Australian Economy

Viewing posts in the Australian Economy category

Will Australia join the great global deflation?

deflationcycle By Leith van Onselen Dixon Advisory's Max Walsh has written a ripper piece in The AFR today warning about the dangers of pinning an economy on rising housing values and debt, which more often than not lead to a significant downturn and a period of financial instability: If you think you have heard the story of the finance-based, housing-led recovery that was the ideal medicine for an economy under stress, you are correct. A property boom underwritten by high leverage and/or low mortgage entry rates will collapse suddenly, ensuring a slow recovery. In Australia our banks have become little...
read more

China and Australia trade blows

images From the FT: China will officially launch a new $50bn Asia Infrastructure Investment Bank on Friday as it steps up its challenge to global financial institutions like the World Bank that it feels are dominated by America and its allies. But only 20 mostly small economies, many of them effectively client states of China, will become founding members of the bank at Friday’s ceremony in Beijing after Washington lobbied furiously to stop other countries from signing up. ...India will be the only large economy to sign up to the Chinese initiative at the ceremony in the Great Hall of the People in...
read more

Australian CPI in detail

ScreenHunter_01 Jun. 08 23.33 By Leith van Onselen As noted briefly by Houses & Holes, the Australian Bureau of Statistics (ABS) has released the Consumer Price Index (CPI) data for the September quarter 0f 2014, which registered a modest quarterly increase in prices, with the result also coming ahead of economists’ expectations of 0.4% inflation over the quarter. According to the ABS, headline CPI rose by a modest 0.5% in the September quarter, which follows June’s 0.5% rise (see next chart). On an annual basis, headline CPI growth fell to 2.3% from 3.0% in the June quarter, which is well within the...
read more

CPI eases

images The Australian Bureau of Statistics has released the September quarter CPI and inflation is easing at 0.5% (0.4 expected) for the quarter and a tame 2.2% for the year. The analytical series are now easing as well with the trimmed mean at 0.4% and 2.5% and weighted median 0.6% and 2.6%. All figures are down sharply from June QTR growth rates: SEPTEMBER KEY FIGURES Jun Qtr 2014 to Sep Qtr 2014 Sep Qtr 2013 to Sep Qtr 2014 Weighted average of eight capital cities % change % change All groups CPI 0.5 2.3 Food and non-alcoholic...
read more

DEEWR jobs ads show weak labour market

sdfq The Department of Education, Employment and Workplace Relations Job Vacancies index is out for September and has fallen away 0.8 on the month: The trend remains a shallow and vulnerable recovery but vacancies have barely climbed above their GFC low: Falls were widespread: Skilled vacancies were a littler better: This remains an historically lousy jobs market. Full report...
read more

Leading index sinks further

erty3 From Westpac's Bill Evans: The six month annualised deviation from trend growth rate of the Westpac Melbourne Institute Leading Index which indicates the likely pace of economic growth three to nine months into the future fell from –1.07% in August to –1.16% in September. This is the eighth consecutive month where the growth rate in the Index has been below trend. That follows 13 consecutive months to February this year when the growth rate was above trend. The index continues to indicate that we can expect growth in the Australian economy to stay below trend in the final quarter...
read more

China accelerates away from the quarry

fdghe A few extra charts this morning from the CBA commodities team gives an insight into just how fast the Chinese economy is moving way from Australia. Net exports are a new support for growth as imports fall back: Consumption and investment are still stuck together: Fixed asset investment is falling across the board (though infrastructure has been rising): The Li Keqiang index is looking sick:     Power production is galloping away from thermal coal:   And growth in residential floor space under construction is fading fast: As starts...
read more

ANZ-RM consumer confidence dips

ScreenHunter_20 Apr. 10 19.28 By Leith van Onselen The ANZ-Roy Morgan Research (RMR) consumer confidence index fell in the week ended 19 October, falling 2.2 points (-1.9%%) to 111.6, taking it below its long-run average reading of 113.2 (see next chart). The overall fall in consumer confidence was driven by households having a more pessimistic take on their financial situation compared with the previous year and also being more downbeat about the economic outlook for the next five years. ANZ chief economist, Warren Hogan, continues to summon the confidence fairy and wealth effect from rising housing prices, even...
read more

Stokes rightly sees WA headed for 1991 recession

kerry-stokes3 From the SMH comes a blunt assessment from Kerry Stokes that Western Australia is headed for a recession: "They [BHP and Rio] are pretty big smart cats," Mr Stokes said. "Frankly if you can sell something at $80 a tonne that cost you $20 a tonne you might want to sell as much as you can. I understand that. That means everybody else who competes has got to get a whole lot more efficient." ...Mr Stokes offered a blunt assessment of the state's economic climate. "We are in a really tough period," Mr Stokes said. "Probably, this is as tough as I've seen since 1991. People are saying to me how...
read more

