tag:blogger.com,1999:blog-15974780067670226602024-03-28T20:14:01.990-07:00Macro View | James FosterIndependent Australian and global macro analysisJames Fosterhttp://www.blogger.com/profile/01305732698755570848noreply@blogger.comBlogger1120125tag:blogger.com,1999:blog-1597478006767022660.post-23444262632045733932024-03-27T20:47:00.000-07:002024-03-27T20:47:26.595-07:00Australian retail sales rise 0.3% in February<div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;">Australian retail sales were up 0.3% in February, slightly below the 0.4% rise expected. Spending in discretionary categories (0.6%) underpinned the lift in retail sales, with the ABS attributing this strength to the Taylor Swift Eras Tour. Retail sales have been highly volatile over recent months due to seasonal effects, but the underlying momentum is soft with </span><span style="font-family: georgia; font-size: 15.4px;">February sales ($35.9bn) only marginally higher (0.8%) than their level last October. </span></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi3OrJqGJuOlP6AtPm3SdabE46f1sBBSnlyqLXlYEm9dr1EkvMNOCXjP9xCBpgE9ezav_Ctu39MqkROFvnZVGFlCHRBjJhH3gfH8NKsE7uFsv2AzYYGeOOa1M7N84IPzyaSm-x9F61SQlJUzcqU_gIk_56ZfowVFNBcpxYSXv-zlo3ZUo4wik4pJkYEoCs/s801/Retail.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="536" data-original-width="801" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi3OrJqGJuOlP6AtPm3SdabE46f1sBBSnlyqLXlYEm9dr1EkvMNOCXjP9xCBpgE9ezav_Ctu39MqkROFvnZVGFlCHRBjJhH3gfH8NKsE7uFsv2AzYYGeOOa1M7N84IPzyaSm-x9F61SQlJUzcqU_gIk_56ZfowVFNBcpxYSXv-zlo3ZUo4wik4pJkYEoCs/w640-h428/Retail.jpg" width="640" /></a></div><br /></div><div style="text-align: center;"><span style="font-family: georgia; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgX5Fh0gUFIyX-NalCKwcin0sX-rH-YQ0feEvfXQeKIS76Br3shiqHo-uZQU4qDem4APZXoI5mhlkROcdPide-GTJfv9s4TntYA3laADKvQ75y_nm1DRhN4CrLiuKbEhqUwdfaQZcluLDNtEtTSrdiHmeD2Y60RQowcDriDluBpcRGfYu_7LMVmY3b_YW0/s702/Summary.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="362" data-original-width="702" height="330" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgX5Fh0gUFIyX-NalCKwcin0sX-rH-YQ0feEvfXQeKIS76Br3shiqHo-uZQU4qDem4APZXoI5mhlkROcdPide-GTJfv9s4TntYA3laADKvQ75y_nm1DRhN4CrLiuKbEhqUwdfaQZcluLDNtEtTSrdiHmeD2Y60RQowcDriDluBpcRGfYu_7LMVmY3b_YW0/w640-h330/Summary.jpg" width="640" /></a></div><br /></span></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;">February sales moderated to a 0.3% rise following a sequence of volatile outcomes around the turn of the year. This stretches back to November when Black Friday discounting drove an acceleration in turnover (1.5%) in the lead-up to Christmas; this was </span><span style="font-family: georgia; font-size: 15.4px;">followed by a pullback in December (-2.1%) and then a rebound in January (1.1%). </span></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;">Overall, this leaves the level of retail spending only a little above where it was in October, </span><span style="font-family: georgia; font-size: 15.4px;">prior to the period of seasonal volatility. </span><span style="font-family: georgia; font-size: 15.4px;">Discretionary spending (total sales ex-food) lifted by 0.6% in February, outperforming the increase in headline sales; however, both are running at around the same pace in annual terms: headline 1.6% and discretionary 1.5%, which is weak relative to the pace in growth in the population at 2.5% according to the ABS's latest estimate. </span><span style="font-family: georgia; font-size: 15.4px;"> </span></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgZTF-zUcsFT6DwnOBwgtSvu0RChdjSnEYEiIcZgl4qbTYNRD5ErwhsSQOdiu0IgWqEvm0jYytx1It9c1mFx7wga8Zeb1pTVqKZL_hR1qwUDl1eWTRc4d9lWrYWAO7XGQ21KKYn_BhvHFJNBF1nT-6DOGmTmqnszlkRD1hFGh8Ucy2Z2AJnFnMNt68jTDU/s687/Retail%20levels.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="383" data-original-width="687" height="356" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgZTF-zUcsFT6DwnOBwgtSvu0RChdjSnEYEiIcZgl4qbTYNRD5ErwhsSQOdiu0IgWqEvm0jYytx1It9c1mFx7wga8Zeb1pTVqKZL_hR1qwUDl1eWTRc4d9lWrYWAO7XGQ21KKYn_BhvHFJNBF1nT-6DOGmTmqnszlkRD1hFGh8Ucy2Z2AJnFnMNt68jTDU/w640-h356/Retail%20levels.jpg" width="640" /></a></div></div><div style="text-align: left;"><br /></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;">Clothing and footwear spending surged by 4.2% in the month - its strongest rise since January 2023 - driving the rise in discretionary spending. The ABS credited this result to fashion, accessories and merchandise sales associated with the Taylor Swift concerts in Sydney and Melbourne. Flow-on effects</span><span style="font-family: georgia; font-size: 15.4px;"> were also evident at department stores (2.3%) and cafes and restaurants (0.5%m/m).</span><span style="font-family: georgia; font-size: 15.4px;"> These gains were attenuated by softness in food (-0.1%), while household goods (-0.8%) and 'other' retailing (-0.4%) also eased. </span></div><div style="text-align: center;"><br /></div><div style="text-align: center;"><div class="separator" style="clear: both; font-family: georgia; font-size: 15.4px; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi0LqANoIA9ihxWNFbi51sHZl7JkNaJeei7MLOEAQKkZbKUwj42FgzPz4b1H4D0lH54uxUX8OVx7z4_1K-mMVSG8N7Qa0sMr6bSTdNDs9yAgHmrzBc8i8lmzpf1aJ6bjxiANEc2quMFMY2ijT2ADBxzaLotambj4M2y58k88tjQt_DE61ZDlYSgzSU_8Ew/s801/Categories.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="536" data-original-width="801" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi0LqANoIA9ihxWNFbi51sHZl7JkNaJeei7MLOEAQKkZbKUwj42FgzPz4b1H4D0lH54uxUX8OVx7z4_1K-mMVSG8N7Qa0sMr6bSTdNDs9yAgHmrzBc8i8lmzpf1aJ6bjxiANEc2quMFMY2ijT2ADBxzaLotambj4M2y58k88tjQt_DE61ZDlYSgzSU_8Ew/w640-h428/Categories.jpg" width="640" /></a></div><div style="font-family: georgia; font-size: 15.4px; text-align: center;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;">Notably, the increase in turnover at the national level was driven almost exclusively by New South Wales (0.6%) and Victoria (0.7%), with the Eras Tour generating additional spending </span><span style="font-family: georgia; font-size: 15.4px;">in the host cities of </span><span style="font-family: georgia; font-size: 15.4px;">Sydney and Melbourne. Spending across the other states (ex-territories) declined by 0.2% in the month, weighed by Queensland (-0.5%) and Tasmania (-0.4%). </span></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhnlXtoAoWK9tFum8cFw3ME0mSY6eU6umeYZcaUzHbPTyeSRrSNN_6IwMjC2KUtETD44aLtW1kyvECDt1M6oyKu2mzV2FA1YoAXEO89bEMx_VDBzcjQZLRI0oaFqvadlKuHHKoKo01x0lgAF7OehBXI1U28PkyBykdYX0IyXcKemokWYSIm24k4sZnew8g/s686/NSW%20VIC.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="383" data-original-width="686" height="358" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhnlXtoAoWK9tFum8cFw3ME0mSY6eU6umeYZcaUzHbPTyeSRrSNN_6IwMjC2KUtETD44aLtW1kyvECDt1M6oyKu2mzV2FA1YoAXEO89bEMx_VDBzcjQZLRI0oaFqvadlKuHHKoKo01x0lgAF7OehBXI1U28PkyBykdYX0IyXcKemokWYSIm24k4sZnew8g/w640-h358/NSW%20VIC.jpg" width="640" /></a></div></div></div>James Fosterhttp://www.blogger.com/profile/01305732698755570848noreply@blogger.comtag:blogger.com,1999:blog-1597478006767022660.post-1632087272204237682024-03-26T20:40:00.000-07:002024-03-26T20:40:59.171-07:00Australian CPI 3.4% in February <div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><span style="font-size: 15.4px;">Australia's 12-month inflation rate remained at 3.4% in February, unchanged since December and </span></span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">defying expectations for a rise to 3.6%. Progress over recent months has been encouraging and suggests inflation remains on track to come back to the RBA's target band, but services prices remain a sticking point in terms of holding the Board back from cutting rates. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiwxfp3dV996d_v0I7LKaev-Wsj8_3x58kPbZDckzh4pKHXG9L_kaio1Apcx7N7aiBWq3szMzUUUkMC9ZvGHHcMGop77aIeuIZffH-ptsy4QDV_EGVYwkcGdsOJmiaRSLtNXBS8fCodf1gbPVS9nuBstEU3UWxIrZM-8lcr7K4wX-YLEqLPn_M5QlRS_EM/s685/Headline.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="383" data-original-width="685" height="358" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiwxfp3dV996d_v0I7LKaev-Wsj8_3x58kPbZDckzh4pKHXG9L_kaio1Apcx7N7aiBWq3szMzUUUkMC9ZvGHHcMGop77aIeuIZffH-ptsy4QDV_EGVYwkcGdsOJmiaRSLtNXBS8fCodf1gbPVS9nuBstEU3UWxIrZM-8lcr7K4wX-YLEqLPn_M5QlRS_EM/w640-h358/Headline.jpg" width="640" /></a></div><br /></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgTaLsr7RvhXG8bKbHC-YHuQb3UkXDWUMk3JzgMpuXCPqAbNySU0mNHDnRCLkt31gmANlgoS0xap7k-7HIGAOpYyhzY76VCJfCy0VIihz1F5_f1MgMkWceu_PR6PkcZxNt5sWOXZCDQVUaXRRTOWhgnCAEy38FAU82BaWWxXCUj91dzIKFPJNYI4wjlYl8/s648/Summary.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="422" data-original-width="648" height="416" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgTaLsr7RvhXG8bKbHC-YHuQb3UkXDWUMk3JzgMpuXCPqAbNySU0mNHDnRCLkt31gmANlgoS0xap7k-7HIGAOpYyhzY76VCJfCy0VIihz1F5_f1MgMkWceu_PR6PkcZxNt5sWOXZCDQVUaXRRTOWhgnCAEy38FAU82BaWWxXCUj91dzIKFPJNYI4wjlYl8/w640-h416/Summary.jpg" width="640" /></a></div><br /></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">February's report was a little mixed. Encouraging progress continued regarding headline inflation, though the underlying measures showed signs of stickiness. Headline CPI was unchanged at 3.4%, halving from its pace this time last year (6.8%) and down even more significantly from its peak at the end of 2022 (8.4%). Further declines look likely with inflation in 3-month annualised terms now 2% and 2.2% in 6-month annualised terms, indicating the recent momentum is consistent with inflation below the midpoint of the RBA's 2-3% target band. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEikDy3rhqKp0PKBlwBohFYVB7frB09Tnb-FIWriNeD8aHk0x4kBW65Rz74K7BbCu_8NRRGXWMBcM4UfCzgaYwxc2q_Bogk6582DgKzbPR5-ZZiGnnFARjFZMyWjKBzn7erDn8Be-jUpr_hK2ZiKFkIHodAMAzJLbOez2nXgvgIulL1n1xUnj6VnjOkM3FI/s686/3mth.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="384" data-original-width="686" height="358" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEikDy3rhqKp0PKBlwBohFYVB7frB09Tnb-FIWriNeD8aHk0x4kBW65Rz74K7BbCu_8NRRGXWMBcM4UfCzgaYwxc2q_Bogk6582DgKzbPR5-ZZiGnnFARjFZMyWjKBzn7erDn8Be-jUpr_hK2ZiKFkIHodAMAzJLbOez2nXgvgIulL1n1xUnj6VnjOkM3FI/w640-h358/3mth.jpg" width="640" /></a></div><br /></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">However, the RBA has repeatedly communicated caution around the inflation outlook, reaffirming this at last week's meeting. Both of the key measures of underlying inflation are showing slower progress than the headline CPI; CPI ex-volatile items and holiday travel eased from 4% to 3.9% (in seasonally adjusted terms), the trimmed mean measure also printed at 3.9%, firming from 3.8% in January. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgAzNXY43avQt5GS2_TtkYIcyr-Uc_701oMUBQI2uCKvmtOe45QpZeLA3jJjYUdghX1_jTtIMtEoKwDmjVYZHpEifDclW51zteTk2_eLgYi-iEfK-W-1AkQJ4LUkiNDCf0bKUwe6XVxVc7h77o_aZB-xc2Hdv52nkIvYUTZz3O1oATsJQsszSgLi6-GhQA/s686/Underlying.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="385" data-original-width="686" height="360" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgAzNXY43avQt5GS2_TtkYIcyr-Uc_701oMUBQI2uCKvmtOe45QpZeLA3jJjYUdghX1_jTtIMtEoKwDmjVYZHpEifDclW51zteTk2_eLgYi-iEfK-W-1AkQJ4LUkiNDCf0bKUwe6XVxVc7h77o_aZB-xc2Hdv52nkIvYUTZz3O1oATsJQsszSgLi6-GhQA/w640-h360/Underlying.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;"><div><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Higher underlying CPI is underpinned by elevated services inflation, which was reported to have lifted from 3.7% to 4.2%. The increase can be explained by the data for February incorporating a much broader range of </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">services price updates than in the January series. Looking past the month-to-month movements, the chart below shows 12-month services inflation has fallen materially over the past year, though it still remains high. </span></div><div><br /></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiRGIY7HZ8_2TNXildC3tMZKUhT9i7t4WZbn7CL9SfaqmWhyphenhyphenRuqy8KZm8GGQcfbJT4s2Y9FtYgJsPtOYLgUaTaZVEoruSsqTP2sxB9RJE8kLg_txq9rceFJTV_atM5QqT8nCwtGIfzoEmVQFvSU1UkGuii-K_G2rDJdvc0kL1aALm9z4qW3Kl4d10ciWrY/s685/Services.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="383" data-original-width="685" height="358" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiRGIY7HZ8_2TNXildC3tMZKUhT9i7t4WZbn7CL9SfaqmWhyphenhyphenRuqy8KZm8GGQcfbJT4s2Y9FtYgJsPtOYLgUaTaZVEoruSsqTP2sxB9RJE8kLg_txq9rceFJTV_atM5QqT8nCwtGIfzoEmVQFvSU1UkGuii-K_G2rDJdvc0kL1aALm9z4qW3Kl4d10ciWrY/w640-h358/Services.jpg" width="640" /></a></div><br /></div></div></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">A notable contributor to higher services inflation in February was insurance, which is up by 16.5% over the past year, with rising claims, natural disasters and reinsurance costs all playing a role. Housing-related inflation remained at 4.6%yr, though rents firmed from 7.4% to 7.6% reflecting very low capital city vacancy rates. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhX8rndb5rJ9228xNYedhMK5mSYvBNJincvFCY8GMijIxbfwGzUf0CtkyRPw0YisXudKIk1w3VdR-uXS7Nm2rET8uZQM1v8uXbrJZPpiiCiW5f-t-nJGKdmiFOQPBHiUINp9tjF0NbFAMMFOd_Nvp3xbtfOD_FNJFW-7hXWuzwMqx0ZDPDijTP5P4IbBic/s687/Housing.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="384" data-original-width="687" height="358" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhX8rndb5rJ9228xNYedhMK5mSYvBNJincvFCY8GMijIxbfwGzUf0CtkyRPw0YisXudKIk1w3VdR-uXS7Nm2rET8uZQM1v8uXbrJZPpiiCiW5f-t-nJGKdmiFOQPBHiUINp9tjF0NbFAMMFOd_Nvp3xbtfOD_FNJFW-7hXWuzwMqx0ZDPDijTP5P4IbBic/w640-h358/Housing.jpg" width="640" /></a></div><br /></span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">In the other direction, declining holiday travel and accommodation prices (-1.3%yr) are a weight on services inflation. The ABS reported that </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">although the Taylor Swift Eras Tour boosted hotel prices in Sydney and Melbourne, this was more than offset by seasonal falls for airfares and accommodation in other parts of the country post the school summer holiday period. