Houses and Holes


China services PMI solid

China’s May services PMI is out and registered solid growth: May data signalled another month of business activity growth in China. This was signalled by the HSBC Composite Output Index posting a plus-50 reading for the second month in a row (51.9 compared to 51.4 in April). Although only modest, the rate of expansion in


Current account blows out

The ABS has released the March quarter current account balance and the blowout has begun with a current account deficit (CAD) of -14892 million recorded. That was slightly worse than consensus at -14850. This subtracted 0.5 points of GDP in the quarter: Here are the internals: The big turnaround is obviously in exports,  with imports


PSI retraces some

The AIG Performance of Services (PSI) for May is out and shows a decent rebound, though still languishing well into recession territory: The latest seasonally adjusted Australian Industry Group/Commonwealth Bank Australian Performance of Services Index (Australian PSI®) shows that the services sector contracted again in May, but at a slower pace than in April. ■ The


The RBA’s shadow bullhawks take flight

Yes, unbelievably, as the RBA Board enters the cockpit of monetary policy today, this is the view confronting it through the windshield: From the AFR this morning comes complete nonsense from the RBA’s shadow board of freshly plumed bullhawks: A small but high-powered group of policy hawks has urged Reserve Bank of Australia governor Glenn


Fortescue’s boom decisions

Cross-posted from Bronte Capital: The Australian boom – the one that leaves foreigners gobsmacked when they see our housing prices, debt levels and general economic cheeriness – has been powered by iron ore and (to a lesser extent) coal. These are the components of steel – and steel is the foundation metal of infrastructure – bridges, skyscrapers,


Pascometer burns red on a 50 bps rate cut

The Pascometer is burning red on a 50bps rate cut. It is interesting to look through the reasons why. Unemployment remains low I don’t take much notice of the headline seasonally-adjusted labour force figures, but the trend series shows the rate remains in the low 5s. Employment growth, though subdued, is still growth. We continue


Profits down, inventories up

The ABS this morning released its Company Operating Profits survey for the first quarter and the news wasn’t great, -4% in the first quarter, a slight improvement from the December quarter which saw profits at -6%. Consensus was for -2.5%. The history shows how weak this is: Company profits are a component of GDP so


ANZ job ads tank in May

Aaaand, the good news keeps on rolling with ANZ job ads down 2.4% in May. Although, the good news is the previous month was revised up from -3.1 to -0.8% so the damage is not as bad as first blush. Here is the ANZ’s take: The number of jobs advertised in newspapers and online declined


Terms of trade holding up

There are signs that the iron ore price correction is easing. The price has risen a couple of bucks (blue line) over the past few days since the mooting of a Chinese stimulus, whatever it will be. Also encouraging is that the Chinese steel prices for billet (pink) and rebar (green) have bounced at the


Banks cut deposit rates harder than mortgages

From Banking Day: Financial institutions cut their savings rates harder than their borrowing rates in the month following the Reserve Bank’s 50 basis point reduction in the official cash rate. According to data supplied by Infochoice, standard variable rates fell by an average of 32 basis points in May, while high-yield savings account rates fell


Is Australia the next Spain?

Sigh. They’re onto us all right. From the AFR on Saturday: Credit ratings agency Standard & Poor’s has warned it could cut Australia’s coveted AAA rating if the federal government abandons the budget surplus in response to a global recession triggered by the European debt crisis. …S&P’s director of sovereign ratings, Kyran Curry, said an extended


North Asian manufacturing eases

The PMI’s are in and it’s more subdued news with across the board slumps in the growth rates of North Asia’s manufacturing powerhouses. The other day it was Japan with the best result at a flat reading of 50.7: Today it was China’s official PMI sinking to 50.4 and the HSBC PMI falling to 48.4:


China’s official PMI miss spanks dollar, stocks

Uh oh, guess that hard landing ain’t over. China official PMI for May just hit the tape and missed expectations, barely managing to expand at 50.4 versus expectations of 52. The internals were ugly too, with new orders and exports hit plus inventories rising. Neither the dollar nor stocks enjoyed it one little bit.


Deposit growth slows

From Banking Day: Household deposits continue to grow at a faster rate than home loans, according to the latest Australian Prudential Regulation Authority banking statistics. This is good news for banks trying to increase the proportion of their funding coming from deposits. Total household deposits grew by 8.3 per cent during the 12 months to


Manufacturing leaves the building

This morning the ANZ’s morning note said the following: In Australia today, there are no major data releases. Only the manufacturing PMI. In the US, and just about every other country on earth, the manufacturing PMI is one of the top five data releases for the month. Just sayin’. And so, on to the manufacturing


US triple dip fears looming

Sadly, as promised, the US recovery is slowing to its formerly anaemic pace. The data last night was uniformly mangy. First, the final GDP print for the first quarter was revised down to a measly 1.9% annualised: Next, the Chicago PMI for May fell sharply from 56.8 to 52.7, to  its lowest point since the


Roy Morgan unemployment tumbles

From Roy Morgan late yesterday: In May 2012 according to Roy Morgan: Unemployment was 8.2% (down 1.1% since April 2012) — an estimated 997,000 Australians were unemployed and looking for work. A further 9% of the workforce* (up 0.8%) were working part-time looking for more work (underemployed) — 1,107,000 Australians. In total 17.2% (down 0.3%)


Fearful Symmetry sees a troubled India

Two months ago this chronicle was devoted to the Budget, while the April edition centred on the RBI. This time around Fearful Symmetry is most interested in the parlous state of external financing, which has manifested itself in stark bilateral weakness of the rupee against the US dollar, substantial trade weighted depreciation and a range of troubles in the real


S&P strips SA’s AAA

Late today S&P announced that: Long-Term Rating On South Australia Lowered To ‘AA+’ On Budgetary Pressures, ‘A-1+’ Short-Term Rating Affirmed; Outlook Remains Negative MELBOURNE (Standard & Poor’s) May 31, 2012–Standard & Poor’s Ratings Services said today that it had lowered its long-term rating to ‘AA+’ from ‘AAA’, on the state of South Australia and the


Bill Evans calls for another 100bps

So, once again, mainstream economists are catching up to MB. This afternoon, Bill Evans of Westpac, who orignally saw this rate easing cycle constituting 100bps, is now calling for another 100bps. And let’s not forget that Bill Evans has led the pack on this cycle. Bravo I say and about time. His reasoning is as


Gillard talks but can’t walk

From the SMH: Julia Gillard told a dinner hosted by the council last night that Australians deserved to benefit from the mining boom – and that the nation’s resources belonged to its people and not the government or mining companies. ”And here’s the rub. You don’t own the minerals. I don’t own the minerals. Governments


Site slowness

Dear readers, No doubt some of you have noticed that in the recent past the MB site has been running slowly at times.  The good news is that this problem is a result of the huge traffic hitting the site, so it’s growing pains for which we apologise! We are working feverishly on a rebuild that


Private capex bonanza!

So, private capex is out and kapow! Yes, it’s an extravaganza of investment with the March quarter delivering 6.1% growth against consensus of 4%. Year on year it is up 28.3%. That’s all to the good, but I was more interested to see if capex projections had at all been reigned in in the March


We are different, dammit!

My favourite economic Mandarin, Martin Parkinson (AKA Parko), Secretary of the Treasury, is on the hill today beating the exceptionalism drum. From the AFR: Treasury secretary Martin Parkinson said Australia would have the capacity to respond to any potential renewed global credit crisis or recession triggered by Europe, including returning to larger deficits. “I disagree