Australian Economy

Viewing posts in the Australian Economy category

Australia’s world-class health system

ScreenHunter_64 Sep. 01 14.23 Cross-posted from The Conversation: There is an old joke about one fish asking another about the state of the water and the other answering “what’s water?” When you’re immersed in something and that is your daily experience, you are not able to step outside it – all you see is what you know. But with all the talk about Australia’s health system being unsustainable, it’s useful to step back and look at the Australian health system in an international context. So, how do we perform against our peers? The short answer is pretty well. Comparing inputs and outcomes Much of the...
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Australia’s growing youth unemployment scourge

ScreenHunter_3946 Sep. 01 12.43 By Leith van Onselen The Brotherhood of St Laurence has today released a new report on the growing scourge of youth unemployment and underemployment in Australia, which is at the worst level since records began in 1978, with more than 580,000 Australians aged 15 to 24 either under-employed or unemployed: Today, young people are more likely to be underemployed – to have some work but want more hours – than at any time in the last 36 years... Presently, there are more than 310,000 people aged 15 to 24 who are underemployed in Australia. When you add the numbers who are without any work,...
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Mining exploration falls, petroleum lifts

ScreenHunter_03 Jul. 23 09.31 By Leith van Onselen The Australian Bureau of Statistics (ABS) today released its Mineral & Petroleum Exploration data for the June quarter, which revealed a sharp fall in mineral exploration expenditure, but a large lift in petroleum exploration expenditure. Nationally, expenditure on minerals exploration fell by a seasonally-adjusted $35.8 million (-7.5%) over the June quarter. The fall was driven by Queensland, where exploration expenditure fell by $30.2 million (-24.5%): The various components, presented below in non-seasonally adjusted raw terms, actually rose over the quarter by...
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Shock! Manufacturing back in recession

dfgr Pasconomics just keeps delivering for manufacturing: The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) slipped back into negative territory this month, following a brief stabilisation in July. The index decreased by 3.4 points, to 47.3 points in August (seasonally adjusted), indicating a mild contraction in conditions across the manufacturing sector. The three-month moving average also moved lower in August, to 48.9 points. Readings below 50 points indicate contraction. Many respondents to the Australian PMI® expressed ongoing concern about the...
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Horrible Q2 GDP preview

dfgwr From Westpac's Q2 National Accounts preview: The Australian National Accounts, to be released on Wednesday September 3, will provide an estimate ofeconomic activity in the June quarter. We expect the second quarter of 2014 to be a soft one for GDP, following a strong start to the year. Central to this profile is a lopsided performance by resource exports, with Q2 to see some payback for a burst in Q1. GDP growth is forecast to be 0.4%qtr, 3.0%yr in Q2. This follows an outcome in Q1 of 1.1%qtr, 3.5%yr. Net exports swing from a positive contribution of 1.4ppts to a 0.7ppts subtraction...
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Coalition retreats from draconian dole requirements

ScreenHunter_10 Mar. 29 12.46 By Leith van Onselen The Abbott Government has backed away from its draconian plan to require unemployed jobseekers to apply for 40 jobs a month in order to receive the dole, admitting the plan would have created a "meaningless" burden on employers that would have had to sift through piles of sham job applications. From The AFR: “It is clear that, overwhelmingly, people say that if you're unemployed, your full-time job should be job seeking,” he said. “On the other side, there is the view - and I think it's a legitimate view – that getting people to apply for 40 jobs in a meaningless...
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BIS Shrapnel bull turns bear

imgres By Leith van Onselen BIS Shrapnel has predicted tough times ahead for the Australian economy, forecasting that domestic consumption and investment expenditure will experience its weakest four-year run since the early-1990s recession, averaging just 2% per annum to 2017-18. From Ferret: Richard Robinson, senior economist at BIS Shrapnel warns that employment growth will be soft with only 668,000 jobs created over the next four years. Robinson comments that it will be a slow and difficult transition from an economy driven by the huge resources construction boom, which largely underwrote...
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Pascometer burns red on capex rebound

imgres Weeoo, weeoo, weeoo. As I wrote my recession risks post this morning I did spare a thought for The Pascometer, which hasn't fired off a counter-contrarian sell-signal in some time. But lo, here it is: It sometimes seems capital investment commentary in Australia concentrates on mining and manufacturing, perhaps because they are industries with unhappy outlooks – bad news is good news. The reality is that the game has moved on, that the non-resources sector is substantially larger than mining and that manufacturing is but a small part of that non-resources story. So while the immediate...
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Five reasons to prepare for Australian recession

imgres Sigh. The moment has come to call a spade a spade. The Chinese property bust is smashing iron ore. Thermal and coking coal are still falling and/or catching up to past falls in contract prices: Gold and oil/LNG are also down sharply in the past few months. In short, Australia's terms of trade (ToT) are getting smashed to the extent that it's rapidly assuming the proportions of an external shock, especially since the Australian dollar has totally detached itself from the economy. I can only estimate the ToT falls in train but can say with confidence that they are much bigger than forecast by...
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Mining gets its coolies