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjs8d196q6eNG3X-qSyakv_C32FcVWYkV-LU2zv2r6DZKEfHyoqWtSjNChBlYBs2IWrNwv0Z3ekkRKh8kIRMdykcDnI-OtHu68ndmdZwUzBoOmeXotT65n6yUSyhF83mHh9ZG5IDkscuUk3z8HyppYbV_rIaH3MwnYPfKlCDReyvqdI2iDqTbxvzqRCnHQ/s686/travel.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="384" data-original-width="686" height="358" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjs8d196q6eNG3X-qSyakv_C32FcVWYkV-LU2zv2r6DZKEfHyoqWtSjNChBlYBs2IWrNwv0Z3ekkRKh8kIRMdykcDnI-OtHu68ndmdZwUzBoOmeXotT65n6yUSyhF83mHh9ZG5IDkscuUk3z8HyppYbV_rIaH3MwnYPfKlCDReyvqdI2iDqTbxvzqRCnHQ/w640-h358/travel.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Other key components in food and fuel prices saw contrasting movements. Food inflation softened from 4.4% to 3.6%, its slowest since January 2022; however, fuel inflation lifted from 3.1% to 4.1%. </span></div><div class="separator" style="clear: both; text-align: left;"><span style="font-family: georgia;"><span style="font-size: 15.4px;"><br /></span></span><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjlWxR1D_n_mnJXc4HihqpNztWtwyGw8NEFaGWftXnQmJJJ2o1dXNJ9Q3O8V3nSV6JubNX3MI-aePCo5Zr5TpWMEaZH-ljbW1x83gxsPx8K5Pzc4bfl-Bo_jg8uAI-X8EYJvqImGiQN2Wbx9iv8iDUI2V-NQvudSdBNCDsHpUBKjNspf_Gkg_hByG6i-4k/s687/Food.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="385" data-original-width="687" height="358" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjlWxR1D_n_mnJXc4HihqpNztWtwyGw8NEFaGWftXnQmJJJ2o1dXNJ9Q3O8V3nSV6JubNX3MI-aePCo5Zr5TpWMEaZH-ljbW1x83gxsPx8K5Pzc4bfl-Bo_jg8uAI-X8EYJvqImGiQN2Wbx9iv8iDUI2V-NQvudSdBNCDsHpUBKjNspf_Gkg_hByG6i-4k/w640-h358/Food.jpg" width="640" /></a></div></span></div></div><div style="text-align: left;"><br /></div>James Fosterhttp://www.blogger.com/profile/01305732698755570848noreply@blogger.comtag:blogger.com,1999:blog-1597478006767022660.post-53685548634797719722024-03-22T19:06:00.000-07:002024-03-23T18:33:27.363-07:00Macro (Re)view (22/3) | Fed easing supports soft landing outlook <div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">What shaped as a pivotal week for G10 central banks delivered a broadly dovish surprise that is now set to drive </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">the market narrative for the foreseeable future. Bond yields are lower after the Federal Reserve reaffirmed that it is moving towards an easing cycle; the <a href="https://www.snb.ch/en/the-snb/mandates-goals/statistics/statistics-pub/current_interest_exchange_rates#t00" target="_blank">SNB</a> announced a surprise 25bps rate cut; while the BoE and RBA meetings were seen as communicating a more dovish message. Although the <a href="https://www.boj.or.jp/en/mopo/mpmdeci/mpr_2024/k240319a.pdf" target="_blank">BoJ</a> hiked rates by 10bps and abandoned its unconventional measures of Yield Curve Control and ETF and REIT purchases, <a href="https://www.reuters.com/markets/asia/boj-chief-vows-support-economy-with-monetary-stimulus-2024-03-21/" target="_blank">Governor Kuroda</a> indicated that accommodative monetary policy would be maintained. With </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">the assessed probability of a soft landing for the US economy increasing, the dollar strengthened and equities rallied to new record highs.</span></div><div style="text-align: left;"><i><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></i></div><div style="text-align: center;"><i><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgY7wHY1lCN5g90uo9f3vPMDz1eh-dr8TBydFaa8MXqw63Os4PvVXcNFENBvVfkbMMyU6SlT92LHH6LNWN88ub-Xh9QGbcJzxLliM59HQkNRpM9iL0wVHI5BMhqE9ArytkjCuDIfqPtj-PLdmEhJd7Zlz9NjAwAWqfxnCOFKswWKbCfqGP1_skTP2pdTPU/s808/22-3.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="285" data-original-width="808" height="226" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgY7wHY1lCN5g90uo9f3vPMDz1eh-dr8TBydFaa8MXqw63Os4PvVXcNFENBvVfkbMMyU6SlT92LHH6LNWN88ub-Xh9QGbcJzxLliM59HQkNRpM9iL0wVHI5BMhqE9ArytkjCuDIfqPtj-PLdmEhJd7Zlz9NjAwAWqfxnCOFKswWKbCfqGP1_skTP2pdTPU/w640-h226/22-3.jpg" width="640" /></a></div><br /></i></div><div style="text-align: left;"><div><span style="font-family: georgia; font-size: 15.4px;">Domestically, the focus was on the shift from the RBA at this week's meeting </span><span style="font-family: georgia; font-size: 15.4px;">to a neutral stance </span><span style="font-family: georgia; font-size: 15.4px;">on the policy outlook. The Board held rates at 4.35% but the decision </span><span style="font-family: georgia; font-size: 15.4px;"><a href="https://www.rba.gov.au/media-releases/2024/mr-24-05.html" target="_blank">statement</a> made an impact by removing</span><span style="font-family: georgia; font-size: 15.4px;"> the line that "a further increase in interest rates cannot be ruled out" and replaced it with a more balanced position </span><span style="font-family: georgia; font-size: 15.4px;">of </span><span style="font-family: georgia; font-size: 15.4px;">"the Board is not ruling anything in or out". The shift acknowledges the progress made on inflation but still conveys caution with the Board continuing to assert there remains an imbalance between aggregate demand and supply. My review covers the meeting in further detail <a href="https://jamesfostermacro.blogspot.com/2024/03/rba-extends-pause-in-march.html" target="_blank">here</a>. Also this week, a 116.5k surge in employment in February printed nearly 3 times higher than </span><span style="font-family: georgia; font-size: 15.4px;">the expected rise (40k), driving the unemployment rate down from 4.1% to 3.7%. The report confirmed the labour market remains resilient, with the weakness in employment around the turn of the year reflecting seasonal shifts in hiring post the pandemic.</span><span style="font-family: georgia; font-size: 15.4px;"> For more analysis, please see my review </span><a href="https://jamesfostermacro.blogspot.com/2024/03/australian-employment-1165k-in-february.html" style="font-family: georgia; font-size: 15.4px;" target="_blank">here</a><span style="font-family: georgia; font-size: 15.4px;">. </span></div><div><br /></div></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">The Federal Reserve remains on track to cut rates later in the year, undeterred by expectations for stronger US economic growth and higher inflation in the near term. The policy-setting <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20240320a.htm" target="_blank">FOMC</a> left rates on hold at 5.25-5.5%, with Chair Powell reaffirming at the <a href="https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20240320.pdf" target="_blank">press conference</a> that rates had likely peaked and that if the economy evolved as expected, </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">it would "</span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">likely be appropriate to begin dialing back policy restraint at some point this year". Although the recent data has shown an uptick in inflation, this was judged to be due to seasonal factors and was therefore not expected to derail progress back to the 2% inflation target. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Importantly, it has also not dented the FOMC's outlook on rate cuts, with the Committee retaining the projection for 3 rate cuts in 2024 </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">in the updated <a href="https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20240320.pdf" target="_blank">Summary of Economic Projections</a></span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">. This is despite the incoming data prompting the FOMC to raise its forecast for the key core PCE deflator to end the year at 2.6% from 2.4% previously. Meanwhile, stronger-than-expected data saw the FOMC </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">lifting its forecast for GDP growth for this year from 1.4% to 2.1%, resulting in a slightly lower unemployment rate of 4% from 4.1% previously. Another key development coming out of the meeting was that Chair Powell communicated that the FOMC would be looking to slow the pace of balance sheet reduction (currently targeted at $95bn/mth) "fairly soon". Chair Powell said the intention was to transition from "abundant" to "ample" reserves and that by taking a more gradual approach, it could</span><span style="background-color: white; font-family: georgia; font-size: 15.4px;"> guard against undue liquidity strains emerging. </span></div><div style="text-align: left;"><br /></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">A dovish </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">tinge to the Bank of England's decision to leave Bank Rate unchanged at 5.25% has shifted market pricing for the start of the easing cycle into June from August. The <a href="https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2024/march-2024" target="_blank">MPC</a> voted 8-1 to hold, with the split notable due to members Haskel and Mann siding with the majority after scrapping their calls to hike rates further. As was the case at the February meeting, member Dhingra was again the sole voter supporting a rate cut. Summarising the tone of the MPC, Governor Bailey said there had been "further encouraging signs" inflation was coming back to target - in February, headline CPI slowed from 4% to 3.4%yr and the core rate eased from 5.1% to 4.5%yr - </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">but it was still too early to be cutting rates. Although the guidance that monetary policy would need to be "restrictive for an extended period" was retained, the minutes noted that rate cuts would still leave policy at a restrictive setting given the current level of Bank Rate. Over in Europe, ECB <a href="https://www.ecb.europa.eu/press/key/date/2024/html/ecb.sp240320~28c9a70818.en.html" target="_blank">President Lagarde's</a> opening remarks at the ECB and its Watchers Conference continued to </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">guide towards a June start date for the first cut of the cycle.</span></div>James Fosterhttp://www.blogger.com/profile/01305732698755570848noreply@blogger.comtag:blogger.com,1999:blog-1597478006767022660.post-25893677932947142742024-03-20T21:06:00.000-07:002024-03-21T15:28:47.048-07:00Australian employment 116.5k in February; unemployment rate 3.7%<div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">The Australian labour market has regained momentum, with a post-summer holiday surge in employment driving the unemployment rate back below 4%. Employment more than rebounded from a decline around the turn of the year, which was less severe than initially reported. Today's report provides optimism that the labour market remains resilient to the slowdown in the economy. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><span style="font-family: georgia;"><b>By the numbers | February </b></span></div><ul style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px; line-height: 1.4; margin: 0.5em 0px; padding: 0px 2.5em;"><li style="margin: 0px 0px 0.25em; padding: 0px;"><span style="font-family: georgia;">Employment increased by a net 116.5k on a seasonally adjusted basis in February, well above the 40k rise expected. Backward revisions revised the fall in employment over December-Janaury to -46.5k from -62.2k. </span></li><li style="margin: 0px 0px 0.25em; padding: 0px;"><span style="font-family: georgia;">The headline unemployment rate fell by more than expected declining from 4.1% in January to 3.7% in February (vs 4% forecast). With underemployment falling from 6.7% to 6.6%, the total underutilisation rate decreased from 10.8% to 10.3%, a low since October. </span></li></ul><ul style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px; line-height: 1.4; margin: 0.5em 0px; padding: 0px 2.5em;"><li style="margin: 0px 0px 0.25em; padding: 0px;"><span style="font-family: georgia;">Labour force participation ticked up from 66.6% (revised from 66.8%) to 66.7%, sitting slightly below the record high seen in November (67%). </span></li></ul><ul style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px; line-height: 1.4; margin: 0.5em 0px; padding: 0px 2.5em;"><li style="margin: 0px 0px 0.25em; padding: 0px;"><span style="font-family: georgia;">Hours worked rebounded by 2.8% in February following a 2% fall in January. Annual growth was unchanged at 0.8%. </span></li></ul><div style="text-align: center;"><span style="font-family: georgia;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgBwa2OXuy5emL2QqM7ZcDhSQGQvmpcqnqijj8vy7NmcP7Y2X3dTap287evOaY-bnMCPBIb5YDG9QmGjUhUGprZcAnJq0kSghVvuA3e_biB1mIg0JZEnJOgeuOHn-0XEn1fcCcgE6hcGa4jVe-FtZ2-hbOVFcSOtDwmo-NLliMHE52-j4alpA4eJnTiqwU/s802/EMP%201.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="536" data-original-width="802" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgBwa2OXuy5emL2QqM7ZcDhSQGQvmpcqnqijj8vy7NmcP7Y2X3dTap287evOaY-bnMCPBIb5YDG9QmGjUhUGprZcAnJq0kSghVvuA3e_biB1mIg0JZEnJOgeuOHn-0XEn1fcCcgE6hcGa4jVe-FtZ2-hbOVFcSOtDwmo-NLliMHE52-j4alpA4eJnTiqwU/w640-h428/EMP%201.jpg" width="640" /></a></div><br /></span></div><div style="text-align: center;"><span style="font-family: georgia;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFD0R1hcQkJKoKxL7sWA4vJrIuTwVUyHs6BUWpXRmztSk-L0qVkt6El1ji9yMhkLT7wZ2RNXBgyLG10ltN1SLz41Q9goEJibHaxfvlEgiOGO6yaW422iDySUfyTrnY0o4y1vHhJK_ilpOH09Sugn4KITXh752DVv-qpScu8e3tCsU_2O_Lf12b_nGtivY/s800/Ratios.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="534" data-original-width="800" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFD0R1hcQkJKoKxL7sWA4vJrIuTwVUyHs6BUWpXRmztSk-L0qVkt6El1ji9yMhkLT7wZ2RNXBgyLG10ltN1SLz41Q9goEJibHaxfvlEgiOGO6yaW422iDySUfyTrnY0o4y1vHhJK_ilpOH09Sugn4KITXh752DVv-qpScu8e3tCsU_2O_Lf12b_nGtivY/w640-h428/Ratios.jpg" width="640" /></a></div><span style="font-size: 15.4px;"><br /></span></span></div><div style="text-align: center;"><span style="font-family: georgia;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhNytJsm-G41SV_EuemjlzIInPgaF4hRStbZOjAcsPJU8gZFjFXmr9uqeztzH3c40jfF7P6kNXIusr6bKzbOIfn1YLgG3gp6qQGvFDx_URdYMTkwsccAH_CwrJQnkj4qrA9-IvhkaXLDCwsS_JqMkJyhT7osGnGx7oBkyDP7KNAW_5Od5w-f6qBJt0xXrs/s525/Summary.