up 7.5% seasonally adjusted, but only up slightly on trend basis), it appears to be all about apartments: TOTAL DWELLING UNITS The trend estimate for total dwellings approved rose 0.2% in November and has risen for six months. The seasonally adjusted estimate for total dwellings approved rose 7.5% in November and has risen for two months. PRIVATE SECTOR HOUSES The trend estimate for private sector houses approved fell 0.3% in November and has fallen for eight...