The east coast gas crisis is overblown

fgw4g From the Grattan Institute today: For some time the price of natural gas has been rising well above  the cost of living. As with electricity, rising network prices are the  main reason for a 36 per cent increase in average gas bills over  the past five years. But in the next few years, huge changes in the  gas market will push up prices even more sharply, adding more  than $300 a year to the average household gas bill in Melbourne  and over $100 a year in Sydney and Adelaide. The increases will  mean tough decisions for many households and businesses. Natural gas is one of Australia’s main...
read more

Population ageing and the Australian economy

ScreenHunter_08 Feb. 03 14.45 By Leith van Onselen Reserve Bank of Australia (RBA) deputy governor, Christopher Kent, has today given a speech to the Leading Age Services Australia National Congress on the impacts of population ageing on the Australian economy. Kent identifies three causes of population ageing: Population ageing is driven by three different forces. The first is the baby boom that followed the Second World War. The second is the drop in fertility rates thereafter. Combined, these two changes led to a ‘bulge’ in the age distribution of the population. The early part of this cohort began to retire from...
read more

Desalination plants pump endless stupidity

ScreenHunter_16 May. 13 15.31 By Leith van Onselen The cost to Australian consumers from the construction of costly desalination plants continue to soar as rising dam levels make the investments redundant. From The Australian: ...the Victorian desalination plant, southeast of Melbourne, will have cost water users $1.2bn by the November 29 state election, rising to $2bn by the end of the next financial year. The cost has soared, despite no water having been drawn from the facility since its opening in 2012 and dams being more than 80 per cent full... Average yearly water-bill increases in Melbourne of about $200 have been...
read more

More 457 visa rorts revealed

ScreenHunter_2531 May. 22 07.09 By Leith van Onselen Fairfax revealed further rorts of Australia's 457 visa system over the weekend, with an audit of 1,800 of the so-called 200,000 skilled foreign workers in Australia by the Fair Work Ombudsman showing that 40% of audited 457 visas potentially breached visa rules. From The Canberra Times: The Fair Work log suggests that certain cafes and restaurants in populated urban areas are almost entirely staffed by foreign workers. For example, a restaurant called Goa Indian Fusion on Queensland's Gold Coast has five staff on 457 visas. The Gold Coast has a youth unemployment rate of...
read more

Dour consumers going nowhere

3 From Westpac's excellent Red Book,the bible of consumer attitudes: ― The Westpac–Melbourne Institute Index of Consumer Sentiment rose by 0.9% from 94.0 in Sep to 94.8 in Oct, a slight improvement but still leaving the index stuck in a pessimistic range. ― The Oct result appears to reflect a mix of negatives from financial market developments (the ASX fell 6½% between the Sep and Oct surveys) and positives on ‘Budget and tax’ issues with the Government announcing it was setting aside controversial Budget measures. ― CSI±, our modified sentiment indicator...
read more

ABS inflation figures dodgy as well

ScreenHunter_4566 Oct. 17 14.40 By Leith van Onselen Following the Australian Bureau of Statistics' (ABS) admission that its unemployment data was dodgy, The AFR is this afternoon reporting that the ABS' consumer price inflation (CPI) figures are no longer a reliable indicator of general price increases across the economy: Top economists say the ABS waits too long to change the items and base weightings it uses to measure the rate of in­flation in the economy – a key that helps decide interest rates, wages and some social security benefits. Items that are increasingly irrelevant to Australian life such as ­answering...
read more

Light rail divides the nation’s capital

ScreenHunter_06 Jun. 06 09.33 By Leith van Onselen The ACT Light Rail Project - the $610 million to $783 million 12-kilometre line connecting Gungahlin in the north and Civic - is dividing the nation's capital. Earlier this week, David Hughes - an economist and former manager of major project analysis for ACT Treasury and director of the economics branch from 2002-2005 - labelled the Light Rail Project as "folly", claiming that the cost-benefit analysis used to support the Project is chock full of erroneous assumptions, spurious benefit inclusions, and double-counting. In another article, Hughes summed-up the Project as...
read more

