May 19 links: It’s all good!

Fairfax doesn’t even comment. At least, not online…

David Llewellyn-Smith
Latest posts by David Llewellyn-Smith (see all)


  1. Yeah, I noticed Dyer came to a very different conclusion than you would have.

    McCrann gets it…

    Parkinson noted that our exports to China were only slightly bigger than those to Japan. But nobody lamented what a “terrible risk that we’re tying our economy to Japan.”

    I’d hope that Parkinson would understand the monumental qualitative and — future — quantitative differences between our exports to the two countries. And how China’s demand operates at the margin to drive up the prices paid by Japan (and Korea and India) for our exports to them.

    We haven’t half-tied our economy to Japan and half to China. It all, all, turns on China.

  2. Adam Carr today:

    Yesterday we got wage prices, which is the more useful inflationary measure and today we get average weekly wages which is the better measure of incomes. Actually while we’re on this point, I should note that yesterday’s wage result was largely irrelevant for policy, which I mention only because some suggest the slightly more modest 3.8 per cent annual pace, from 3.9 per cent, gives the RBA cause to pause. I don’t think that’s quite right though, wage pressures were contained prior to the release and they were contained after it. They were never going to be a smoking gun. That is, the data didn’t show anything different, not that anyone really expected it to.

    Wage inflation is more a medium term concern, the idea being that the rising costs of living and a tight labour market will, at some stage, see higher wage demands. But we are a long way from the rate at which the RBA becomes concerned. So yesterday’s result is kind of meaningless.

    I think he’s lost it.

    • Well, he’s not saying its wrong (like the bullhawks did about the employment data) just that its irrelevant and meaningless.

      Of course, if the number had been above expectations, Adam’s “analysis” would have been very different.

        • Meanwhile over at CJ’s blog

          David Bassanese has really stepped-up the quality of his RBA commentary of late.

          [snip: the usual name-dropping nonsense]

          In today’s column, he makes several interesting points. First, had wages growth hit 1.2%, the RBA was near-certain to go in June:

          “Had wage growth jumped in the March quarter – with private sector wages rising by about 1.2 per cent or more – the RBA would have been compelled to raise rates next month irrespective of lingering weakness in the nonmining side of the economy…In this case, the RBA could not afford to show any mercy.”


        • No Lorax, it would only be funny/hilarious if people didn’t listen to him.

          Unfortunately he influences Hockey and elements of the RBA, and probably the bank economists.

          There’s a mysterious silence on Moody’s too. Odd given his support for a Son of Wallis Inquiry.

        • I just think its funny that Carr says the wages growth number is meaningless and irrelevant, but CJ (and his mate) are saying it would have resulted in a near certain rate rise if it was above expectations.

          Perhaps economic data is only meaningless if it doesn’t fit your view?

    • The real question that hasnt been answered by the bullhawks is why haven’t house prices tracked wage growth?

      Have any houses gone up 4% this year?

      According to RPData, national house prices have fallen 0.2% – that’s a 4% annual divergence.

      In the case of where the strongest wage growth is expected – WA and QLD, house prices have tapered by over 6% – so that’s a 10% divergence in the “robust” econometric model.

      No commentary on that is forthcoming from a bullhawk of any plume. (or non de plume)