Australian Economy

Viewing posts in the Australian Economy category

Consumer confidence index points to rising spending

ScreenHunter_15 Mar. 18 16.24 By Leith van Onselen The ANZ-Roy Morgan Research (RMR) consumer confidence index rose by 1.3 points in the week ended 23 November to 114.3, to be just above its long-run average reading of 113.2 (see next chart). ANZ chief economist was particularly happy with the result, noting that “alongside low interest rates and rising house prices, this should support consumer confidence and retail spending as we head into the Christmas season”. ANZ also provided the below chart, which compares the sub-index of the financial situation compared to a year ago against real household consumption...
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Aussies flee to New Zealand

ScreenHunter_5145 Nov. 25 09.48 By Leith van Onselen Statistics New Zealand has today released its permanent & long-term migration figures, which revealed that New Zealand net migration is at record highs, with net migration from Australia to New Zealand also at the highest level in 21 years: Seasonally adjusted permanent and long-term (PLT) migration figures showed a net gain (more arrivals than departures) of 5,200 migrants in October 2014. This surpasses the previous high, recorded in August 2014 (4,800). Before 2014, the last peak was in February 2003 (4,700). Net migration has increased in most months over the...
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The last stand of Australia’s dying economic model

url The AFR is reporting that: Australia’s big four banks are tipped to raise $134 billion from wholesale markets this financial year, the most since 2009-10, as lenders use cheaper global funds to fuel domestic competition. ...The last time banks raised this much wholesale money was in financial 2010, when the government was guaranteeing bank borrowings in response to the financial crisis. The trend helps to lower banks costs, as most of the wholesale money being raised replaces more expensive funding secured during the crisis. Three cheers for them! Here are the latest offshore borrowing...
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The population monster that’s swallowing Victorian governments

ScreenHunter_5140 Nov. 25 08.03 By Leith van Onselen The Australian's Judith Sloan has questioned why Victorians are set to throw-out the one-term Napthine Government when its performance has not been all that bad: It’s not as though the Coalition government has been especially bad. There is a good news story to tell about fiscal management, expense control and initiatives for some needed new infrastructure. Victoria retains its AAA credit rating, which is in marked contrast with most of the other states. To be sure, the Victorian economy has been sagging along with the rest of the economy. And given the relative...
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NZ gives Oz an income thrashing

ScreenHunter_5138 Nov. 25 07.35 By Leith van Onselen Statistics New Zealand has released its annual National Accounts (Income and Expenditure) data for the year to March 2014, which revealed that New Zealand national disposable income increased by a strong 8.2% over the year: New Zealand earned $14.4 billion more as a country than in 2013, Statistics New Zealand said today. National disposable income was up 8.2 percent to $189.2 billion, in current prices, in the March 2014 year. The growth was led by business profits, while income from employment also grew. Business profits were up $9.0 billion (9.8 percent), due to large...
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East coast leads national income shock

ScreenHunter_5123 Nov. 24 15.26 By Leith van Onselen The income shock afflicting the Australian economy has been well documented on this site. Essentially, the ending of the biggest commodity price (terms-of-trade) boom in the nation's history in 2011 ushered in a new era of sluggish income growth, whereby real national disposable income (NDI) would significantly lag the growth in the economy, as measured by GDP. This situation is best captured by the next chart showing the falling terms-of-trade dragging down NDI per capita: As well as the below charts showing NDI per capita falling relative to GDP since...
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QLD’s mega-casino fails

rca__casino_550 From the AFR: Hong Kong billionaire Tony Fung said he is still committed to building the $8.5 billion integrated casino resort at Yorkey’s Knob in Far North Queensland, despite failing to acquire the Reef Casino in Cairns. ...The acquisition of the Reef Casino was crucial to Mr Fung’s plans as the Cairns casino licence was a fall-back if probity checks failed on the Aquis Resort. Aquis said it could not meet the deadline for regulatory approvals for the Reef Casino due by this Friday. I'm sure Comrade Campbell can come up with...
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BIS’ happy mining cliff

ScreenHunter_08 Nov. 07 08.52 By Leith van Onselen BIS Shrapnel is out today warning of a 40% slump in mining investment: the biggest decline on record. From The ABC: BIS Shrapnel has released the findings of its Mining in Australia 2014-2029 report which points to a 40 per cent collapse in investment in the sector over four years. "Already we're seeing a substantial slump take place in iron ore and coal investment around the country but now with the LNG investment boom about to end we're about to see the biggest slump ever in mining investment," spokesman Adrian Hart said. He said the current slump had barely...
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Senate to block cuts to auto industry assistance

