Unconventional Economist


Manufacturing activity flat in December

This morning, the Australian Industry Group (AIG) released the Performance of Manufacturing (PMI) index for December. At 50.2, manufacturing activity was broadly flat for the month of December, but rose by 2.4 points from November when manufacturing activity contracted: Overall, the report suggests that Australian manufacturing remains subdued, with falls evident in 7 of the 12


Private credit growth remains subdued

The RBA has just released its private sector credit aggregates for November: Total credit provided to the private sector by financial intermediaries rose by 0.3 per cent over November 2011, after rising by 0.2 per cent over October. Over the year to November, total credit rose by 3.5 per cent. Housing credit rose by 0.5


Home prices rise slightly in November

Just in, RP Data has released its home values index for November. Capital city home prices have risen by a seasonally adjusted 0.1% over the month and regional values by 0.3%. Here is the release on AAP via Business Spectator: Australia’s capital city home values rose by a seasonally-adjusted 0.1 per cent in November, according to the RP Data-Rismark Home


Urban planning & economic performance

The UK Spatial Economics Research Centre (SERC), which is in my opinion one of the world’s leading authorities on planning economics, recently released a Policy Paper entitled  What we Know (and Don’t Know) About the Links between Planning and Economic Performance (provided below). The Policy Paper summarises the impact of the UK’s land-use planning on economic performance,


RP Data expects ‘slow melt’ to continue

Missed this one last week. RP Data has released its 2012 Outlook, which forecasts a continued thawing of Australian home values: 2012 2011 has certainly been a tough year for the residential property market with property values falling across most capital cities and regional markets and the number of transactions also decreasing in most regions.  According to the October


Why developers land bank

Land banking is a common practice adopted by developers, whereby they accumulate land for development well before the date at which they intend to sub-divide and build new housing. In modern production processes, “just-in-time” systems – where inputs into the production process are received/acquired just prior to use – are favoured because they reduce the


When bubbles bite back

A cracking article was published yesterday in Caixin, discussing how China’s local governments, which are addicted to revenue from land sales, are feeling the pinch now that the volumes of land sales and prices are falling. The article also illustrates the corruption endemic within the Chinese economy: The development-ready land market, long a reliable revenue


Puru Saxena’s alarm rings true

Back in March, I posted an audio interview with Puru Saxena, who runs Puru Saxena Wealth Management, an established money management firm based in Hong Kong. Saxena produces the monthly Money Matters report, which follows economic, historical and geo-political trends, and explores investment opportunities in unpopular and distressed markets. It was a fascinating interview where


Westpac-Melbourne Leading Index stalls

The Westpac-Melbourne Leading Index,  which indicates the likely pace of economic activity three to nine months into the future, has fallen to 2.6% in October 2011 from 4.4% in August. According to Westpac Chief Economist, Bill Evans: “The growth rate in the Index has slowed from the 4.4% which was reported for August and is now back


Melbourne rental vacancies continue to rise

From SQM Research’s weekly newsletter comes the news that Melbourne’s rental vacancy rates again rose in the month of November, climbing to 3.4%: According to SQM Research: It seems that overall, rental vacancies remained reasonably steady throughout the country with the exception of Melbourne, whose vacancies continue to increase from month to month. SQM Research would now


Here comes the Chinese burn

Over the last few days, a large selection of articles have appeared exposing cracks within the Chinese economy and suggesting that the China’s housing bubble might finally have burst. Paul Krugman, has finally weighed-in to the China debate drawing eerie parallels with the 1980s Japanese economy: Consider the following picture: Recent growth has relied on


Banks reliving 2008

Yesterday, Houses and Holes penned a cracking post questioning the Australian banks’ gigantic external liabilities that are exposing the financial system to the risk of a sudden liquidity shock, and have placed Australian taxpayers on the hook for potential bank bailouts. For added context, please find below two charts summarising the banks’ offshore funding exposures.


Charting Australia’s population growth

The Australian Bureau of Statistics (ABS) yesterday released the Australian Demographic Statistics for the June Quarter 2011. Below are a series of charts summarising the key trends relating to Australia’s population growth. First, a chart showing net overseas migration (NOM), which measures in/out migration of anyone residing/leaving Australia for a period of 12 months or


Younger Aussies feeling the pinch

Last week, the Reserve Bank of Australia’s (RBA) Bulletin noted how high housing costs are disproportionately affecting younger Australians: Median housing debt-to-income ratio for Australians under 39 years of age has risen 29 per cent in the six-year period to June 2010, compared to the 20 per cent rise for the oldest Australians in the