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="322" data-original-width="525" height="245" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhNytJsm-G41SV_EuemjlzIInPgaF4hRStbZOjAcsPJU8gZFjFXmr9uqeztzH3c40jfF7P6kNXIusr6bKzbOIfn1YLgG3gp6qQGvFDx_URdYMTkwsccAH_CwrJQnkj4qrA9-IvhkaXLDCwsS_JqMkJyhT7osGnGx7oBkyDP7KNAW_5Od5w-f6qBJt0xXrs/w400-h245/Summary.jpg" width="400" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhWCrEmTwWK1Lp0qEtK_DDB7YxxvwuW7Ea2LE6UVigxEA-aRgx8ZPlgEc3piWtd3j5UOslMud4U-OSvd1H7U_nFAC6RgpJp7lwxDsdDFFmxT1RnUgo9JDndOEzVwu_wwlzrdD6X47MCZVAdSHV3RZ7vmd_DO5biX36Hid2KAT37fp1rnKteS3yIUiHiKP4/s523/States.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="521" data-original-width="523" height="399" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhWCrEmTwWK1Lp0qEtK_DDB7YxxvwuW7Ea2LE6UVigxEA-aRgx8ZPlgEc3piWtd3j5UOslMud4U-OSvd1H7U_nFAC6RgpJp7lwxDsdDFFmxT1RnUgo9JDndOEzVwu_wwlzrdD6X47MCZVAdSHV3RZ7vmd_DO5biX36Hid2KAT37fp1rnKteS3yIUiHiKP4/w400-h399/States.jpg" width="400" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div></span></div><div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><span style="font-family: georgia;"><span style="font-size: 15.4px;"><b style="font-size: 15.4px;">The details | February </b></span></span></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><span style="font-family: georgia;"><span style="font-size: 15.4px;"><b style="font-size: 15.4px;"><br /></b></span></span></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><span style="font-family: georgia;">February's report confirms that the labour market slowdown either side of the new year was seasonally related, with activity subsequently rebounding after the summer holidays had wound down. The employment figure posted for February was a net increase of 116.5k (seasonally adjusted) - the largest one-month rise since November 2021 - delivering a far greater rebound than was expected after employment declined over </span><span style="font-family: georgia; font-size: 15.4px;">December-January (-46.5k). </span></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><span style="font-family: georgia;"><br /></span></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgGgzy95SXPxPZaqLbq_TiLibCWoIuUONTjuS0q9io0JqQfMGG3S3rQfMfCgv3SJgsaPjkySYgmOfY5t02Wutq3K9mcXrPPY0wPFZQUTHFXMD3jAWqi9I0HpAm0dJ_g0I_9jrpCa89UwOzJoAJ42TrLIs8pg8UeYQIlB7sbV4kd8tcM4hEFQnJ8Cz-ygC8/s799/Emp.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="534" data-original-width="799" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgGgzy95SXPxPZaqLbq_TiLibCWoIuUONTjuS0q9io0JqQfMGG3S3rQfMfCgv3SJgsaPjkySYgmOfY5t02Wutq3K9mcXrPPY0wPFZQUTHFXMD3jAWqi9I0HpAm0dJ_g0I_9jrpCa89UwOzJoAJ42TrLIs8pg8UeYQIlB7sbV4kd8tcM4hEFQnJ8Cz-ygC8/w640-h428/Emp.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;"><span style="font-family: georgia; font-size: 15.4px;">February's surge in employment can be explained by shifting hiring patterns in the post-covid labour market. The ABS has picked up that many more people now commence new jobs and move into employment after the summer holiday period than was the case prior to the pandemic. According to today's report, 4.7% of employed people in February were not employed in January. </span><span style="font-family: georgia; font-size: 15.4px;">At the same time, the proportion of workers who moved out of employment in February was 3.1%, little changed compared to recent years. This resulted in a net inflow into employment of 1.6ppts, an extremely large increase in historical terms and this drove the headline employment outcome. Over time</span><span style="font-family: georgia; font-size: 15.4px;">, the ABS will be able to recalibrate its seasonal adjustment processes to account for this shift, but for the moment the data are very volatile, with employment weakening around the turn of the year and then surging after the summer holiday period. </span><span style="font-family: georgia; font-size: 15.4px;"> </span></div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: center;"><span style="font-family: georgia; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgc6Uip-y0WUkZ3gN2ckujqoUYikptATkCXEA7b2Re7PQJ0kvGQ59OqiW-SMXZqcyJ2A61nxZE23o2xMhl_XN7OvcrycpPSaN2NXQB4hb7nhhUJrFm4Ik7ukQRJhH0g-3xdYrou9WXsmDlbkr6BQTfLHGSZ8Lu_9LYYottshPA4CVwCrV-OsoP9YKn8dD4/s799/Inflows%20and%20outflows.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="534" data-original-width="799" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgc6Uip-y0WUkZ3gN2ckujqoUYikptATkCXEA7b2Re7PQJ0kvGQ59OqiW-SMXZqcyJ2A61nxZE23o2xMhl_XN7OvcrycpPSaN2NXQB4hb7nhhUJrFm4Ik7ukQRJhH0g-3xdYrou9WXsmDlbkr6BQTfLHGSZ8Lu_9LYYottshPA4CVwCrV-OsoP9YKn8dD4/w640-h428/Inflows%20and%20outflows.jpg" width="640" /></a></div><br /></span></div><div class="separator" style="clear: both; text-align: left;"><span style="font-family: georgia; font-size: 15.4px;">Smoothing the volatility, the 3-month average increase in employment to February was 23.3k. This indicates employment is running at an annualised pace of around 2%, returning to the sort of momentum that was seen at the end of Q3 last year. </span><span style="font-family: georgia; font-size: 15.4px;">Indicators such as job vacancies - while down from their peaks - remain at elevated levels and suggest that the pace of employment growth can pick up.</span></div><div class="separator" style="clear: both; text-align: left;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEid9E4KJFzyzjfOyIqgb57g1RVyzGv_epaU2wjvndxU9kn7IVMnvobDwVpdFpOs3gDt2D811Gl-2XND6K2LXc66NR4UbXnJa2skL8VZ-3OER5X5wP2_C8i6Vet-z80SJyJLdAfXZ4QUPBGoSVhlpbAdPGQP-V-hH_a9B6JBnSgfUJz368pSpf45XEvVYus/s800/3m.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="535" data-original-width="800" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEid9E4KJFzyzjfOyIqgb57g1RVyzGv_epaU2wjvndxU9kn7IVMnvobDwVpdFpOs3gDt2D811Gl-2XND6K2LXc66NR4UbXnJa2skL8VZ-3OER5X5wP2_C8i6Vet-z80SJyJLdAfXZ4QUPBGoSVhlpbAdPGQP-V-hH_a9B6JBnSgfUJz368pSpf45XEvVYus/w640-h428/3m.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;"><span style="font-family: georgia; font-size: 15.4px;">This will be key to </span><span style="font-family: georgia; font-size: 15.4px;">keeping upward pressure on the unemployment rate in check as growth in the labour force is still running at a strong pace on the back of post-covid population growth. </span></div><div class="separator" style="clear: both; text-align: left;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjrkfI0Q3IGfcJ-3WocLMT08MLfNrfvG2-o6eKW3idtHjZAs4X3vqz9w9B2mmt5jiSFmdTtRLCnCsA7ts7YwRsZnm0Ovlsby2SubcJZ6Z9EjpBKs5ZnGAcMLU60HGOzngmGiXyI0Afz_X198Ej1jA1h0fAAz1jMLuTPU6YFjK13MhwSlw8la2Rx-OBDGh8/s801/LF.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="535" data-original-width="801" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjrkfI0Q3IGfcJ-3WocLMT08MLfNrfvG2-o6eKW3idtHjZAs4X3vqz9w9B2mmt5jiSFmdTtRLCnCsA7ts7YwRsZnm0Ovlsby2SubcJZ6Z9EjpBKs5ZnGAcMLU60HGOzngmGiXyI0Afz_X198Ej1jA1h0fAAz1jMLuTPU6YFjK13MhwSlw8la2Rx-OBDGh8/w640-h428/LF.jpg" width="640" /></a></div><br /></div></div></div></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;">In February, the strength of the employment outcome drove a large fall in the unemployment rate from 4.1% to 3.7%. Whether or not sub-4% unemployment can be maintained remains to be seen; the participation rate saw only a modest lift in the month </span><span style="font-family: georgia; font-size: 15.4px;">from 66.6% to 66.7% and </span><span style="font-family: georgia; font-size: 15.4px;">will likely rise further towards the record highs seen in late 2023 as the year progresses. Declines in both underemployment (6.7% to 6.6%) and underutilisation (10.8% to 10.3%) reversed earlier increases and are consistent with the labour market regaining momentum. </span></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-9Symo0voAXcMrJ6RtEbybPD2L-Rw3t1d0JY2eyDU8d7OKHUwXOWR_9YiLYQx-2W7CV0tfKh5FWsMFTscE_hM_wSJ-1ux86BLSFfboEhe9MWflDTOr90hwCYSC1ty-W_kIpX0Kb36YAo2HYkJv1nbUIYGB629Ubw6H6ayujJFfFGWOwfBoGv5MDuTg68/s837/UE.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="554" data-original-width="837" height="424" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-9Symo0voAXcMrJ6RtEbybPD2L-Rw3t1d0JY2eyDU8d7OKHUwXOWR_9YiLYQx-2W7CV0tfKh5FWsMFTscE_hM_wSJ-1ux86BLSFfboEhe9MWflDTOr90hwCYSC1ty-W_kIpX0Kb36YAo2HYkJv1nbUIYGB629Ubw6H6ayujJFfFGWOwfBoGv5MDuTg68/w640-h424/UE.jpg" width="640" /></a></div><br /></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;">Rounding out the report, the lift in employment helped to generate a rebound in hours worked of 2.8% in the month. This more than reverses January's 2% decline, which was seasonally related with many people away from work on annual leave. </span></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px; text-align: center;"><span style="font-family: georgia; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg5147-PhIp2VoIyH5j_t8wy_1kT4ayRAj_V-UwzfGNpi-tovtFDl6LoU2rBbI8Jmx3X1Ue0EjAgg00425cY8GA3Xh6_8mh4yk33Ymj8Ke8hIcyeQ7tfYMop25k58l9SAtW5E_WwF3eBC7T1HX_3zcnqA5f7zogm231FMHSrN_0QC8g-x4I2OTKt-aQjxQ/s800/Hours%20worked.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="538" data-original-width="800" height="430" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg5147-PhIp2VoIyH5j_t8wy_1kT4ayRAj_V-UwzfGNpi-tovtFDl6LoU2rBbI8Jmx3X1Ue0EjAgg00425cY8GA3Xh6_8mh4yk33Ymj8Ke8hIcyeQ7tfYMop25k58l9SAtW5E_WwF3eBC7T1HX_3zcnqA5f7zogm231FMHSrN_0QC8g-x4I2OTKt-aQjxQ/w640-h430/Hours%20worked.jpg" width="640" /></a></div></span></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><div style="font-size: 15.4px;"><b style="font-family: georgia; font-size: 15.4px;">In summary | February </b></div><div style="font-size: 15.4px;"><b style="font-family: georgia; font-size: 15.4px;"><br /></b></div><div style="font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;">On the whole, this was an encouraging report in that it confirms the weakness in the labour market over the summer was seasonally related rather than reflecting underlying economic conditions. It essentially indicates a regaining of momentum in the labour market after the holiday period. I don't think it will change either the RBA's assessment of the labour market or its outlook. At Tuesday's meeting, RBA Governor Bullock said the labour market remained tight but that a gradual easing is expected as the year progresses. </span></div></div>James Fosterhttp://www.blogger.com/profile/01305732698755570848noreply@blogger.comtag:blogger.com,1999:blog-1597478006767022660.post-82748478109291065592024-03-20T14:51:00.000-07:002024-03-20T14:51:49.370-07:00Preview: Labour Force Survey — February <div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;">Australia's Labour Force Survey for February is due</span><span style="font-family: georgia; font-size: 15.4px;"> to be published at 11:30am (AEDT) today. Nearly 2 years of sub-4% unemployment came to an end in January as employment disappointed heavily to the downside of expectations for the second month running. Seasonality </span><span style="font-family: georgia; font-size: 15.4px;">appears to have impacted employment around the turn of the year, but a rebound in February is needed to validate that assessment. At its meeting on Tuesday, the RBA acknowledged that while conditions have eased, it continued to </span><span style="font-family: georgia; font-size: 15.4px;">describe the labour market as being tighter than is consistent with a return to the 2-3% inflation target. </span><span style="font-family: georgia; font-size: 15.4px;"> </span></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><span style="font-family: georgia;"><b>A recap: Employment failed to rebound, driving the unemployment rate above 4% </b></span></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><br /></div><div style="background-color: white; font-size: 15.4px;"><span style="font-family: georgia;">After employment closed out 2023 with a sizeable fall (-62.7k), the rebound expected in January (25k) failed </span><span style="background-color: transparent; font-family: georgia; font-size: 15.4px;">to materialise as a broadly flat net outcome of 0.5k </span><span style="background-color: transparent; font-family: georgia; font-size: 15.4px;">(full-time +11.1k and part-time -10.6k)</span><span style="background-color: transparent; font-family: georgia; font-size: 15.4px;"> was posted. Although seasonality likely explains the weak outcomes over December and January, the level </span><span style="background-color: transparent; font-family: georgia; font-size: 15.4px;">of </span><span style="background-color: transparent; font-family: georgia; font-size: 15.4px;">employment at around 14.2 million is little changed since October.</span><span style="background-color: transparent; font-family: georgia; font-size: 15.4px;"> </span></div><div style="background-color: white; font-size: 15.4px;"><span style="background-color: transparent; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="background-color: white; font-size: 15.4px; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiqRRusb8T3hGYDG3aWFNYqegLl3p2jhGWzP8lDk4_DsfOWDnlMeYx5W-hoJRNV5XyawyIZlXv5uEtOj_YQbuLcNfu9Gfk_pM4lZR9wSidjNDvR0qHIHw_5NHRnPEowr1heGtJ9M1JlBLXPiKlTvhoYMS9B3tvSN1daKJ9J1hRW6fcDDAI53iiWcZmS1BE/s799/EMP.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="535" data-original-width="799" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiqRRusb8T3hGYDG3aWFNYqegLl3p2jhGWzP8lDk4_DsfOWDnlMeYx5W-hoJRNV5XyawyIZlXv5uEtOj_YQbuLcNfu9Gfk_pM4lZR9wSidjNDvR0qHIHw_5NHRnPEowr1heGtJ9M1JlBLXPiKlTvhoYMS9B3tvSN1daKJ9J1hRW6fcDDAI53iiWcZmS1BE/w640-h428/EMP.jpg" width="640" /></a></div><br /></div><div style="background-color: white; font-size: 15.4px;"><span style="background-color: transparent; font-family: georgia; font-size: 15.4px;">With employment losing momentum, the </span><span style="background-color: transparent; font-family: georgia; font-size: 15.4px;">unemployment rate lifted </span><span style="background-color: transparent; font-family: georgia; font-size: 15.4px;">from 3.9% to 4.1% - its highest since early 2022 - as the participation rate remained at 66.8%. </span><span style="font-family: georgia; font-size: 15.4px;">Together with a rise in the underemployment rate (6.5% to 6.6%), total underutilisation increased from 10.4% to 10.7%, movements consistent with easing tightness in the labour market. </span></div><div style="background-color: white; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="background-color: white; font-size: 15.4px; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgTkwrbxVjzzj5vd_LQvi_q6CSFNqqXQvxszStrcDe9ySkuUHuwTbXQdeh0UnKH3yqgqa1lttJYFZj-eaQJeP-wdfzUbK3M6StVTMROmoUizSWGWfepb5Wc2EYjI89I6bBbC5oWRf7UI8hyphenhyphenAZt-1ckWwH5NtpUxy27L6CdXJS1CKrQHU1THPhXOf-AvgH4/s838/Ratios.