Australian Economy

By Leith van Onselen Over the weekend, Prime Minister Tony Abbott signaled that the Government would boost infrastructure investment in order to improve the nation’s productivity and see it over the mining investment cliff.

From TD Securities, February monthly inflation came in at 0.2% month or month and 2.7% year on year.

From Ross Gittins today: In political economist Mancur Olson’s pathbreaking book, The Rise and Decline of Nations, published in 1982, he argued that a country’s economic stability ultimately leads to decline as it becomes increasingly dominated by organised interest groups, each seeking to advance their interests at the expense of others.

From Paul Krugman comes the assessment that Andrew Robb should have made many months ago: It’s less well known that the administration’s international economic agenda is also stalled, for very different reasons.

Fresh from Westpac comes a Q4 GDP preview, which is out next week.

Stephen Batholomeusz at Locked-BS has an interesting take on Qantas versus Virgin today: Virgin Australia’s $118 million first half pre-tax loss closes the worst calendar for the domestic aviation industry’s profitability in more than two decades.

From the Australian Department of Employment: The Australian labour market softened over 2013 and skill shortages continued to abate.

The RBA credit aggregates for January are out and its happy housing month with mortgage credit putting the foot down.

It’s time to prepare for recession.

The AFR has fantastic piece today on the future of Geelong, based around a profile of its eccentric new mayor, Darren Lyons: “You’ve got to get off your bloody arse, and you’ve got to go out, and you’ve got to find it, and you’ve got to do it yourself.

By Leith van Onselen In a welcome development, Prime Minister Abbott has this afternoon taken a hard line on Qantas and played down the prospects of providing the airline with a debt guarantee, instead pushing for the abolition of the Qantas Sale Act, which limits foreign ownership in the airline.

From The Australian: A MAJOR union is threatening strike action after Qantas announced it will axe 5000 jobs over three years.

Here’s the optimist’s view of things today: Facts – Data for Q4 2013 showed that capital expenditure fell by -5.2% q-o-q (market expected -1.3%), with plant & machinery investment falling by -8.6% q-o-q.

Here is the what today’s capex data says about the prospects for Australian manufacturing: The red dot and line is the investment prospect for 2014/15 and it includes an uplift from a decent realisation ratio.

By Leith van Onselen The Australian Bureau of Statistics (ABS) today released data on capital expenditures (capex) for the December quarter of 2013, which registered a seasonally-adjusted 5.2% fall in capex over the quarter and a 5.7% decrease over the year.

The ABS has released December quarter Expected Private Capex and the news is poor with the mining cliff now officially in sight, manufacturing cataclysmic  and only a muted response elsewhere.

From Mac Bank today: The last few weeks have seen huge civil and political unrest in Ukraine’s capital city, Kiev, which culminated in the loss of nearly hundred lives by 20th February, as people protested against corrupt politicians and asked for a return to democracy, stability and growth.

Qantas has confirmed 5000 job losses and a statutory loss after tax of $235 million; revenue: $7.9 billion, down 4%; capex spending cut by $1 billion; 50 aircraft sold or deferred and selling its lease at Brisbane airport.

As reported last week, the Coalition has ear-marked tens-of-billions of taxpayer dollars to local defence manufacturing, including a $10 billion to $15 billion-program for 1,000 locally produced armoured vehicles, as well as locally designed and built submarines for around $40 billion.

And why not?

From Crikey today the Government is accused of more inconsistency around entitlement as it approves a farmer’s bailout package: In 2009, the Productivity Commission produced a report on drought assistance that was scathing of the National Drought Policy and the “exceptional circumstances” trigger that Labor had inherited from previous governments.

By Leith van Onselen The ABS quarterly labour force data for November 2013 showed a continued rise in labour underutilsation, which hit a 14.5 year of 13.6% in trend terms (see next chart).