ScreenHunter_59 Aug. 29 07.46 By Leith van Onselen Despite overall unemployment at 12-year highs (and rising), a budding youth unemployment crisis, and its own Department of Employment revealing that skills shortages are at an "historic low", with employers able "to recruit skilled workers without marked difficulty" and "generally large fields of applicants vying for skilled jobs and employers filled a high proportion of their vacancies", the Coalition has announced that it will materially loosen rules to enable employers in specific regions to import more labour from overseas. From The Australian: ...the federal government...
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Actual capex in surprise lift

ScreenHunter_07 Apr. 05 12.46 By Leith van Onselen The Australian Bureau of Statistics (ABS) today released data on capital expenditures (capex) for the June quarter of 2014, which registered a surprise seasonally-adjusted 1.1%lift in capex over the quarter but a 4.0% decrease over the year. The result beat analyst’s expectations of a 0.9% fall over the quarter (see below table). While Houses and Holes has covered the more important capex intentions survey, which covers industry’s forward-looking capex plans over the coming years, below are some backward looking charts showing actual capex up to the June quarter...
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Expected capex still sees big cliff

imgres The Australian Bureau of Statistics has released the much admired Private Capex report today and it looks like Glenn Stevens is going to have to do a little more whinging. Estimate 7 for last year is weak and shows capex fell year on year. More importantly, after last quarter's strong rebound, expected capex is easing back: Estimate 7 for total capital expenditure for 2013-14 is $157,869 million. This is 1.7% lower (-$2,661m) than Estimate 7 for 2012-13. Estimate 7 for equipment, plant and machinery decreased by 8.9% (-$4,997m) while Estimate 7 for buildings and structures increased by 2.2%...
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UBS: Australian growth rebounding!

dvsd You've go to love the sell side, or is that the sunny side? From UBS today: Weekly SEEK job ads in August point to another modest ~2% monthly gain in the ANZ  job ads series (due 8 Sept, Figure 1), lifting its y/y to almost 8%, its best since 2011  (Figure 3). Despite the recent unemployment jump, this is consistent with a pick-up in  jobs growth to over 1½% by end-14, usually enough to lower the unemployment rate. The weekly BDO retail series – after forecasting the June retail rebound (Figure 2) –  points to a ‘flat’ July (due 4 Sept), and a modest ~½% m/m gain in August. This...
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It’s time to allow “grey” car imports (members)

ScreenHunter_29 Aug. 27 14.45 By Leith van Onselen The Productivity Commission's (PC) report into Australia's Automotive Manufacturing Industry recommends relaxing controls on so-called "grey" imports of second-hand cars, noting that Australian consumers are being fleeced, particularly when it comes to purchasing higher-end vehicles: It might be the case that some ‘premium’ vehicle segments (such as luxury European made motor vehicles) are characterised by larger profit margins and are relatively less competitive compared to overseas pricing because of the existence of fewer close substitutes. An increased supply of...
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S&P warns WA budget on iron ore

Travel-Warning From Standard and Poors this arvo: Standard & Poor's Ratings Services said today that its 'AA+/Stable/A-1+' issuer credit ratings on the State of Western Australia are not immediately affected by the recent fall in iron ore prices to less than US$90 per ton. The potential loss in the state's iron ore royalties would not by itself lead to a lowering of the ratings. We anticipate the Western Australian government's operating balance will remain in surplus after considering the potential earnings loss, at between 0% and 5% of operating revenues. At the same time, we project the state's...
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Mining unwind drags construction activity down

ScreenHunter_03 Jul. 23 09.31 By Leith van Onselen The ABS has released data on the value of construction work done for the June quarter of 2014, which registered a seasonally-adjusted 1.2% fall in total construction activity over the quarter and a 0.6% decline over the year. The result disappointed analysts' expectations for a 0.5% fall over the quarter. The 1.2% quarterly decline in construction activity was driven entirely by a 3.1% fall in engineering construction, which more than offset the 2.2% rise in residential construction and the 0.5% increase in non-residential construction (-1.5%): Residential...
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Labor’s NBN gold-plated

ScreenHunter_17 Aug. 27 10.44 By Leith van Onselen The Coalition's 196-page cost benefit review into the National Broadband Network (NBN) has been released and finds that Labor's plan for fibre-to-the-premises (FTTP) broadband is markedly ($16 billion) inferior to the Coalition's multi-technology mix (MTM) solution. The study compares four main scenarios: leaving things as they are with no further progress; an unsubsidised rollout of hybrid-fibre coaxial (HFC) and fibre to the node (FTTN); a full fibre to the premises (FTTP) rollout with wireless and satellite in high-cost areas; and a multi-technology mix...
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Car industry’s job losses will be worse than forecast (members)