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="554" data-original-width="838" height="424" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgTkwrbxVjzzj5vd_LQvi_q6CSFNqqXQvxszStrcDe9ySkuUHuwTbXQdeh0UnKH3yqgqa1lttJYFZj-eaQJeP-wdfzUbK3M6StVTMROmoUizSWGWfepb5Wc2EYjI89I6bBbC5oWRf7UI8hyphenhyphenAZt-1ckWwH5NtpUxy27L6CdXJS1CKrQHU1THPhXOf-AvgH4/w640-h424/Ratios.jpg" width="640" /></a></div><br /></div><div style="background-color: white; font-size: 15.4px;"><span style="background-color: transparent; font-family: georgia; font-size: 15.4px;">A large 2.5% decline in hours worked in January coincided with the peak summer holiday period and </span><span style="background-color: transparent; font-family: georgia; font-size: 15.4px;">likely reflects seasonal volatility. However, the sharp slowing in the annual growth rate indicates that hours worked are responding to softer economic conditions. </span></div><div style="background-color: white; font-size: 15.4px;"><span style="background-color: transparent; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="background-color: white; font-size: 15.4px; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiv1t9WCaWXMydiyi55hN8-gBlQfl5ebJeqvkHmln54g4FgEa6a2dYz3mTG-AQz8h2RgAET5VxW77bXM4L4P7_5gh8idcKnpZxbsBT_s-qPIDFPOLaxhhi-ujFKl64ZQ9VqVmvO3wgTeTQVZ4JBFnp1uxYejrkXtT6ZoaV8emcUn_L2vums7UxTqdXr3Jc/s800/Hours%20worked.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="536" data-original-width="800" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiv1t9WCaWXMydiyi55hN8-gBlQfl5ebJeqvkHmln54g4FgEa6a2dYz3mTG-AQz8h2RgAET5VxW77bXM4L4P7_5gh8idcKnpZxbsBT_s-qPIDFPOLaxhhi-ujFKl64ZQ9VqVmvO3wgTeTQVZ4JBFnp1uxYejrkXtT6ZoaV8emcUn_L2vums7UxTqdXr3Jc/w640-h428/Hours%20worked.jpg" width="640" /></a></div><br /></div><div style="background-color: white; font-size: 15.4px; text-align: left;"><b style="font-family: georgia; font-size: 15.4px;">A seasonal rebound is expected in February </b></div><div style="background-color: white; font-size: 15.4px; text-align: left;"><b style="font-family: georgia; font-size: 15.4px;"><br /></b></div><div style="background-color: white; font-size: 15.4px; text-align: left;"><span style="font-family: georgia; font-size: 15.4px;">The expectation is that after employment was weak over the summer holiday period it will pick up in February with a 40k increase forecast (range: 15k to 55k). Hiring patterns post the pandemic have shifted, with many more people now moving into employment after the summer holidays. As of January, the ABS reported that around 210k people were waiting to start new jobs, well up from a pre-covid average of around 120k. The ABS's payrolls series lifted by 2% for the month to mid-February, indicating that many people have moved into employment since the summer holidays. This rise in payrolls is comparable to recent years and this has previously translated into a strong employment outcomes in the February Labour Force Survey. </span></div><div style="background-color: white; font-size: 15.4px; text-align: left;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="background-color: white; font-size: 15.4px; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgAZz2_g7K0_msaXySo78ZeEQBHiC_BwnPtsmzVCG1OcTnPK6Q1P1DUDOLK2l6Mo7LSbhJQTRbJIOCkqJMXyG0T4UOxjlMYA831vjzdgv1HHLp9f4opimR-KZLShYv9MwvYkwRo3ZIPD_0dvY-HSIkw95Fc-fcZx84KBvAYtpdFOYfjUJhBoOt8y2rUdYw/s799/FEB.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="534" data-original-width="799" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgAZz2_g7K0_msaXySo78ZeEQBHiC_BwnPtsmzVCG1OcTnPK6Q1P1DUDOLK2l6Mo7LSbhJQTRbJIOCkqJMXyG0T4UOxjlMYA831vjzdgv1HHLp9f4opimR-KZLShYv9MwvYkwRo3ZIPD_0dvY-HSIkw95Fc-fcZx84KBvAYtpdFOYfjUJhBoOt8y2rUdYw/w640-h428/FEB.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;"><span style="font-family: georgia; font-size: 15.4px;">With employment tipped to rebound, expectations are that the unemployment rate will ease back to 4% from 4.1% as of January. The main risk to this forecast is that if the participation also rebounds back towards the record highs seen late last year, then the unemployment rate may hold or potentially even rise. </span></div></div>James Fosterhttp://www.blogger.com/profile/01305732698755570848noreply@blogger.comtag:blogger.com,1999:blog-1597478006767022660.post-91562367589750579482024-03-19T07:12:00.000-07:002024-03-19T07:12:33.058-07:00RBA extends pause in March <div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">The RBA maintained its key rates at current levels (cash rate 4.35% and Exchange Settlement rate 4.25%), extending its pause for a third meeting in succession. </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">A cautious RBA said that it is 'not ruling anything in or out' from a policy perspective, but the decision to remove the reference to this including 'a further increase in interest rates' is hard to interpret in any other way than the Board softly signalling the peak for the tightening cycle. The Board reaffirmed that policy will remain data-dependent, reflecting uncertainty over how the economy will evolve. Taking a less forward-looking approach is vulnerable to a scenario where </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">more of the downside risks start coming to fruition. </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Markets are pricing in around 2 rate cuts by year-end, a reasonable outlook in my view. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKPPhoBtOy3F7XMButomP_Te_j68fs_-xKXi6mer8tCpJdBQcJoCOv2A8IAwLpRD5rYYdN88mZVuYMKLCCvnc3SkwImd5DkJDlpdAaCEvt1SwCZYdQaiBAs5CHZ5ThCvBm_N2dHfiyXdXV9j7pTU9B5MleeL69PT4AHoroQ4gH0lBKpQzva7bac_aZ34E/s838/Cash%20rate.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="534" data-original-width="838" height="408" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKPPhoBtOy3F7XMButomP_Te_j68fs_-xKXi6mer8tCpJdBQcJoCOv2A8IAwLpRD5rYYdN88mZVuYMKLCCvnc3SkwImd5DkJDlpdAaCEvt1SwCZYdQaiBAs5CHZ5ThCvBm_N2dHfiyXdXV9j7pTU9B5MleeL69PT4AHoroQ4gH0lBKpQzva7bac_aZ34E/w640-h408/Cash%20rate.jpg" width="640" /></a></div><br /></span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Despite the recent inflation data coming in broadly in line with the RBA's forecasts, remaining on track to return to the 2-3% target range from next year (reaching the midpoint in 2026), the messaging in today's </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Board <a href="https://www.rba.gov.au/media-releases/2024/mr-24-05.html" target="_blank">statement</a> and in Governor Bullock's <a href="https://www.rba.gov.au/speeches/2024/mc-gov-2024-03-19.html" target="_blank">press conference</a></span><span style="background-color: white; font-family: georgia; font-size: 15.4px;"> was cautious. In short, the Board hasn't seen enough signs to indicate that inflation is headed back to 2-3% on a sustainable basis. It still judges the labour market as tight and unit labour cost growth 'remains very high'. Concern, therefore, remains around services prices. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">The statement noted that elevated services inflation is consistent with excess demand in the economy, a point later reiterated by Governor Bullock. The RBA's narrative is that while </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">the growth rate </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">in the economy has slowed sharply (and is unequivocally weak for consumption), demand remains at a level that exceeds the supply capacity of the economy. I remain unsure as to how the RBA can be as adamant as it is on this point, </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">but if growth remains weak then this imbalance it is seeing will continue to diminish. </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;"> </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">In the concluding paragraph, the wording that </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">'a further increase in interest rates cannot be ruled out' was scrapped in place of </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">'the Board is not ruling anything in or out'. </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">While it doesn't preclude another hike - as unlikely as it is - the change still seems purposeful. The tightening cycle started in May 2022 and in every decision statement up until today, there has been a clear reference inserted to indicate the possibility or expectation of higher rates. Notably, 'not ruling anything in or out' means there is no direct pushback to rate cut pricing. The next RBA meeting is on 6-7 May. </span></div>James Fosterhttp://www.blogger.com/profile/01305732698755570848noreply@blogger.comtag:blogger.com,1999:blog-1597478006767022660.post-61868776684250741752024-03-18T15:50:00.000-07:002024-03-18T15:50:45.633-07:00Preview: RBA March meeting <div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;">The RBA Board is set to hold its key policy rate at 4.35% at today's meeting (2:30pm AEDT). With recent data coming in broadly in line with RBA forecasts, the focus will be on the tone of the Board's statement and the messages from Governor Bullock in the post-meeting press conference. The Board is holding onto a tightening bias, but inflationary risks are receding with the economy slowing sharply and the labour market easing. </span></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEihsTSboQ_YCPJvAtZpdyOmigi-dpR8HCI_w82JEi4FZm40w2H8ez4n0fuCFQtfuE3L0EhD93tXfYRm59e4o_jE9S__xrL1Qe2LJ-zixgPyMCJ0cdzu1CZeUCEyqe15ofrPxITrPEFhuohhnxnCFBixliszWzF6P1FS3pRa0xS9fKAzQc1OOf6W-xML0jI/s839/Cash%20rate.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="534" data-original-width="839" height="408" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEihsTSboQ_YCPJvAtZpdyOmigi-dpR8HCI_w82JEi4FZm40w2H8ez4n0fuCFQtfuE3L0EhD93tXfYRm59e4o_jE9S__xrL1Qe2LJ-zixgPyMCJ0cdzu1CZeUCEyqe15ofrPxITrPEFhuohhnxnCFBixliszWzF6P1FS3pRa0xS9fKAzQc1OOf6W-xML0jI/w640-h408/Cash%20rate.jpg" width="640" /></a></div><br /></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;"><span style="font-family: georgia; font-size: medium;"><span style="font-size: 15.4px;">Today's meeting shapes </span></span></span><span style="font-family: georgia; font-size: 15.4px;">another case </span><span style="font-family: georgia; font-size: 15.4px;">of steady as it goes for the Board. </span><span style="font-family: georgia; font-size: 15.4px;">Key data outcomes have been in broad alignment with RBA forecasts and commentary from officials at the central bank has been scarce in recent weeks. The key message from the Board at the February meeting was that it was not yet confident that inflation was heading back to target on a sustainable basis</span><span style="font-family: georgia; font-size: 15.4px;">, </span><span style="font-family: georgia; font-size: 15.4px;">meaning that it could not rule out "a further increase in interest rates". </span><span style="font-family: georgia; font-size: 15.4px;">That contrasts with market pricing that is pushing towards discounting two </span><span style="font-family: georgia; font-size: 15.4px;">RBA rate cuts in the back half of the year, while many of its central bank peers overseas have moved on from signalling the peak for rates in the cycle and are discussing the timeline for policy easing. </span><span style="font-family: georgia; font-size: 15.4px;"> </span></div><div style="text-align: left;"><br /></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;">Key judgments the RBA has made look unlikely to change in light of recent data. Disinflationary trends appeared to remain intact in early 2024 as the headline CPI held at 3.4%yr; however, the January report contained limited updates on services prices</span><span style="font-family: georgia; font-size: 15.4px;">, the component of the CPI basket the RBA is watching the closest. Another point the RBA has been strong on is that inflation remains elevated due to demand conditions exceeding the capacity of the economy to supply goods and services. Although I have reservations about that assessment, the RBA has said that this imbalance it has seen is easing as the economy slows. I think this is how the Board will frame its interpretation of what was a </span><span style="font-family: georgia; font-size: 15.4px;">weak GDP outcome of 0.2%</span><span style="font-family: georgia; font-size: 15.4px;"> </span><span style="font-family: georgia; font-size: 15.4px;">in Q4 and 1.5% in year-ended terms.</span></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;">The Board's analysis of the labour market will also be important. Tightness in the labour market clearly eased over the course of 2023 - the 3-month average for the unemployment rate ended the year at 3.9% compared to 3.5% in December 2022 - and wages growth looked to be peaking at just above 4% in the Q4 update received late last month. For the moment, the Board's priorities are on the inflation side of its mandate, but the risks to the employment side look to be increasing. A policy pivot that removes the possibility of further tightening and opens the dialogue to rate cuts probably requires more attention to shift to the risks to the labor market outlook. </span></div>James Fosterhttp://www.blogger.com/profile/01305732698755570848noreply@blogger.comtag:blogger.com,1999:blog-1597478006767022660.post-32437102744756830432024-03-15T18:40:00.000-07:002024-03-15T18:40:10.040-07:00Macro (Re)view (15/3) | Over to the Fed and BoJ <div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Equity markets were patchy this week as stronger-than-expected US inflation data drove Treasury yields higher and lifted the dollar. The positioning ahead of next week's Fed meeting indicates that markets sense the policy-setting committee may signal fewer rate cuts this year than the 3 currently projected as its </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">central forecast. Outcomes from key wage negotiations in Japan were seen as clearing the runway for the BoJ to exit from negative rates at next week's meeting. </span></div><div style="text-align: left;"><br /></div><div style="text-align: center;"><i><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgmAy2O4S-Mc_jKwpBvDvHeNCLJZYcOV_ZcPr_5LM1Ae-wvI_7fiQJCaWDk9QMeKrSwNMnVx4_q6a7uPCBPW1i7-7o2A9qwenLwIipKftw2R-l8jotwk_rQnCflpbKQ0ocClTSKLEkX5iglL5crowbBzLK5fCgTLzWpz7aC4taMkKou1ogNq_MxlpMdVIs/s807/15-3.