NZPC hits the mark on housing supply

The New Zealand Productivity Commission (PC) on Friday released its draft report on housing affordability. Below is a video discussing the PC’s draft findings (via Interest.co.nz). The PC report correctly identifies regulatory constraints on land/housing supply as the key impediment to affordable housing. Below are some key extracts from the report discussing the supply-side of the New Zealand housing


12 predictions for 2012

Please find below former Reserve Bank of New Zealand advisor and multiple CEO, Terry “Macca” McFadgen’s, predictions for the year ahead. Do not take them too seriously. As noted by Macca, predictions are “foolhardy and discredited”, and this exercise is just for fun. Feel free to provide your own predictions for the year ahead in


The demographic time bomb

Interest.co.nz’s Bernard Hickey yesterday published the below chart showing the projected decline in the number of workers per retiree in a cross-section of major economies: The chart nicely summarises the population ageing dilemma facing much of the world, whereby economies are likely to face sharply slowing economies, lower taxation receipts, higher aged care expenditures, and


Mapping WA’s mining boom

Reader a63 posted a comment linking to the latest edition of the Department of Minerals & Petroleum’s Prospect magazine. On pages 34 to 36 you will find some incredible statistics and maps of the massive mining-related investment currently underway or planned in Western Australia. According to the magazine, “There are currently more than A$180 billion


RP Data October housing market overview

Find below RP Data’s October housing market overview. Some key points from this update: October saw the 10th consecutive month of home price falls. That’s the same number of months that prices fell during the GFC, when prices fell just 2.7% peak-to-trough on a seasonally adjusted basis. So the current decline from peak – 4.0%


China’s ghost city busts

China’s most famous ghost city, Ordos in inner-Mongolia, has regularly been cited as a prime example of China’s unsustainable construction-led economy. Last year, AlJazeera posted an explosive video showcasing Ordos’ ghost apartments and frenetic pace of construction, which exemplified the “build it and they will come” approach that has underpinned the Chinese economy. Then Business


How to kill an industry: tourism

As the mining and construction sectors continue to boom, spare a thought for Australia’s tourism sector, which is being badly affected by the high Australian dollar. Monday’s release of the overseas short-term tourist arrivals and departures figures for October showed that the ratio of tourism arrivals to departures has hit a 25-year low: With the


We are all Keensians now

Last week, the Prince posted the below chart showing the spectacular rise and then stagnation of private credit in Australia: This rise in private credit, which is largely attributable to housing debt, has seen Australia become one of the most heavily mortgaged nations in the developed world (chart from the IMF): Commentators like Professor Steve


Victoria’s budget black hole will deepen

Last week, I showed how the Victorian Government is overly addicted to property taxes and discussed how next year’s State Budget is likely to get hit hard by falling stamp duty receipts, which are likely to send the budget into deficit. Included in this article was the below chart showing the Victorian Government’s heroic forecast


Recourse mortgages don’t prevent housing busts

Yesterday, Delusional Economics linked a video from Sunday Sunrise showing SQM Research’s Louis Christopher and Sunrises David Koch (‘Koshie’) discussing the Australian housing market. While much of what both commentators said was reasonable, I found one point made by Koshie misleading: From 4.40 of the video, Koshie notes that a major difference between Australia and the


We should listen to David Murray (now)

In December 2010, David Murray, Chairman of the Future Fund and former CEO of the Commonwealth Bank, issued a stern warning on Australia’s high level of net foreign liabilities, which had reached nearly 60% of GDP: …the assumption that Australia could maintain a high level of foreign borrowings because the economy was underpinned by the


Population growth has normalised

Yesterday’s Daily Telegraph contained an interesting article on the increasing number of Australians departing Australia permanently: OVERALL migration from Australia has soared to a record high – with 88,000 leaving in the past year, almost half from NSW. The stampede abroad is a 90 per cent increase 10 years ago, figures from the Department of


QLD Budget’s housing black hole

Following last weeks article, WA Budget’s housing black hole, reader amdweb82 requested that I undertake a similar analysis of Queensland’s (QLD) budgetary situation to gauge whether it is experiencing similar pressures to WA from falling home prices and lower housing transactions. Thanks to an anonymous reader, who emailed me the data set, I now possess


Expect the revolution to grow

Back in May, former Reserve Bank of New Zealand advisor and multiple CEO, Terry “Macca” McFadgen, wrote a guest post on MacroBusiness entitled: Will Aussie housing go bust?. He then followed up in August with Big trouble ahead. Now Terry is back with another serving of ‘Maccanomics’. In this installment, Terry provides a sobering assessment