ScreenHunter_5113 Nov. 24 07.42 By Leith van Onselen The Australian is reporting today that the Senate will block the Abbott Government's bid to cut assistance to the automotive sector (known as the Automotive Transform­ation Scheme, or ATS) by $900m between 2013-14 and 2020-21, by bringing forward the end date for the scheme and lowering the amount that individual firms can claim: Blocking the bill would reverse $500m in cuts to 2017-18 announced in last year’s Mid-Year Economic and Fiscal Outlook and a further $400m in savings announced in the May budget... “All available evidence shows that decimating the...
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Goldman sees 2015 crapola economy

Crapola-500x500 This is two days old now but is worth revisiting: There are two main changes in our Australian economic forecasts. Firstly we have shaved our 2015 GDP growth by 30pps from 2.3% to 2.0%. This compares with consensus forecasts for 2.9%. The core themes behind our bottom-of-consensus forecasts that we held through 2014 appear to be still the central themes; 1. A terms of trade shock from lower commodity prices driving nominal income growth back towards stall speed. 2. A household income shock as an uncompetitive exchange rate and labour costs coalesced with 'cost out and capital...
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Population ponzi masks fall in Victorian living standards

ScreenHunter_5103 Nov. 21 11.35 By Leith van Onselen Victoria's population growth fetish has once again been shown to be false economy, with today's State Accounts, release by the Australian Bureau of Statistics (ABS), showing a 0.2% fall in Victorian gross state product (GSP) per capita in the year to June 2014, despite a 1.7% headline increase (see next chart). The ACT also registered a fall in per capita GSP, down 0.9% over the year, whereas the mining strongholds of Western Australia and the Northern Territory registered 2.6% and 4.8% rises respectively, with the former's due to rising export volumes and the...
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RBA up-sells dirt phase three

images Find below a fresh (or, rather, stale) speech from the latest RBA doyen to be using the mining rear vision mirror. For all of its happy points, the analysis overlooks one crucial fact. If Chinese demand isn't growing then neither are Australia's export earnings. It simply does not matter that demand is strong if it is not stronger than last year, especially if we've entered oversupply. Rate of growth is all that matters to an economy hooked on expanding dirt exports. It's increasingly obvious that Chinese steel output has peaked, given it's been falling all year ex-exports, despite the's RBA...
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Uber in guerilla war with protected taxi interests

ScreenHunter_5102 Nov. 21 10.06 Cross-posted from The Conversation: I took two separate rides with two different UberX drivers yesterday. At no time did I feel as though my life was in danger. But in danger I was, at least according to several factions debating the safety of my choice to have an unregulated stranger drive me from one location to another. You see, a war is brewing. Uber, it appears, has been at war since its inception not only with other transport providers, local government and councils, but an increasing group of journalists. This war seems to have reached a boiling point over the past few...
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Australia hits peak car use

ScreenHunter_277 Nov. 14 12.57 By Leith van Onselen Two reports are out about how Australia is losing its love affair with cars, with younger Australians shirking car ownership and the nation reaching "peak car use". The first, aired on ABC's 7.30 Report last night, claims that the enthusiasm for car ownership displayed by the baby boomers is not shared by the younger generations, which is driving an overall decline in car usage: ...while the number of cars per person has risen, the number of new car sales per person has dropped sharply since the GFC. They're now at their lowest in 20 years. The question is: why? If the...
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LNG white elephant to trample economy

roaring-elephant-john-keaton Yesterday I attended the latest in the Melbourne Economic Forum series, on energy, and there was one paper that stole the show. Professor Philip Adams of Victoria University unleashed the Centre of Policy Studies model of the Australian economy on the question of whether the LNG boom will increase welfare in the long run and the results were stunning. Here it is: 1. Introduction What follows is an assessment of the economic impacts of two key developments in the gas market on the East Coast of Australia: 1. the construction and operation of three large LNG projects in QLD utilising gas generated,...
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More consumer surveys see Xmas grinch

imgres We recently saw a rather depressing take on Xmas sales this year in the Westpac Red Book. We've also seen the Deloitte Chep Index predict lousy Xmas volumes. Now, from Banking Day: Yesterday Commonwealth Bank released results of a survey showing that consumers expect to spend less this year than last. CBA has estimated that average Christmas spending per head on gifts, holidays, entertainment, extra food and drink and Boxing Day sales (covering the period from December 1 to January 6 next year) would be A$1079 per head, compared with $1116 per head in 2013.This adds up to an estimated total Christmas...
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Netflix entry a big win for Aussie consumers

ScreenHunter_5086 Nov. 20 13.43 By Leith van Onselen Little by little, Foxtel's stranglehold on subscription television services is being loosened, with Netflix announcing its entry into Australia next year. From The Australian: Netflix announced internet-connected users will be able to access its library in high definition and 4K where available, although it has not announced pricing. Expectations are it will cost around $10 a month... It is understood Nine Entertainment and Fairfax Media’s joint venture SVOD service Stan is rushing towards a December launch. Its parent, StreamCo, has already confirmed SVOD deals with...
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WA taxi users “ripped-off” by licence restrictions