ScreenHunter_10 Mar. 29 12.46 By Leith van Onselen The Productivity Commission has released a new report on the closure of the car industry. It concludes: Australia's automotive manufacturing industry is undergoing significant change. Motor vehicle producers in Australia have not been able to survive in the highly competitive global and domestic automotive markets — Ford, Holden and Toyota have announced they will cease local manufacturing before the end of 2017. Component manufacturers face ongoing adjustment pressure and rationalisation. It is estimated that up to 40 000 people may lose their jobs as a result...
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The politico-housing complex has turned on itself (members)

images Long term readers will recall that I see Australian property not as a "market" but a highly-distorted quango that has largely eaten the economy. Recall the 2011 post that laid out this view: When the baby-boomer generation first took power and reshaped Australia in the 1980s, the promise was for a new kind of meritocracy. The old “Australian Settlement” described brilliantly by Paul Kelly in the End of Certainty - a protectionist social contract between unions, industry, government and the people – was swept aside in favour of a neo-liberal vision. The new world demanded an open, more...
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Trade deficit to subtract 0.7% from Q2 GDP (members)

ScreenHunter_01 Jan. 25 13.29 From Westpac this afternoon comes analysis of today's preliminary June quarter estimate of Australia's international trade balance from the ABS, with Westpac estimating a 0.7% drag on GDP growth over the quarter - a sharp turnaround from the 1.4% positive contribution made in the March quarter: Australia’s international trade balance was a deficit of $4.69bn in the June quarter, a turnaround of $7.26bn on the revised March quarter surplus of $2.57bn. These figures are broadly in line with the monthly trade release, which reported a $7.74bn deterioration between Q1 and Q2. Export earnings...
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Coalition metadata targets innocent

ScreenHunter_07 Aug. 26 13.14 By Leith van Onselen The Australian has revealed today that the Attorney General's Department is seeking a wide array of powers in its bid to require telecommunications companies to store detailed information about the calls and internet use of its customers for two years: Confidential consultations with the companies — including Telstra, Optus and iiNet — commenced late last week with the circulation of a paper that has been obtained by The Australian... The paper, prepared for “preliminary discussions”, reveals the companies should retain records that would identify the names and...
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How are local muslims radicalised?

imgres From Crikey's Bernard Keane today (who does politics so much better than economics): "The best defence against radicalisation is through well-informed and well-equipped families, communities and institutions," the Prime Minister claimed this morning, announcing a package of over $60 million in measures targeting "young Australians being radicalised". Wrong, PM. The best defence against radicalisation is to avoid gratuitous military attacks on Muslim countries. Who says? Baroness Manningham-Buller: "By 2003/2004 we were receiving an increasing number of leads to terrorist activity from within...
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Weak Australian growth to go on, and on…

zvda One of the more bemusing elements of current Australian economic forecasting is the mysterious upturn that is expected by almost everyone at the end of 2015. The basic rationale for it is the rise of Abbott infrastructure spending, as well as the assumption that consumption will bounce back. That's what's driving many rising interest rate forecasts. All very questionable and there's no reason for me to repeat why, especially so since Alex Joiner of BofAML has done such a good job of illustrating that that outlook is highly optimistic, if not downright dubious... In Focus: Growth to remain mired...
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Why won’t the rationalists stand-up to privatisation?

ScreenHunter_06 Aug. 26 11.45 By Leith van Onselen The Australia Institure's Richard Denniss has produced a ripper article today in The AFR questioning why the economic rationalists of the 1980s and 1990s have gone silent on the privatisation of natural monopolies, which threaten to worsen outcomes for Australian consumers: Who could have foreseen however, that by 2014, their desire to privatise and cut taxes would see [economic rationalsist] supporting the creation of monopolies in order to “generate revenue” for governments... The whole point of economic rationalism was that the consumer was king... How far the...
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Australia’s budding youth jobs crisis

ScreenHunter_05 Aug. 26 10.29 By Leith van Onselen The Age has posted a sobering report today on the emerging youth jobs problem, which is fast approaching crisis levels: Youth unemployment has leapt to a 15-year high in Victoria... An analysis of youth unemployment data reveals that the situation has deteriorated in 12 of the state's 17 regions in the past year. Thousands of young Victorians from all backgrounds are finding themselves caught up in a spiral of unemployment, and the situation is particularly dire in socially disadvantaged suburbs of greater Melbourne and rural areas... The region of Warrnambool and...
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