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="285" data-original-width="807" height="226" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgmAy2O4S-Mc_jKwpBvDvHeNCLJZYcOV_ZcPr_5LM1Ae-wvI_7fiQJCaWDk9QMeKrSwNMnVx4_q6a7uPCBPW1i7-7o2A9qwenLwIipKftw2R-l8jotwk_rQnCflpbKQ0ocClTSKLEkX5iglL5crowbBzLK5fCgTLzWpz7aC4taMkKou1ogNq_MxlpMdVIs/w640-h226/15-3.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div></i></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><span style="font-size: 15.4px;">An interesting Fed meeting awaits next week. Economic activity and the labour market remain resilient and there are signs that the disinflationary process is losing momentum. This economic backdrop has led markets to scale back their expectations for Fed rate cuts from as many as 7 at the start of the year to the 3 signalled by the FOMC in their December forecasts. Much of the interest, therefore, is around whether the FOMC retains this forecast for 3 rate cuts this year in light of recent data. </span></span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><span style="font-size: 15.4px;"><br /></span></span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><span style="font-size: 15.4px;">This week, February reports for consumer (CPI) and producer prices (PPI) surprised on the high side of expectations. Headline CPI was 0.4%m/m, rising from 3.1% to 3.2% at an annual pace (vs 3.1% exp). </span></span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">This was the strongest month-on-month rise since September, with an uptick in energy prices (2.3%m/m) being a major contributor. However, the core rate also came in at 0.4%m/m (the same as in January), suggesting this was a more broad-based lift in prices, and the annual pace </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">slowed by less than expected from 3.9% to 3.8%yr (vs 3.7% exp). The main concern for the FOMC is the disparity between goods (0.3%yr) and services inflation (5%yr; there is uncertainty that the former has scope to decline much further while the latter continues to run at a pace too hot </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">to be consistent with a sustainable return to the 2% inflation target. </span></div><div style="text-align: left;"><br /></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">A slight softening in UK wages data (6.2% to 6.1%yr) and a fall in job vacancies (to 908k) provided signs of easing labour market conditions. Inflation data for February is due out next Wednesday, but the implications for the BoE meeting the following day appear to be limited. Markets aren't expecting the BoE to cut rates until the second half of the year, with policymakers signalling that restrictive monetary policy will be required "for an extended period". </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">The ECB's <a href="https://www.ecb.europa.eu/press/pr/date/2024/html/ecb.pr240313~807e240020.en.html" target="_blank">operational review</a> appeared not to contain any major surprises as far as markets were concerned. The review looked into the tools and strategies the ECB will call upon to implement monetary policy going forward. In the short term, there are few implications by all reports, mainly because </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">the deposit facility rate was reaffirmed as the main policy rate of the ECB's 3 interest rates, while banks' </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">minimum reserve requirements are to remain at 1%. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">After a lull this week, local events ramp up again next week with an RBA meeting </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">(Tue) and labour market data (Thu) awaiting. With recent data coming in broadly consistent with RBA forecasts, there seems little need for the Board to shift its messaging, reaffirming that </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">it remains attentive to inflation risks while signalling that it is not ruling anything in or out from a policy perspective. Meanwhile, coming off a seasonally weak period either side of the new year, February's labour force survey is anticipated to report a rebound in employment (40k), easing the unemployment rate back to 4% from 4.1%. </span></div>James Fosterhttp://www.blogger.com/profile/01305732698755570848noreply@blogger.comtag:blogger.com,1999:blog-1597478006767022660.post-67818458910545231372024-03-08T17:59:00.000-08:002024-03-08T17:59:40.730-08:00Macro (Re)view (8/3) | Payrolls weaken US dollar <div style="text-align: left;"><span style="background-color: white; font-family: georgia;"><span>US equities declined and the dollar lost ground this week. Just as markets had begun to ponder a scenario of no Fed rate cuts in 2024 (and potentially a hike), Fed Chair Powell told Congress that the FOMC is not far from having the confidence to lower rates, while back revisions to US employment data indicated the labour market is not as hot as previously thought. The Australian dollar and Sterling saw their strongest weekly gains against the USD this year, while the Japanese yen rose by its most since July amid signs that the BoJ is moving towards hiking rates. The euro also advanced despite the ECB giving strong indications that it will cut rates in June. </span></span><span style="background-color: white; font-family: georgia;">Next week's highlight events include US CPI (Tue) and retail sales (Thu). </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><span style="font-size: 15.4px;"><br /></span></span></div><div style="text-align: center;"><span style="background-color: white; font-family: georgia;"><div class="separator" style="clear: both; font-size: 15.4px; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh6UaqUOFtO1-usy2lISj8FuudDgphU-X4cDKUwVGRmouUCHDseynHbSuikjrtvG1yRErWSDajGQlN9D7ftLAiw3v-Sidk_sC_foMO1BsvV6xN-0P7Cl4lJS1c4u0ElrgwsLCJfV5zbEuR7IGrtGaDFXByFCOO-3mRSPMCJjq79PcKF1i5vUrohljV0LCM/s809/8-3.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="287" data-original-width="809" height="228" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh6UaqUOFtO1-usy2lISj8FuudDgphU-X4cDKUwVGRmouUCHDseynHbSuikjrtvG1yRErWSDajGQlN9D7ftLAiw3v-Sidk_sC_foMO1BsvV6xN-0P7Cl4lJS1c4u0ElrgwsLCJfV5zbEuR7IGrtGaDFXByFCOO-3mRSPMCJjq79PcKF1i5vUrohljV0LCM/w640-h228/8-3.jpg" width="640" /></a></div><div class="separator" style="clear: both; font-size: 15.4px; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;">Fed Chair Powell's Congressional <a href="https://www.federalreserve.gov/newsevents/testimony/powell20240306a.htm" target="_blank">testimony</a> reaffirmed that rate cuts remain on the cards despite an uptick in recent inflation readings and strength in the labour market. Assessments around the latter, however, have shifted somewhat following Friday's employment report. Nonfarm payrolls increased by 275k in February, stronger than the 200k consensus but sizeable downward revisions saw reductions to the employment gains in December (333k to 290k) and January (353k to 229k). The unemployment rate lifted from 3.7% to 3.9% and the broader underemployment rate rose from 7.2% to 7.3%, both touching highs since late 2021/early 2022, as labour force participation remained unchanged (62.5%). Further signs of softening in the labour market were seen in average hourly earnings growth easing from 4.5% to 4.3%yr. </div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;"><div><span style="font-family: georgia;">The Australian economy posted subdued growth of just 0.2% in the December quarter and 1.5% through the year. This confirmed a notable slowing of momentum through the back half of the year (0.5%), as household consumption </span><span style="font-family: georgia;">(0.1%q/q, 0.1%Y/Y) became </span><span style="font-family: georgia;">increasingly constrained by cost-of-living pressures and higher interest rates. Alongside a moderation in business investment and renewed weakness in residential construction, the composition of growth </span><span style="font-family: georgia;">rebalanced further away from private demand to public demand. In light of this, the RBA's assessment of excess demand in the economy is looking harder to sustain. For in-depth analysis of the Q4 National Accounts please see my </span><i>In Review </i><span style="font-family: georgia;">feature article <a href="https://jamesfostermacro.blogspot.com/2024/03/in-review-australian-q4-gdp-momentum.html" target="_blank">here</a>. Other key developments from the week are also covered, including a substantial widening in the current account surplus to $11.8bn (see <a href="https://jamesfostermacro.blogspot.com/2024/03/australia-current-account-118bn-in-q4.html" target="_blank">here</a>), with the monthly trade surplus coming in at $11bn in January (see <a href="https://jamesfostermacro.blogspot.com/2024/03/australias-trade-surplus-11bn-in-january.html" target="_blank">here</a>); while </span><span style="font-family: georgia;"><a href="https://jamesfostermacro.blogspot.com/2024/03/australian-dwelling-approvals-decline-1.html" target="_blank">dwelling approvals</a> (-1%) </span><span style="font-family: georgia;">and <a href="https://jamesfostermacro.blogspot.com/2024/03/australian-housing-finance-39-in-january.html" target="_blank">housing finance</a> (-3.9%) opened 2024 on the back foot. </span></div><div><br /></div></div><div class="separator" style="clear: both; text-align: left;"><span style="font-family: georgia;">The ECB is </span><span style="font-family: georgia;">inching closer to cutting rates </span><span style="font-family: georgia;">but is awaiting more data to confirm that inflation is on track to return to target.</span><span style="font-family: georgia;"> Markets are betting on the first rate cut coming in June. With the <a href="https://www.ecb.europa.eu/press/pr/date/2024/html/ecb.mp240307~a5fa52b82b.en.html" target="_blank">Governing Council</a> leaving all monetary policy settings unchanged, the focus was on the ECB's messaging as a new set of economic forecasts was published. The new <a href="https://www.ecb.europa.eu/pub/projections/html/ecb.projections202403_ecbstaff~f2f2d34d5a.en.html" target="_blank">forecasts</a> cut </span><span style="font-family: georgia;">the growth outlook this year to 0.6% from 0.8% and </span><span style="font-family: georgia;">lowered </span><span style="font-family: georgia;">the inflation outlook across the projection horizon, anticipating headline and core inflation to slip below the 2% target in Q3 next year. Given this outlook, a case could have been made to cut rates at this meeting, but President Lagarde said this was not discussed. Instead, the main point coming out of the <a href="https://www.ecb.europa.eu/press/pressconf/2024/html/ecb.is240307~314650bd5c.en.html" target="_blank">press conference</a> was that the Governing Council wants to see more data - particularly on wages - to give it confidence that it can start to </span><span style="font-family: georgia;">dial back restrictive monetary policy.</span><span style="font-family: georgia;"> </span><span style="font-family: georgia;">President Lagarde said the Governing Council will know "a little more in April" and "a lot more by June", giving soft validation to market pricing. </span></div></span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia;"><br /></span></div><div style="text-align: left;"><span style="font-family: georgia;"><span style="background-color: white;">In the UK, the <a href="https://assets.publishing.service.gov.uk/media/65e8578eb559930011ade2cb/E03057752_HMT_Spring_Budget_Mar_24_Web_Accessible__2_.pdf" target="_blank">Spring Budget</a> capitalised on an outlook for lower inflation and interest rates, using the windfall to increase fiscal support to the economy. The <a href="https://obr.uk/efo/economic-and-fiscal-outlook-march-2024/#foreword" target="_blank">OBR</a> calculates that new measures announced in the budget will increase spending by around </span>£<span style="background-color: white;">40bn over the next 5 years, delivering stimulus of 0.</span><span style="background-color: white;">3% of GDP on average per year. </span><span style="background-color: white;">The major announcement was tax relief </span><span style="background-color: white;">for households, a 2ppt cut </span><span style="background-color: white;">to National Insurance Contributions coming at a cost of </span>£<span style="background-color: white;">10bn</span><span style="background-color: white;"> per year. However, this will be partly offset by new taxes, expected to raise </span>£<span style="background-color: white;">7bn</span><span style="background-color: white;"> through 2028/29. Following the budget, planned Gilt sales in 2024/25 have been announced at </span>£<span style="background-color: white;">265bn, this was above expectations (</span>£<span style="background-color: white;">258bn) but market reaction was limited. </span></span></div>James Fosterhttp://www.blogger.com/profile/01305732698755570848noreply@blogger.comtag:blogger.com,1999:blog-1597478006767022660.post-76834443749178720892024-03-07T01:53:00.000-08:002024-03-07T01:53:46.523-08:00Australian housing finance -3.9% in January<div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">The value of Australian housing finance commitments fell by 3.9% in January to $25.1bn. This follows a sizeable fall in December (-4.1%). These declines may be driven by seasonality, abruptly halting an uptrend in commitments through 2023. That said, renewed concerns around housing affordability and a </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">further RBA rate rise in November - increasingly looking to be the last for the cycle - could also be relevant factors. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjzcd4HypzfJD0NikJgci8QklF5LC64VSsLuarR3YSp8QSJkMx2leMm_1J89mUNgvIYQi_aJR2g_fV7WvRq7wJj2Q-iT5bAytN5eP0x7LHR3EqdpGc2lhftUjZMI4Q-er7sS7emO_kpH60GEh-Qt-HXkIa940l2W35WP3yxj0O3jNWNTU-ySjPhD63zVPk/s837/HF.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="536" data-original-width="837" height="410" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjzcd4HypzfJD0NikJgci8QklF5LC64VSsLuarR3YSp8QSJkMx2leMm_1J89mUNgvIYQi_aJR2g_fV7WvRq7wJj2Q-iT5bAytN5eP0x7LHR3EqdpGc2lhftUjZMI4Q-er7sS7emO_kpH60GEh-Qt-HXkIa940l2W35WP3yxj0O3jNWNTU-ySjPhD63zVPk/w640-h410/HF.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFl9ByGUItUwaSHmzci7KLqomqpCvBjE-OQO5X2NaRRDhSEGHxpihW52RTfQVIhuNHug8JDp0e_mZKWBGTr479mqC5NHwSDMqfrgUVbhhIJ4CsqaKebE90gEFkAM4iDK1UPzV2zjGheT08WS4pH_ohmzBDSyIjgra3upkHPTR0-dbpeDqTqpuusx1zTo0/s647/Summary.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="503" data-original-width="647" height="498" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFl9ByGUItUwaSHmzci7KLqomqpCvBjE-OQO5X2NaRRDhSEGHxpihW52RTfQVIhuNHug8JDp0e_mZKWBGTr479mqC5NHwSDMqfrgUVbhhIJ4CsqaKebE90gEFkAM4iDK1UPzV2zjGheT08WS4pH_ohmzBDSyIjgra3upkHPTR0-dbpeDqTqpuusx1zTo0/w640-h498/Summary.jpg" width="640" /></a></div><div style="text-align: center;"><br /></div></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgEoSLaM1N_fk5YxF0uDHckTnZzmg1LabzKV_iBaLnDTj4J2dNyBzP-9ZN-y1p6sswAtnKFl0DXPBVzPm5QM1ygwmnnhTgQ_MNZ3XS4VUWSzyxISq1nhL0VWPjHPWoGOvfndaZ_V3_T4JILnVq3duRsT84b_OX0LeE2hqi2uZPjrxVpktSI2Cv36Eo3Lj8/s648/States.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="523" data-original-width="648" height="516" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgEoSLaM1N_fk5YxF0uDHckTnZzmg1LabzKV_iBaLnDTj4J2dNyBzP-9ZN-y1p6sswAtnKFl0DXPBVzPm5QM1ygwmnnhTgQ_MNZ3XS4VUWSzyxISq1nhL0VWPjHPWoGOvfndaZ_V3_T4JILnVq3duRsT84b_OX0LeE2hqi2uZPjrxVpktSI2Cv36Eo3Lj8/w640-h516/States.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEijrtsZGpaZgL7eLHMjxncu4hSIzilCLhjjTanpbl8OqOA1irkpjgqIWUEBvXT89QuKQ5q4SkOV12voiphnVnwTIh2wrZc4VnsEwT-WeDyXzNVL4eyBrQSdtI-MyW7TvAFgzUuBkn0EFrSimgEpRNWjRURMNJrY-sIZcoHQru9KxO3F0vZvWLKOtd6tQbE/s1366/States%201.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="763" data-original-width="1366" height="358" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEijrtsZGpaZgL7eLHMjxncu4hSIzilCLhjjTanpbl8OqOA1irkpjgqIWUEBvXT89QuKQ5q4SkOV12voiphnVnwTIh2wrZc4VnsEwT-WeDyXzNVL4eyBrQSdtI-MyW7TvAFgzUuBkn0EFrSimgEpRNWjRURMNJrY-sIZcoHQru9KxO3F0vZvWLKOtd6tQbE/w640-h358/States%201.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Housing finance commitments fell by 7.9% over December-January, retracing to their lowest level ($25.1bn) since August 2023. Heightened volatility across a range of economic data sets around the turn of the year has suggested that there may be some issues with the ABS's seasonal adjustment processes, by extension a potential factor in this series as well. In January, commitments fell to owner-occupiers (-4.6%) and investors (-2.6%), both segments posting back-to-back declines following contractions of 5.6% and 1.6% respectively in December. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFyEJFkVHujoqZtra1VgcqJTCuysOgkjll-R3bp2LXJBJ1tVvsWtYOH3GBCOVxra0EiFNCAPVNJIE1pLr8c_zJ5v7XUBn2n15w2VN5CMm2W1C_tY6TVxiHCsDb-NHrA0M255r8H20GYCEBFYbl756ew1ZkDAfEPz62q9IjMiZKNBqfd_kyCNpEbC0_gXA/s799/HF%201.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="534" data-original-width="799" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFyEJFkVHujoqZtra1VgcqJTCuysOgkjll-R3bp2LXJBJ1tVvsWtYOH3GBCOVxra0EiFNCAPVNJIE1pLr8c_zJ5v7XUBn2n15w2VN5CMm2W1C_tY6TVxiHCsDb-NHrA0M255r8H20GYCEBFYbl756ew1ZkDAfEPz62q9IjMiZKNBqfd_kyCNpEbC0_gXA/w640-h428/HF%201.jpg" width="640" /></a></div></div><div style="text-align: left;"><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><br /></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;">The fall in owner-occupier lending in January was broad based: upgraders -5.2% (on a 2.3% fall in loan volumes), construction-related -2.4% (-4.2%) and first home buyers -6% (-6.9%); alterations went against the trend rising modestly by 0.7%. </span></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4QLLXklIeGI9aNKrPRjLAL795RqYEqZggPXFGH_0MvCJytpwvKYYHZr6YYcTBfKDSFvTeLu2ZMTWmdMS4oHSu0WHi8QDw_h4zgAyOdlTejJTI6_b7Gm03c50K5rjA4TON2kgUgPSKJneEJVFEZVcx8DhtWeFaEcvMwK1BtF9y02mWGeDY91dhCCMy02g/s800/Own%20occ.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="536" data-original-width="800" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4QLLXklIeGI9aNKrPRjLAL795RqYEqZggPXFGH_0MvCJytpwvKYYHZr6YYcTBfKDSFvTeLu2ZMTWmdMS4oHSu0WHi8QDw_h4zgAyOdlTejJTI6_b7Gm03c50K5rjA4TON2kgUgPSKJneEJVFEZVcx8DhtWeFaEcvMwK1BtF9y02mWGeDY91dhCCMy02g/w640-h428/Own%20occ.jpg" width="640" /></a></div><br /></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;">Lending to the investor segment declined by 4.1% over December-January but at $9.2bn was still 18.5% </span><span style="font-family: georgia; font-size: 15.4px;">above its level a year ago. The state figures show the fastest growth through the past 12 months has come in Western Australia (63.1%) and South Australia (41.7%). </span></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;"> </span></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj5N19bW2nemfd3VtPEiR3x6AfAuK0WkPa2q8NbBo-IOaTHtXbPiW3o_zvYaQWkpmBerqdizgexZWeCfWVygnTs8bqGz-WxwlNayud1qdxFXQc5AmIfKakqf0mM01tb4Vg71ll7k28ckbz8hyphenhyphenM-wc3WPlioI9hkzkg5LjRF-xzNb0s7gcIeotvSrlptm-A/s802/INV.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="536" data-original-width="802" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj5N19bW2nemfd3VtPEiR3x6AfAuK0WkPa2q8NbBo-IOaTHtXbPiW3o_zvYaQWkpmBerqdizgexZWeCfWVygnTs8bqGz-WxwlNayud1qdxFXQc5AmIfKakqf0mM01tb4Vg71ll7k28ckbz8hyphenhyphenM-wc3WPlioI9hkzkg5LjRF-xzNb0s7gcIeotvSrlptm-A/w640-h428/INV.jpg" width="640" /></a></div><br /></div><div><span style="background-color: white; font-family: georgia; font-size: 15.4px;">In the refinancing segment, activity slowed further in January. Total refinancing fell by 5% in the month to $16.1bn, posting its 6th consecutive decline. Refinancing declined by 7.4% for owner-occupiers ($10.3bn) and 0.5% for investors ($5.8bn). The slide over recent months is an unwind from an earlier surge in activity alongside the RBA's tightening cycle. </span></div><div><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjCuRfUnlCDZ59geAI8tgARq3Uw7ZGO_EvTwHhSDrGylBFyx7TS1LwUCkRtk4RRviMkp9CNzks1JGBalZqPblphGS8PRU-XiGQiKOEoCcTps58BVNRhk5QJHFSScGtIr7H4f3-u8qpMfyXM7kNwsDe4fxWUhKyB7IQEVGaHjktUEidRhWsBmOGlRp0uKAk/s800/Refi.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="536" data-original-width="800" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjCuRfUnlCDZ59geAI8tgARq3Uw7ZGO_EvTwHhSDrGylBFyx7TS1LwUCkRtk4RRviMkp9CNzks1JGBalZqPblphGS8PRU-XiGQiKOEoCcTps58BVNRhk5QJHFSScGtIr7H4f3-u8qpMfyXM7kNwsDe4fxWUhKyB7IQEVGaHjktUEidRhWsBmOGlRp0uKAk/w640-h428/Refi.jpg" width="640" /></a></div></span></div></div>James Fosterhttp://www.blogger.com/profile/01305732698755570848noreply@blogger.comtag:blogger.com,1999:blog-1597478006767022660.post-41409188885754622024-03-06T18:40:00.000-08:002024-03-06T18:40:27.784-08:00Australia's trade surplus $11bn in January<div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Australia's goods trade surplus was moderately wider at $11bn in January from a revised $10.7bn in December, the outcome printing below the $11.5bn consensus forecast. Exports opened 2024 with a 1.6% rise, its 4th month-on-month increase in succession, outpacing a 1.3% lift in import spending. Both exports and imports have fallen by around 5% over the past year. </span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9M1ToPEOrsHFP4MSB2lWYx9c9Sv3iBS1hAyusS3m8RhyphenhyphenaxTUsruQv1Snp1reGLf6kxxEh-IQ6IXHFqygR18_PF-kxOpEP-vY0UYNJw-OuRbWHlGbSm4LvW3Jr3vQIcHyfn7cYvvuax6H4bIjRi1Cfc8uR3Kr3Z9V19rfxsvbdtoHAnr1VWyeV5UAlVeY/s851/TB.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="573" data-original-width="851" height="430" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9M1ToPEOrsHFP4MSB2lWYx9c9Sv3iBS1hAyusS3m8RhyphenhyphenaxTUsruQv1Snp1reGLf6kxxEh-IQ6IXHFqygR18_PF-kxOpEP-vY0UYNJw-OuRbWHlGbSm4LvW3Jr3vQIcHyfn7cYvvuax6H4bIjRi1Cfc8uR3Kr3Z9V19rfxsvbdtoHAnr1VWyeV5UAlVeY/w640-h430/TB.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgrgHQBpJI8eXCyTBf8Rg7YwVVzMF6KU1vSLDSMv6bjbLBuK_DV7WZb-neoThgpxJfOBWwXeynD8XCYTHOXUB1wVSlUVTYDmkFTP-YrzthrLq0snwGxvjrfPn8N28aLaROAvlZjig7ZNgZjROWdrkY2aRugZZylVC0TGD8kAWmDE8DFazrGb1LjDVLs97s/s854/Summary.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="262" data-original-width="854" height="196" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgrgHQBpJI8eXCyTBf8Rg7YwVVzMF6KU1vSLDSMv6bjbLBuK_DV7WZb-neoThgpxJfOBWwXeynD8XCYTHOXUB1wVSlUVTYDmkFTP-YrzthrLq0snwGxvjrfPn8N28aLaROAvlZjig7ZNgZjROWdrkY2aRugZZylVC0TGD8kAWmDE8DFazrGb1LjDVLs97s/w640-h196/Summary.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">The goods trade surplus widened a little further to $11bn in January. This is consistent with the trend over recent months. On a 3-month average basis, the goods surplus reached a recent trough of around $8bn in September-October; subsequently, it has widened to an average of $11.1bn for the 3 months to January. Export income has been on a rising trajectory - underpinning the acceleration in the current account surplus <a href="https://jamesfostermacro.blogspot.com/2024/03/australia-current-account-118bn-in-q4.html" target="_blank">reported earlier this week</a> - as import spending has softened, reflecting weakening domestic demand conditions. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj_yMKI2fgLb1XblmncVHeMTv4fU_TdXcwaERUpXy2duRvWy-QgNIVOquwW4gtbPiT6CciS9XJABqGX86QqZncNeKfXtZNR6PFqjwPDyImFvU2gV4dtALCmhq7hZ8a4YmUg54Tkxmt3O9B1Bh1oRQk1RimZg6U-aChWYrOnyjRyr5ckyDCBkOELw2-yjZ8/s874/3m.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="573" data-original-width="874" height="420" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj_yMKI2fgLb1XblmncVHeMTv4fU_TdXcwaERUpXy2duRvWy-QgNIVOquwW4gtbPiT6CciS9XJABqGX86QqZncNeKfXtZNR6PFqjwPDyImFvU2gV4dtALCmhq7hZ8a4YmUg54Tkxmt3O9B1Bh1oRQk1RimZg6U-aChWYrOnyjRyr5ckyDCBkOELw2-yjZ8/w640-h420/3m.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">In January, exports saw a 1.6% rise to $47.5bn, the level down 5.2% on a year ago. The key movements came in non-monetary gold (18.2%) and rural goods (7.6%). Rural goods advanced as the value of meat (17.7%) and grain exports (26.6%) accelerated. Non-rural goods declined overall, down 0.5% as a 1% rise in iron ore exports was offset by falls in coal (-0.7%), LNG (-0.9%) and metals (-6.7%).</span></div><div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiLFLJnYobhmp_QKeq2ZVbrs72U6sqSnlgrzUI_G5f1II81F12I0wY1bIh-z1yRcWzAve7rFk2FwHUDjPxzlCbXwkoGaUmIDnAHgBjSZUDq86iOd1ZWeN-ZIGDmNvc-fPNITXVyib9wNPM7OO6SNV9MBnX3pp9zMqeWX-r8dB0U_T1Z-z6AYw7fZ7iW1I0/s799/Rural.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="535" data-original-width="799" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiLFLJnYobhmp_QKeq2ZVbrs72U6sqSnlgrzUI_G5f1II81F12I0wY1bIh-z1yRcWzAve7rFk2FwHUDjPxzlCbXwkoGaUmIDnAHgBjSZUDq86iOd1ZWeN-ZIGDmNvc-fPNITXVyib9wNPM7OO6SNV9MBnX3pp9zMqeWX-r8dB0U_T1Z-z6AYw7fZ7iW1I0/w640-h428/Rural.jpg" width="640" /></a></div><br /></span></div><div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Imports ($36.5bn) posted a 1.3% rise following a 4% lift in December. Prior to that, imports were down notably through October (-3.2%) and November (-8.2%). For January, consumption goods increased by 5.2%, driven almost exclusively by imports of new vehicles (17.2%). Capital goods saw a 5.9% rise on the back of telecommunications equipment (30.3%) and industrial transport equipment (13.1%). By contrast, intermediate goods declined 5.1%, dragged lower by declines in fuel imports (-5.6%) and parts for vehicles (-27.6%). </span></div><div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgWRsST0OZvDUlmTb0zharOMKS9rAHw-RDnRnHMwA_FoE8ZQ_tPXND8Z_0ktuMWjIExvZV2_YrrrijgpuV9h8eL9oGK6Jjv4sA7Y7xJlS_BEo7IaE2hqHRXwBIazXlOUi9AhOVHvW3lu8Fd7Zq5pAVjifqXj2UNfO8JgKH_F2gY6tPc1NNQJma9KAAO5Hk/s836/Imports.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="534" data-original-width="836" height="408" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgWRsST0OZvDUlmTb0zharOMKS9rAHw-RDnRnHMwA_FoE8ZQ_tPXND8Z_0ktuMWjIExvZV2_YrrrijgpuV9h8eL9oGK6Jjv4sA7Y7xJlS_BEo7IaE2hqHRXwBIazXlOUi9AhOVHvW3lu8Fd7Zq5pAVjifqXj2UNfO8JgKH_F2gY6tPc1NNQJma9KAAO5Hk/w640-h408/Imports.jpg" width="640" /></a></div></div></div>James Fosterhttp://www.blogger.com/profile/01305732698755570848noreply@blogger.comtag:blogger.com,1999:blog-1597478006767022660.post-6497681575381511492024-03-06T16:46:00.000-08:002024-03-06T16:46:10.261-08:00In review: Australian Q4 GDP: Momentum continues to slow <div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Momentum in the Australian economy slowed materially in 2023. </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><span style="font-size: 15.4px;">With the recovery from the pandemic having run its course, household consumption - the largest component of the economy - was left increasingly exposed to cost-of-living pressures and higher interest rates as the year progressed. Real GDP growth was 0.2% in the December quarter, slowing from 2.1% to 1.5% through the year. The slowdown intensified in the back half of the year; GDP increased by 0.5% in the period - the </span></span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">softest half-year outturn excluding the Covid period since 2008 following the global financial crisis. </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;"> </span></div><div style="text-align: left;"><br /></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh37-grdHbWsWbQPnNsyP_RaSwbvYfCI4OZR7m581yAsG5ia3cqNRieQ-h60M7WMPFCERAIEZPCktb-c9zPAWWAlVoM9JfVF8RNy7TuykWuhLkppCDCK1GHHwvIalbm-7S3pHiwzCdr3AwKJaoJzxX3msV5qiMkIRWRM3-7d00Vf782_ZHU0tZnH4pRGWI/s802/Real%20GDP.