Australian Economy

Viewing posts in the Australian Economy category

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 eastern 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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Leading Index edges up

agt4w From Bill Evans at Westpac. • 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 rose from –1.20% in September to –0.25% in October. This is the ninth consecutive month where the growth rate in the Index has been below trend. That follows thirteen 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...
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Payment times normalise

4 Some good news from Dun and Bradstreet: The average time taken for Australian businesses to pay their invoices has fallen to the lowest level since the third quarter of 2007, in signs that operating conditions have strengthened this year and the business sector’s cash position is improving. According to Dun & Bradstreet’s Trade Payments Analysis, businesses settled their accounts in an average of 51.7 days during Q3 2014, with the proportion of invoices paid within standard terms (1–30 days) lifting to 54 per cent. According to Gareth Jones, CEO of Dun & Bradstreet Australia...
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Sowing the seeds of a mass youth exodus

ScreenHunter_5063 Nov. 19 09.15 By Leith van Onselen Business Spectator's Robb Burgess has posted a thought-provoking article today arguing that the seeds have been sown for the mass emigration of young Australians seeking better opportunities offshore: ... unemployment in the 18 to 24 age group has been rising steadily since the Lehman Brothers global shock of late 2008, from a low around 9 per cent to 14 per cent today... If many youngsters had not given up job hunting, the 14 per cent unemployment rate would be even higher... [The financial system] present[s] a current 18-to-24 year-old with a future of...
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Is Chinese property buying making us rich?

ScreenHunter_5058 Nov. 18 13.37 By Leith van Onselen Simon Henry, the co-founder of China’s ­largest international property ­website, Juwai.com, claims that Chinese investment in Australian residential real estate is unambiguously good for the country, benefiting local sellers and making Australians rich. From The AFR: “Property values are up, and most who sell in the current market are raking in big profits”... “The construction industry employs more than 1 million Australians. Many of the buildings they are constructing were made possible by pre-sales to ­Chinese buyers”... “To say that first-home buyers...
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Perth, Darwin and Canberra in rental bust

ScreenHunter_07 Jul. 17 21.09 By Leith van Onselen SQM Research has today released its rental vacancy data for October, which revealed a slight monthly decline in the national vacancy rate to 2.1%, up 0.1% from October 2013: However, the unwinding of the mining boom is having a drastic impact on Perth and Darwin: Drastic yearly changes are occurring on a capital city basis however, with both Perth and Darwin revealing massive surges in vacancies since this time last year. This has been the trend in recent months and is largely attributed in the downturn in the mining boom, to which both these cities are highly...
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Bill Evans on the RBA minutes

ScreenHunter_85 Sep. 17 12.23 The Reserve Bank of Australia (RBA) today released the minutes from its 4 November board meeting, which are uneventful. The RBA expects the economy to continue growing at a below trend pace over 2014-15, before gradually picking up to an above-trend pace towards the end of 2016. Importantly, there was also no mention of macro-prudential measures to cool the housing market, with the RBA seemingly comfortable about potential risks. Here's Westpac chief economist, Bill Evans', take on the minutes: The Reserve Bank Board minutes continue to provide a generally downbeat assessment of the Australian...
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How China dodges FTAs

ScreenHunter_5054 Nov. 18 11.19 By Leith van Onselen Dr John Lee, adjunct associate professor at the University of Sydney, has written a ripper article at Business Spectator warning that many of the claimed market access improvements gained by Australia in the China FTA are unlikely to materialise due to deliberate behind-the-boarder barriers erected by the Chinese: China has signed many FTAs and other trade agreements... [Yet] Beijing has frequently resorted to using ad hoc regulatory hurdles to restrict the import of goods if the government believes that China is not ‘winning’ from the agreement; or sometimes this is done...
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ANZ-RM consumer confidence falls

ScreenHunter_20 Apr. 10 19.28 By Leith van Onselen The ANZ-Roy Morgan Research (RMR) consumer confidence index fell by 1.8 points in the week ended 16 November to 113.0, to be just below its long-run average reading of 113.2 (see next chart). ANZ chief economist, Warren Hogan, finally appears to have grasped the new normal facing the Australian economy, noting: “The loss of momentum this year may result from sustained weakness in wages growth which may be leaving households in doubt about their capacity to absorb financial shocks and increasing their sensitivity to negative economic news". Nevertheless, Hogan is...
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Employment program favours old, ignores young

ScreenHunter_4715 Oct. 31 07.55 By Leith van Onselen The Australian is reporting today that special incentive payments announced in the May Budget provided to employers that take on workers over the age of 50 are proving successful in getting unemployed older Australians back to work: The Restart program, launched in July, offers a subsidy to employers if they take on workers who are at least 50 years old. So far 438 employers have taken part, with 11 hiring more than one jobseeker under scheme... Most workers were in 50-55 age group, accounting for 215 jobs. There were 125 people aged between 55-60 employed and 105 in the...
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