ScreenHunter_5082 Nov. 20 12.23 By Leith van Onselen A new report by Professor David Cousins and former ACCC head Professor Allan Fels has found that Western Australians taxi users are being ripped-off by the deliberate rationing of taxi plate numbers by the State Government, which has inflated taxi fares by some 16%. From WA Today: "Inclusion of the lease value of licences in the calculation of fares means that fares are around 16 per cent higher than they should be and that customers are paying around $3.30 more for an average trip as a result," the report said... "When a driver leases a licence from someone, that cost...
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The Coalition deserved to get shafted on FoFA

ScreenHunter_5079 Nov. 20 10.03 By Leith van Onselen Fairfax's Adele Ferguson has taken a big stick to the Abbott Government for placing big business ahead of consumers in its bid to wind-back the Freedom of Financial Advice (FoFA) reforms introduced by the former Labor Government: The Coalition was always on a kamikaze mission when it decided to back the big end of town over consumers amid a series of financial planning scandals that exposed series flaws in the system. And so it was when a "coalition of common sense" fronted up to a press conference in Canberra at 9.15 on Wednesday morning with a group of victims to...
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Housing: the last chip for the Aussie economy?

ScreenHunter_12 Sep. 23 12.54 By Leith van Onselen Feedback loops are an important concept in finance and economics. In a nutshell, positive feedback loops are pro-cyclical in that they act to make an economy more volatile by accentuating booms and then busts. By contrast, negative feedback loops are counter-cyclical in that they act to reduce volatility and make an economy more stable by mitigating boom/bust cycles. Positive feedback loops come in various forms. With respect to the Australian housing market, one important positive feedback loop is the link between Australian home values and consumer confidence, borrowing,...
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Australia’s twin economic diseases

ScreenHunter_5059 Nov. 18 16.08 By David Collyer, cross-posted from Prosper Australia Australia has two infections that compromise our economic health. Their remarkably similar symptoms – fever, delirium, impaired judgement – muddy diagnosis and hamper effective treatment. Most are familiar with ‘Dutch disease’, where a resource bounty – in Holland’s case off-shore oil and gas production – lifts a country’s exchange rate, makes other activity like manufacturing and agriculture uneconomic and cause great dislocation even while headline GDP and national accounts look rosy. Australia has a dose of this clap....
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Resources jobs in calm before storm

ScreenHunter_03 Jul. 23 09.31 By Leith van Onselen DFP Recruitment has released its mining and resources jobs index for October, which registered a rise of 1.3% to 63.56, the first increase since January 2014. Year on year, the number of mining and resources job advertisements has fallen by 28.7% nationally, but by only 1.6% in the last quarter, suggesting some stabilisation. Permanent opportunities rose 4% in October, in stark contrast to a 38% fall over the past year. Contract and Temporary roles fell 1.4% to 79.92 and have recorded a 20.6% decline over past year (see next chart). The decline in mining and...
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Cross-party committee slams data retention plan

ScreenHunter_5065 Nov. 19 11.23 By Leith van Onselen The Abbott Government's metadata legislation to require telecommunications companies to store detailed information about the calls and internet use of its customers for two years has been slammed by a cross-party federal committee, which believe that it will place unreasonable limitations on human rights. From The Guardian: Among its concerns, the joint parliamentary committee on human rights raised a warning about the length of time material could be kept, questioned how the information could be used, and criticised the lack of definition about what constitutes a reason for...
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DEEWR job vacancies going absolutely nowhere

sdfqe The Department of Employment and Education (DEEWR) job vacancies index for October is out and was flat: The trend is flat to falling and to describe this as a "recovery" would be flattering: Growth was up in NSW but, worryingly, the only other solid contribution was from WA, which is going to reverse in 2015, to put it mildly: Skilled was weak wall-to-wall: Needless to say, not the kind of market you should add cheap foreign labour to. Full report...
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Abbott urged to junk roads pork

ScreenHunter_5064 Nov. 19 10.08 By Leith van Onselen The Tourism and Transport Forum, which is chaired by Liberal Party luminary Bruce Baird, has called on the Abbott Government to recast its roads-only funding policy. From The Canberra Times: "While state governments have recognised the need to invest in public transport, we are calling on the federal government to reconsider its stance on funding public transport as it has the budgetary capacity to accelerate the construction of key projects that will make a material improvement to Australia's national productivity," TTF chief executive Margy Osmond said. "Yes, investment in...
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