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="536" data-original-width="802" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh37-grdHbWsWbQPnNsyP_RaSwbvYfCI4OZR7m581yAsG5ia3cqNRieQ-h60M7WMPFCERAIEZPCktb-c9zPAWWAlVoM9JfVF8RNy7TuykWuhLkppCDCK1GHHwvIalbm-7S3pHiwzCdr3AwKJaoJzxX3msV5qiMkIRWRM3-7d00Vf782_ZHU0tZnH4pRGWI/w640-h428/Real%20GDP.jpg" width="640" /></a></div><br /></div><div style="text-align: left;"><div><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Similar trends were seen offshore. Although growth in the US economy remained strong, most other advanced economies slowed sharply in the second half of the year. In China, consumption growth eased with the pandemic recovery winding down. </span></div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiUrysU7pUocg25KoE2UcbrrxhWuDeMWf_2BvQYlEqS5O1qGX2WMUx8XRi8DUuDoBTlp8kiPt-1KZHuMDwFxiSs72bpYEOX_pUr6Yc_-UnO5TszNI6ejezpGBwEIEHFCPLvy3R_DcF4kEY-pfrch-HPNB5gnmoFX7uPRQMqfjrT_NBrX6qQHg_kDZp60pM/s686/Global%20GDP.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="421" data-original-width="686" height="392" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiUrysU7pUocg25KoE2UcbrrxhWuDeMWf_2BvQYlEqS5O1qGX2WMUx8XRi8DUuDoBTlp8kiPt-1KZHuMDwFxiSs72bpYEOX_pUr6Yc_-UnO5TszNI6ejezpGBwEIEHFCPLvy3R_DcF4kEY-pfrch-HPNB5gnmoFX7uPRQMqfjrT_NBrX6qQHg_kDZp60pM/w640-h392/Global%20GDP.jpg" width="640" /></a></div><div style="text-align: center;"><br /></div><div><span style="background-color: white; font-family: georgia; font-size: 15.4px;">In Australia, domestic demand </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">(0.1%q/q, 2.3%Y/Y) has been bolstered by the public sector (0.4%q/q, 4.7%Y/Y). This has helped to offset weakening private demand (0%q/q, 1.3%Y/Y) as household consumption slowed to the point of stalling and dwelling investment contracted; however, business investment </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">was resilient, contributing strongly to output growth. </span></div><div><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhO3bNydosJH3aAqeR7_pNFSDhmIrHqBUcXG-3wmDg3eCgNNC5ODp3KGMBmf2ROdpFY9u4C1ZwrCPrTk75o-VrrRuQufIovSPsQi_gjGHmb8L_D_FKNj5DjejTvIkqPDqvFOIpdXxy1d0H6rlKgRBB08NUCTORbpBSPLVrW1ipXf_cpzCJ3IQFBcgJZGjA/s800/Domestic%20Demand.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="534" data-original-width="800" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhO3bNydosJH3aAqeR7_pNFSDhmIrHqBUcXG-3wmDg3eCgNNC5ODp3KGMBmf2ROdpFY9u4C1ZwrCPrTk75o-VrrRuQufIovSPsQi_gjGHmb8L_D_FKNj5DjejTvIkqPDqvFOIpdXxy1d0H6rlKgRBB08NUCTORbpBSPLVrW1ipXf_cpzCJ3IQFBcgJZGjA/w640-h428/Domestic%20Demand.jpg" width="640" /></a></div><br /></div><div><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><span style="font-size: 15.4px;">The December quarter GDP outcomes were in line with RBA expectations. Notwithstanding this, the RBA's assertion of the economy operating in excess demand looks harder to sustain. Economic growth is now at a subdued pace (and -1%Y/Y in per capita terms); inflation slowed sharply into year-end; and the labour market - while still robust - has eased from cycle tights. </span></span></div><div><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><span style="font-size: 15.4px;"><br /></span></span></div><div style="text-align: center;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhtgs9GIugL74kIQuaj1y_20dVZFAcxhfa1XrcO9hAkCgrGkxvdv962kBi2gIeOEtoFzSNdb0S40TI9vCt02moiW8txQEQ8XtlgHRB-55o2beBiwwphmJCKdYu_gJiaxz-gTa59ze95hsC-J3eGsXbB0FfeZyMyUilvt7v3NoasaUUjlAzzbkg2AJ7dYYA/s799/Price%20deflators.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="534" data-original-width="799" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhtgs9GIugL74kIQuaj1y_20dVZFAcxhfa1XrcO9hAkCgrGkxvdv962kBi2gIeOEtoFzSNdb0S40TI9vCt02moiW8txQEQ8XtlgHRB-55o2beBiwwphmJCKdYu_gJiaxz-gTa59ze95hsC-J3eGsXbB0FfeZyMyUilvt7v3NoasaUUjlAzzbkg2AJ7dYYA/w640-h428/Price%20deflators.jpg" width="640" /></a></div><br /></span></div><div><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><span style="font-size: 15.4px;">Declining inflation improved real income dynamics in the quarter, but households are continuing to feel the effects of pressures on their budgets. In 2023, mortgage interest payments and income tax accounted for more than a 21% share of disposable income. </span></span></div><div><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><span style="font-size: 15.4px;"><br /></span></span></div><div style="text-align: center;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><span style="font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh3VUDcF06h61TTgIc5qQIylNTmKsQ40xbYNeq_YRqKWcvkg1pE74tMF5Hc8rQP3_yTiWMMYEezBsAlrcXBkpuDLBzn17B3P4HUuYzUcnqEqfTVekNEqpAKiVrVc2DXtVhQofCcttSxYPHuSgdRCuICZUkkUwFjYjcZuHJsCE5lvB39QsWqlNh5HIX1D1E/s673/Interest%20Payments.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="376" data-original-width="673" height="358" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh3VUDcF06h61TTgIc5qQIylNTmKsQ40xbYNeq_YRqKWcvkg1pE74tMF5Hc8rQP3_yTiWMMYEezBsAlrcXBkpuDLBzn17B3P4HUuYzUcnqEqfTVekNEqpAKiVrVc2DXtVhQofCcttSxYPHuSgdRCuICZUkkUwFjYjcZuHJsCE5lvB39QsWqlNh5HIX1D1E/w640-h358/Interest%20Payments.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;"><span style="font-family: georgia; font-size: 15.4px;">Some relief is on the way via the upcoming stage 3 tax cuts, while the case for the RBA to e</span><span style="font-size: 15.4px;">ase restrictive monetary policy settings from its 4.35% cash rate will </span><span style="font-family: georgia; font-size: 15.4px;">build if the incoming data continues to suggest </span><span style="font-size: 15.4px;">that momentum in the economy is weak. </span></div></span><span style="font-family: georgia; font-size: 15.4px; text-align: left;"> </span><span style="font-family: georgia; font-size: 15.4px; text-align: left;"> </span></span></div></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj-iiSN7_PRurYp_QCbKGr-jeVfXm5OKi5eE1c6jdxOK15t7TXP0ARlJzMggguI8-oRdB-ZW3Hzz5YXhWXOhJsVzEHg5PMO_L5STgB_yBDlwKxpv35XQxziNLl2GnWRG01xTZXJNk3kYjoiq6hxuNB4BXoqavpdJQz27aXurekAh2TsCWl8O59Uzqe49Ss/s732/GDP%20A.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="246" data-original-width="732" height="216" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj-iiSN7_PRurYp_QCbKGr-jeVfXm5OKi5eE1c6jdxOK15t7TXP0ARlJzMggguI8-oRdB-ZW3Hzz5YXhWXOhJsVzEHg5PMO_L5STgB_yBDlwKxpv35XQxziNLl2GnWRG01xTZXJNk3kYjoiq6hxuNB4BXoqavpdJQz27aXurekAh2TsCWl8O59Uzqe49Ss/w640-h216/GDP%20A.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhEeu413wOQUiDxqS8J2302Zm62r1KXf6cZiOSgbKDehe4jO25cfXTs_OwZGij5gPsAXTNvL13EhQAasJLZiJ7e1A2Ahv0vxyJefWJ4zhTLSov3Y2joxQNF6iQQ_d9Ulp1r80zHpaIFh1c5kmYbg7t47R23efxOFpx4dS9K6CNDRKinXKYMYrnCEmUUud4/s801/GDP%20level.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="534" data-original-width="801" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhEeu413wOQUiDxqS8J2302Zm62r1KXf6cZiOSgbKDehe4jO25cfXTs_OwZGij5gPsAXTNvL13EhQAasJLZiJ7e1A2Ahv0vxyJefWJ4zhTLSov3Y2joxQNF6iQQ_d9Ulp1r80zHpaIFh1c5kmYbg7t47R23efxOFpx4dS9K6CNDRKinXKYMYrnCEmUUud4/w640-h426/GDP%20level.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEggIePxpq8PxXqtyiQBNyfDOgZI6FFpbgwcW39g-S7hSZxA8Rqx0Z236wmG8lcoo_z9lVntVjGnZYmA5KZcCLijIsaMQqw9tjHnmZh1BCMB6VaM3hCkHusweIqBnS_F1-Pm0e1MVjC15LXCGBsq0SyZQ10Z8LeLjOVMzORme-MdtT9C7XFe72Li4NMUR7A/s686/Non%20Farm%20GDP.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="686" data-original-width="686" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEggIePxpq8PxXqtyiQBNyfDOgZI6FFpbgwcW39g-S7hSZxA8Rqx0Z236wmG8lcoo_z9lVntVjGnZYmA5KZcCLijIsaMQqw9tjHnmZh1BCMB6VaM3hCkHusweIqBnS_F1-Pm0e1MVjC15LXCGBsq0SyZQ10Z8LeLjOVMzORme-MdtT9C7XFe72Li4NMUR7A/w640-h640/Non%20Farm%20GDP.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div style="text-align: left;"><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px; text-align: center;"><div class="separator" style="clear: both;"><b style="font-family: georgia;">— </b><b style="font-family: georgia;">— </b><b style="font-family: georgia;">—</b></div></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><span style="font-family: georgia; text-align: center;"><div style="text-align: left;"><div style="text-align: center;"><br /></div><div style="text-align: center;"><span style="text-align: start;"></span></div><div style="margin: 0cm;"><b>National Accounts — Q4 | Expenditure: GDP (E) 0.4%q/q, 1.6%Y/Y</b></div><div style="margin: 0cm;"><b><br /></b></div><div style="margin: 0cm; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiuf9Wmx08Bo2EDRTgAR_M9-oAWbHdqAemwSbEUE3HvZovibnVdks48VcW9HHbjtjHVenRE1m9FbLkvuBLXNRt5pyj7NbmQxioG7nFickf1XwtvMiCPwSAl7JF6AvFsS5PccgQC5BCeNbaaLkHSr03kxrgHm3DwJTzfvZtoh3EfgNTwHktuEgtbVhtzRHk/s860/GDP%20E.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="504" data-original-width="860" height="376" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiuf9Wmx08Bo2EDRTgAR_M9-oAWbHdqAemwSbEUE3HvZovibnVdks48VcW9HHbjtjHVenRE1m9FbLkvuBLXNRt5pyj7NbmQxioG7nFickf1XwtvMiCPwSAl7JF6AvFsS5PccgQC5BCeNbaaLkHSr03kxrgHm3DwJTzfvZtoh3EfgNTwHktuEgtbVhtzRHk/w640-h376/GDP%20E.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhH4NIhEVrSDKV_eEGPFqWNQp3k65cOZ9imRBmbAUnHtaWPu7qADV84S44_CaFNfZR44o68PRN4_5FUdHOMz4pdiGll2uouDlKSPKVC6_SMZGb-AqFDrQyi6Ao5E6iFa6kqT07FFLuISlKFlExzF98Xh7In6xcwXmUV-DxpR5ljj_9JigVQQH03InberPI/s799/Q4%20profile.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="534" data-original-width="799" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhH4NIhEVrSDKV_eEGPFqWNQp3k65cOZ9imRBmbAUnHtaWPu7qADV84S44_CaFNfZR44o68PRN4_5FUdHOMz4pdiGll2uouDlKSPKVC6_SMZGb-AqFDrQyi6Ao5E6iFa6kqT07FFLuISlKFlExzF98Xh7In6xcwXmUV-DxpR5ljj_9JigVQQH03InberPI/w640-h428/Q4%20profile.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div></div><div style="margin: 0cm;"><span style="font-size: 15.4px;"><b>Household consumption (0.1%q/q, 0.1%Y/Y) — </b>The accumulation of pressures from the higher cost of living and RBA rate hikes effectively brought household consumption to a standstill </span><span style="font-size: 15.4px;">in the December quarter. </span><span style="font-size: 15.4px;">Consumption went backwards in categories including new vehicles (-3.6%), hotels and cafes (-2.8%) and clothing and footwear (-2.5%), reflective of a broad-based rotation away from discretionary-related consumption over the past year (-1.6%) to essential goods and services (1.2%).</span></div><div style="margin: 0cm;"><span style="font-size: 15.4px;"><br /></span></div><div style="margin: 0cm; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgSJxP8BXU7gfB4BsnUFstfPzQZKAHKP-V5nFMhMIR1dwboGHUrL0tXwhaT0rRvLfyUwsf2vvTtpqnSuXxoNwz296mFeBSCD3JMVElNDevcb5QEVxwpJkTnkw183teFyR68ITe2n7vC46d3eaK2NrDbjlZHrLAiiLTbT4SU2cdZqiYRyQ3eTo3CdFIv4Vw/s673/Household%20Consumption%20contributions.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="375" data-original-width="673" height="356" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgSJxP8BXU7gfB4BsnUFstfPzQZKAHKP-V5nFMhMIR1dwboGHUrL0tXwhaT0rRvLfyUwsf2vvTtpqnSuXxoNwz296mFeBSCD3JMVElNDevcb5QEVxwpJkTnkw183teFyR68ITe2n7vC46d3eaK2NrDbjlZHrLAiiLTbT4SU2cdZqiYRyQ3eTo3CdFIv4Vw/w640-h356/Household%20Consumption%20contributions.jpg" width="640" /></a></div><br /></div><div style="margin: 0cm;"><span style="font-size: 15.4px;">The news around real incomes saw some welcome developments. Real disposable income lifted by 1.5% in the quarter - its best result since Q3 2021 - turning positive in annual terms (0.3%) for the first time since mid-2022. This came as nominal income increased by 2.3%q/q - underpinned by rising wages growth in a still-robust labour market (1.4%), social assistance payments (5.9%) and interest income (6.7%) - and inflation (on the household consumption deflator) eased to 0.8%q/q. </span></div><div style="margin: 0cm;"><span style="font-size: 15.4px;"><br /></span></div><div style="margin: 0cm; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhAcbxekUqenK9w_dN_mVipEGbh3XVaL1Ac9wqzEMGRolnC-wIg0fFV-t_Ciqgdo1P5SUmxW7a-kd3ucqAeahCEonWTgQhYRAh-jZlaJ4kpIH-5hpsieAh7EIY1rMKg0HGwXgClX5fGd12cyMC21h_Q_1W78AepihHvAVRXS06iPi00qWoj8wMA22A2BHE/s677/Real%20incomes.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="421" data-original-width="677" height="398" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhAcbxekUqenK9w_dN_mVipEGbh3XVaL1Ac9wqzEMGRolnC-wIg0fFV-t_Ciqgdo1P5SUmxW7a-kd3ucqAeahCEonWTgQhYRAh-jZlaJ4kpIH-5hpsieAh7EIY1rMKg0HGwXgClX5fGd12cyMC21h_Q_1W78AepihHvAVRXS06iPi00qWoj8wMA22A2BHE/w640-h398/Real%20incomes.jpg" width="640" /></a></div><br /></div><div style="margin: 0cm;"><span style="font-size: 15.4px;">As a result, the improvements to real income dynamics supported a rise in the household saving ratio to 3.2%, lifting from a 15-year low in Q3 (1.9%). Although this remains well below pre-pandemic levels of around 5-6%, households still, on aggregate, retain a substantial stock of excess savings accumulated during the Covid period. </span></div><div style="margin: 0cm;"><span style="font-size: 15.4px;"><br /></span></div><div style="margin: 0cm; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjDAwMFCMlgPBV6YQ4eq5leHufkNJ703R9VuykccoO7FhNMEJJ3g3iZZ4-RO8QHb5M35uBWpWkIqWRXentjmos30dgerIvPo9wB8fQ4DJiBt8N-duXdDCa4h-iIPViKYT7o8SNkYZnKHWWTo_krhGegV4CNGIgJV8E650U02LwpAkQrfKqtPvCf5q2UeIg/s788/Household%20Consumption%20Income%20and%20Saving.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="536" data-original-width="788" height="436" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjDAwMFCMlgPBV6YQ4eq5leHufkNJ703R9VuykccoO7FhNMEJJ3g3iZZ4-RO8QHb5M35uBWpWkIqWRXentjmos30dgerIvPo9wB8fQ4DJiBt8N-duXdDCa4h-iIPViKYT7o8SNkYZnKHWWTo_krhGegV4CNGIgJV8E650U02LwpAkQrfKqtPvCf5q2UeIg/w640-h436/Household%20Consumption%20Income%20and%20Saving.jpg" width="640" /></a></div><br /></div><div style="margin: 0cm;"><div><b style="font-size: 15.4px;">Dwelling investment (-3.8%q/q, -3.1%Y/Y) — </b><span style="font-size: 15.4px;">Residential construction activity slumped into year-end contracting by 3.8% in Q4 to be down 3.1% through the year. The effects of higher interest rates, weak sentiment and supply and labour constraints - legacies of the pandemic - are all weighing on the sector. Declines in Q4 were sizeable in both new home building (-3.5%) and alterations (4.2%), the latter contracting for the 9th time in the past 10 quarters, unwinding from its stimulus-driven peaks seen during the pandemic. </span></div><div><span style="font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi9enItv5bfx7fv7d1b5qp3zUxs3xXUvDjkqehrK2K4jZoHcUtxARbaKN_hJUEELg33cFRpxBo7MqtGn1pByjbeIr7y7COEdfk_PSQq2Y5iXuvevJxxwUSJ8dQhyphenhyphenC-Ur2e2ASmH7RWI-GzeRqKYwUGo-nmCC9apETMAnoBIrcrZWlGW7V3tpnq_Z7UAu_0/s799/Dwelling%20Investment.