Carbon tax removal to tame September CPI

ScreenHunter_4562 Oct. 17 11.57 By Leith van Onselen Find below Westpac's preview of the September quarter consumer price index (CPI), which is due to be released by the ABS on Wednesday: Westpac is forecasting a 0.6%qtr rise (2.4%yr) in the headline CPI in the September quarter. September is historically a seasonally strong quarter due, in part, to the annual price setting for administrated prices (such as utilities, property rates and charges). The ABS seasonal factors suggest that this positive seasonality is worth +0.2ppts with the seasonally adjusted CPI forecast to rise 0.4% in Q3. The core measures, which are...
read more

Australia’s cities don’t need more rents

ScreenHunter_30 Jul. 02 10.28 By Leith van Onselen Dr Tim Williams, chief ­executive of the Committee for Sydney, yesterday gave an extraordinary speech to the National Growth Areas ­Alliance Congress in Adelaide, arguing that Australia's cities have become the "orphans of public policy" and demanded that they receive a greater share of public funding for infrastructure. From The AFR: “Australian cities are the real orphans of public policy”... “They create most Austra­lian wealth but their role is not recognised in ­Federal policy and their infrastructure is not a focus of the ­federal government’s funding...
read more

How Coalition FTAs hurt health policy

ScreenHunter_4541 Oct. 16 13.03 Cross-posted from The Conversation: Health is rarely a priority in trade negotiations. But recent developments in Australia suggest it is an even lower priority for the Coalition government than usual. Over the past two decades, it has become increasingly clear that trade and investment agreements can have significant health impacts. The current case by tobacco giant Philip Morris Asia against Australia’s tobacco plain packaging laws has cast these issues into sharp relief. The Coalition’s Policy for Trade, released just before the 2013 election, marks a significant shift in Australian...
read more

City versus country jobs

ScreenHunter_4536 Oct. 16 11.58 By Leith van Onselen The Australian Bureau of Statistics (ABS) has today released its detailed monthly labour force statistics, which includes breakdowns of employment and unemployment across Australia's capital cities and regions. According to this release, the unemployment rate in Australia's capital cities was 5.8% in September in raw terms, up 0.1% from August. By comparison, unemployment in Australia's rural and regional areas was 6.4%, which was unchanged from August. The below chart, which is presented on a rolling 12 month average basis to smooth volatility, illustrates the trends in...
read more

Inflation expectations falling

Capture From Westpac: The Melbourne Institute (MI) Inflationary Expectations are now reported as a 30% symmetric trimmed mean utilising all responses except for the ‘don’t know’ responses. •These changes have added about 2ppt to the level of the index compared to the old trimmed mean (chart 5). But more importantly, the new series appears to express a greater cyclical amplitude (chart 6 & 7) which is useful for picking turning points in the inflation cycle. •The consumer expected inflation rate fell by 0.1ppts to 3.4% in Oct. The trend of the trimmed mean series also eased 0.1ppt to 3.3%...
read more

Unemployment expectations improve in October

ScreenHunter_4525 Oct. 16 07.21 By Leith van Onselen Westpac has released its Australian Consumer Unemployment Expectations Survey for October, which revealed an improved jobs outlook amongst Australian consumers, with the index falling 3.9% in October -  the largest monthly fall in just over a year - taking it 9.6% below its March 2014 peak. A lower reading from the index indicates reduced concern around the labour market. Nevertheless, despite the recent improvement, the index remains very high: And employment continues to lag population growth, which suggests rising unemployment: My own view is that...
read more

CFO confidence sags

1 From the Deloitte quarterly CFO survey:     Note that the colours are incorrectly marked on the next one:   Pretty telling stuff. Full report...
read more

Kouk sounds the alarm on Australian unemployment

ScreenHunter_30 Oct. 10 06.15 By Leith van Onselen Stephen Koukoulas (aka "the Kouk") has posted a good article in The Guardian sounding the alarm on Australia's deteriorating labour market, which shows no signs of improving without concerted policy action: The debacle of the Australian Bureau of Statistics (ABS) being unable to publish reliable monthly seasonally adjusted labour force data does not hide the trend of deterioration in unemployment over the past couple of years... There are no signs in other indicators that suggest this will be the peak in unemployment and there are plenty of unfolding trends that point to...
read more

Australia’s addiction to private debt

ScreenHunter_4503 Oct. 15 07.54 By Philip Soos and Paul D. Egan A perennial and divisive issue in politics and economics today is the matter of public debt. It is commonly asserted that rising public debt threatens the economy and needs to be reined in. Governments are often portrayed as ‘irrational’ actors when they incur a fiscal deficit, causing unnecessary inflation and interest rates to rise by borrowing to meet the shortfall. Private sector lending is supposedly ‘crowded out’ by lifting the cost of money and limiting access to a finite lending pool by government actors. A large stock of public debt and...
read more
Page 1 of 15212345...102030...Last »