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="535" data-original-width="799" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi9enItv5bfx7fv7d1b5qp3zUxs3xXUvDjkqehrK2K4jZoHcUtxARbaKN_hJUEELg33cFRpxBo7MqtGn1pByjbeIr7y7COEdfk_PSQq2Y5iXuvevJxxwUSJ8dQhyphenhyphenC-Ur2e2ASmH7RWI-GzeRqKYwUGo-nmCC9apETMAnoBIrcrZWlGW7V3tpnq_Z7UAu_0/w640-h428/Dwelling%20Investment.jpg" width="640" /></a></div><br /></div><div><b style="font-size: 15.4px;">Business investment (0.7%q/q, 8.3%Y/Y) </b><span style="font-size: 15.4px;">— A frontloading of business investment into the first half of the year (6.7%) ahead of the withdrawal of tax incentives led to an inevitable easing of momentum in the second half (1.5%). Overall, business investment lifted sharply through the past year (8.3%), contributing</span><span style="font-size: 15.4px;"> 1ppt</span><span style="font-size: 15.4px;"> to the </span><span style="font-size: 15.4px;">1.5% increase in real GDP over the period. In the most recent quarter, business </span><span style="font-size: 15.4px;">investment lifted 0.7%. The major driver was non-dwelling construction (2.5%q/q) - up a robust 9.3%Y/Y - as machinery and equipment investment saw a pullback (-1.3%q/q). </span><span style="font-size: 15.4px;"> </span><span style="font-size: 15.4px;"> </span></div><div><span style="font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh3ldy_9kj9bcsMaw78R5nggcb_PEtIlQoDtz7wVd2wyinT6GnZR10RHgD3bEHMzTcEo6wLsmQ_q_m2oV1vFnK_jjnxKrtksyxWcYz2sDqU5bvihQfRkgUqNiEyI33SPb7ykZF6bSFLc5qM3PPkfPeUreint5-X9Pd56HVey5i3WsqctGrkFhfxyqiWddw/s801/Business%20Investment.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="536" data-original-width="801" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh3ldy_9kj9bcsMaw78R5nggcb_PEtIlQoDtz7wVd2wyinT6GnZR10RHgD3bEHMzTcEo6wLsmQ_q_m2oV1vFnK_jjnxKrtksyxWcYz2sDqU5bvihQfRkgUqNiEyI33SPb7ykZF6bSFLc5qM3PPkfPeUreint5-X9Pd56HVey5i3WsqctGrkFhfxyqiWddw/w640-h428/Business%20Investment.jpg" width="640" /></a></div><br /></div><div><span><span style="font-size: 15.4px;"><b>Public demand (0.4%q/q, 4.7%Y/Y)</b><b> </b>— Despite moderating in Q4 (0.4%), public demand was still up by a solid 4.7% through the year. This has delivered a key offset to the economy alongside the slowdown in private demand. In Q4, public expenditure increased by 0.6%, led by assistance payments to households and the staging of the Aboriginal and Torres Strait Islander Voice Referendum held in October. </span></span><span style="font-size: 15.4px;">Underlying investment was surprisingly soft in the quarter (-0.2%) but has risen significantly over the past year (13.7%) as progress on the </span><span style="font-size: 15.4px;">substantial pipeline of public infrastructure projects has ramped up. </span><span style="font-size: 15.4px;"> </span></div><div><span style="font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj7Vc5LnPZDHCt10z-eZ0FSlqad1mv5pEOkfjXPAyIpMZyz_kvv7VXEbovqfilSMDQY_wNiCUF-AiZzpnKbxoSA_coImNeTqxZvCUGVREPhyzvsV3gcEb9eYzjdMpHODNuI0VWYzWcSSqj5Qw6cR5AanjzVMH1EsHKOWInT6aHTOuomDsEXRfhhhPNg2Wg/s800/Public%20Demand.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="536" data-original-width="800" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj7Vc5LnPZDHCt10z-eZ0FSlqad1mv5pEOkfjXPAyIpMZyz_kvv7VXEbovqfilSMDQY_wNiCUF-AiZzpnKbxoSA_coImNeTqxZvCUGVREPhyzvsV3gcEb9eYzjdMpHODNuI0VWYzWcSSqj5Qw6cR5AanjzVMH1EsHKOWInT6aHTOuomDsEXRfhhhPNg2Wg/w640-h428/Public%20Demand.jpg" width="640" /></a></div><br /></div><div><b style="font-size: 15.4px;">Inventories (-0.3ppt in Q4, -0.9ppt yr)</b><b style="font-size: 15.4px;"> </b><span style="font-size: 15.4px;">— Subtracted from growth in Q4 (-0.3ppt) and over the past year (-0.9ppt). Inventories declined in the December quarter as e</span><span style="font-size: 15.4px;">arlier disruptions that affected production and transportation in the resources sector cleared, amid strong demand for Australia's bulk commodities offshore. This was moderated by a sizeable increase in public authorities inventories.</span></div><div><span style="font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgf2GVVtyptwMWn9CIc1yYO0DXNnJKL4VjO95dadD8jhilvlEz8J4lD9y2K_lX0_JpFXSTL2lxXTau1GClzAgvVdRd10L3Ast8P6WtQBu_JPAZXbWm2MhiHqfSyKm6HcogjdNo7xkFhuqoUWGYfEhjY3dtN5ohIufByMbRTKJ3K95T-raFwz64L8FL0kkg/s800/Inventories.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="534" data-original-width="800" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgf2GVVtyptwMWn9CIc1yYO0DXNnJKL4VjO95dadD8jhilvlEz8J4lD9y2K_lX0_JpFXSTL2lxXTau1GClzAgvVdRd10L3Ast8P6WtQBu_JPAZXbWm2MhiHqfSyKm6HcogjdNo7xkFhuqoUWGYfEhjY3dtN5ohIufByMbRTKJ3K95T-raFwz64L8FL0kkg/w640-h428/Inventories.jpg" width="640" /></a></div><br /></div><div><span><b style="font-size: 15.4px;">Net exports (0.6ppt in Q4, 0.3ppt yr) </b><span style="font-size: 15.4px;">— Contributed 0.6ppt to GDP in Q4 but added only modestly to growth over the past year (0.3ppt). Export volumes </span><span style="font-size: 15.4px;">declined by 0.3% in the quarter, rounding out a soft </span><span style="font-size: 15.4px;">second half in 2023 (-0.5%); goods trade (-2.2%) was weighed by disruptions to resources shipments </span></span><span style="font-size: 15.4px;">and the recovery in the services sector </span><span style="font-size: 15.4px;">(mainly tourism and education) </span><span style="font-size: 15.4px;">moderated (8.3%). </span><span style="font-size: 15.4px;">Overall, exports are still 3.2% short of recovering to pre-Covid levels. By contrast, imports remain substantially above pre-Covid levels (+6.2%); however, a sharp decline of 3.4% in Q4 reflects the weakness seen in domestic demand into year-end. Notable contractions came in</span><span style="font-size: 15.4px;"> </span><span style="font-size: 15.4px;">consumption (-5.4%) and capital goods (-3.4%) as well as in travel services (-9%). </span><span style="font-size: 15.4px;"> </span><span style="font-size: 15.4px;"> </span></div><div><span style="font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEicVj34IJdpLKRosw97_BvtCr550tRYMj2OBPcEjAWj196AdnSSYMayFTD3GYE40B-A0afXrcjY2fnSRUX2vT6DPLTOH5HiLdAJtyG9CVTA7XDM9MsBMhFiwXVtXfR6-Qs2UQUMNIF6hFUtfA92t48xdDBO99jPPtShLAd3YDf_gjbvhliEdqJ5xugGy2A/s802/Net%20Exports.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="534" data-original-width="802" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEicVj34IJdpLKRosw97_BvtCr550tRYMj2OBPcEjAWj196AdnSSYMayFTD3GYE40B-A0afXrcjY2fnSRUX2vT6DPLTOH5HiLdAJtyG9CVTA7XDM9MsBMhFiwXVtXfR6-Qs2UQUMNIF6hFUtfA92t48xdDBO99jPPtShLAd3YDf_gjbvhliEdqJ5xugGy2A/w640-h426/Net%20Exports.jpg" width="640" /></a></div><br /></div><div><div style="font-size: 15.4px; text-align: center;"><b>— </b><b>— </b><b>—</b></div><div style="font-size: 15.4px; text-align: center;"><span style="text-align: start;"><br /></span><span style="text-align: start;"></span></div><div style="font-size: 15.4px; margin: 0cm;"><b>National Accounts — Q4 | Incomes: GDP (I) 0.2%q/q, 1.4%Y/Y</b> </div><div style="font-size: 15.4px; margin: 0cm;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEho9ZtaILzXRfa4R7SwnlcRuC_pBiqDqqE_1mLEMD9JU8SarYn9PSLBgLKec21TKuMcuJrYYivA1C1xX2BgwTPN_L6kMK_Qm8HmImWrdAjiKzx26RFMqGP1NMRaKJgfsUgplftr9eaf8Mka6toQv_wPOcK4-InRE8wZ6M2Txpqmd1N_VFAqrub_kN7bCqU/s730/GDP%20I.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="325" data-original-width="730" height="284" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEho9ZtaILzXRfa4R7SwnlcRuC_pBiqDqqE_1mLEMD9JU8SarYn9PSLBgLKec21TKuMcuJrYYivA1C1xX2BgwTPN_L6kMK_Qm8HmImWrdAjiKzx26RFMqGP1NMRaKJgfsUgplftr9eaf8Mka6toQv_wPOcK4-InRE8wZ6M2Txpqmd1N_VFAqrub_kN7bCqU/w640-h284/GDP%20I.jpg" width="640" /></a></div><div style="font-size: 15.4px; margin: 0cm; text-align: center;"><br /></div><div style="font-size: 15.4px; margin: 0cm;"><span style="font-size: 15.4px;">A 2.3% rise in the terms of trade - coming after declines of 7% in Q2 and 2.1% in Q3 - supported Australian national income in the final quarter of the year. </span><span style="font-size: 15.4px;">This was driven by a 3.1% acceleration in export prices as commodity prices increased, outpacing </span><span style="font-size: 15.4px;">a 0.8% rise in import prices alongside a weaker Australian dollar. Notwithstanding this, the terms of trade fell by 3.9% through the year to be down almost 12% from its record high in mid-2022. </span></div><div style="font-size: 15.4px; margin: 0cm;"><span style="font-size: 15.4px;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiNu5q14SJIddKjrFoPMAxKNEQWgFjOvk3lMtnPtRblYh6M2-yMnOsSYHNvVHu5us-oG28Fr2QCVhxZak4ghwXyKB6mGZuDO479cHEL00Kdp9az_h6bYFQH5-Jf76Dw_XDuZ33tqYjnE206IigJgK6YJAh8AVFRa5i-ow33JQ5x0BOUQMukIuHkFqR2Idk/s801/ToT.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="535" data-original-width="801" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiNu5q14SJIddKjrFoPMAxKNEQWgFjOvk3lMtnPtRblYh6M2-yMnOsSYHNvVHu5us-oG28Fr2QCVhxZak4ghwXyKB6mGZuDO479cHEL00Kdp9az_h6bYFQH5-Jf76Dw_XDuZ33tqYjnE206IigJgK6YJAh8AVFRa5i-ow33JQ5x0BOUQMukIuHkFqR2Idk/w640-h428/ToT.jpg" width="640" /></a></div><div style="font-size: 15.4px; margin: 0cm; text-align: center;"><br /></div><div style="font-size: 15.4px; margin: 0cm;"><span style="font-size: 15.4px;">The increase in the terms of trade </span><span style="font-size: 15.4px;">underpinned rising nominal GDP, up 1.4%q/q to 4.4%Y/Y. A year earlier, nominal GDP had expanded at 12.1%Y/Y pace, with declines in commodity prices driving the slowdown. </span></div><div style="font-size: 15.4px; margin: 0cm;"><span style="font-size: 15.4px;"><br /></span></div><div style="font-size: 15.4px; margin: 0cm; text-align: center;"><span style="font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj0Sr-un3JG0ejy0tDsruXxXR9r8gJVFclipg0bhf_dazKE9-o30uDhxGzKXGhe2gMieeOtcsfaVCy4no_2ui7S7epwVPP_EIRu6sxNKrpTrnlHd0-9A059hYs4B8Ztfjk5JKob1ngu0gBJ6Q1N_-RY-dHCLEW1LlThup69iU8Qhyz4rMT1xML3L8oE8Ac/s798/Nominal%20GDP.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="535" data-original-width="798" height="430" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj0Sr-un3JG0ejy0tDsruXxXR9r8gJVFclipg0bhf_dazKE9-o30uDhxGzKXGhe2gMieeOtcsfaVCy4no_2ui7S7epwVPP_EIRu6sxNKrpTrnlHd0-9A059hYs4B8Ztfjk5JKob1ngu0gBJ6Q1N_-RY-dHCLEW1LlThup69iU8Qhyz4rMT1xML3L8oE8Ac/w640-h430/Nominal%20GDP.jpg" width="640" /></a></div><br /></span></div><div style="font-size: 15.4px; margin: 0cm;"><span style="font-size: 15.4px;">Higher commodity prices flowed through to mining company profits, reflected in non-financial corporations operating surplus rising by 2.9%, partially rebounding from material declines in Q2 (-7.5%) and Q3 (-3.9%). Financial corporations operating surplus posted a 1.6%q/q rise to be up 6.3% through the year, with rising interest rates boosting net interest margins for banks. By contrast, margin pressures are weighing on small company and farming profits, with gross mixed income falling 4.1% q/q and 8.6%Y/Y. </span></div><div style="font-size: 15.4px; margin: 0cm;"><span style="font-size: 15.4px;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjaSBn_zCdcay56IuBKCsR7Nm3MGNjuJiP8jHwY0uGR3K-doIhoZGhFvXedsXNNcQ2nzkzadFRstcypspVpldIS3N4QMkKzqgdswa1tXhfMjasngTGyKQDeX8pAMKsoDyNTe0nQ8QoBf0jkBYCj80bWQGJLIRUEngTA-aKHMkIqSNmQ6aYQGJZnat6ggrY/s801/Company%20Profits.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="536" data-original-width="801" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjaSBn_zCdcay56IuBKCsR7Nm3MGNjuJiP8jHwY0uGR3K-doIhoZGhFvXedsXNNcQ2nzkzadFRstcypspVpldIS3N4QMkKzqgdswa1tXhfMjasngTGyKQDeX8pAMKsoDyNTe0nQ8QoBf0jkBYCj80bWQGJLIRUEngTA-aKHMkIqSNmQ6aYQGJZnat6ggrY/w640-h428/Company%20Profits.jpg" width="640" /></a></div><div style="font-size: 15.4px; margin: 0cm; text-align: center;"><br /></div><div style="font-size: 15.4px; margin: 0cm;"><span style="font-size: 15.4px;">Growth in wage incomes moderated to 1.4% in Q4 (8.4%Y/Y) after receiving a large boost in the previous quarter (2.8%) from increases to the minmium wage and award rates. In Q4, wages were supported by mandated increases that flowed through to workers in the aged care sector and by hiring associated with the Voice Referendum. </span></div><div style="font-size: 15.4px; margin: 0cm;"><span style="font-size: 15.4px;"><br /></span></div><div style="font-size: 15.4px; margin: 0cm; text-align: center;"><span style="font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjgWgCG_zTA-oLtn5e_KfVy1lD4eShhIc0UkoGmmKGM2PxlO9rZXdatWr-Od4TprCgmQy6DwZcp4YvZ4mQcM-6TNcoo04WJJF67pHujZ82U-YbRXlNkAdiuBIeG6FIIq8_z_0B3Ft116g3jfF1MAQrBRlDXAuZKBnKEKtXHNj9g79hUpEJRwF51xCI0dk4/s801/CoE.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="537" data-original-width="801" height="430" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjgWgCG_zTA-oLtn5e_KfVy1lD4eShhIc0UkoGmmKGM2PxlO9rZXdatWr-Od4TprCgmQy6DwZcp4YvZ4mQcM-6TNcoo04WJJF67pHujZ82U-YbRXlNkAdiuBIeG6FIIq8_z_0B3Ft116g3jfF1MAQrBRlDXAuZKBnKEKtXHNj9g79hUpEJRwF51xCI0dk4/w640-h430/CoE.jpg" width="640" /></a></div><br /></span></div><div style="font-size: 15.4px; margin: 0cm;"><div style="font-size: 15.4px; margin: 0cm;"><div style="font-size: 15.4px; margin: 0cm;"><span style="font-size: 15.4px;">Due to hours worked in the economy falling over the past couple of quarters (-0.7% in Q3 and -0.3% in Q4), </span><span style="font-size: 15.4px;">growth in hourly earnings (non-farm wages) has picked up to be running at a 6%Y/Y pace. But this has not translated to an associated rise in unit labour costs; this is because measured productivity outcomes increased in Q3 (1.5%) and Q4 (0.5%), the result of economic growth rising as hours worked declined. </span></div><div style="font-size: 15.4px; margin: 0cm;"><span style="font-size: 15.4px;"><br /></span></div><div style="font-size: 15.4px; margin: 0cm; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhj3HtQ6Q77Tmfx0lVUFOatUXmW8XvCbAClvDlhzKTgZSPSnKiqfFE5hZTT7DyqXyqrXm86XYTDORWJ6rJfSmORE5J08X1GCnqKRvsMiwyDWCR52jkPf2KDjQH1kItrBH915jBXYUvVhV6gOkcIU0mO_loclTM4N0FlTcJL1mxCFO7wFrvs4pRSeO1djGw/s801/Labour%20Costs.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="535" data-original-width="801" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhj3HtQ6Q77Tmfx0lVUFOatUXmW8XvCbAClvDlhzKTgZSPSnKiqfFE5hZTT7DyqXyqrXm86XYTDORWJ6rJfSmORE5J08X1GCnqKRvsMiwyDWCR52jkPf2KDjQH1kItrBH915jBXYUvVhV6gOkcIU0mO_loclTM4N0FlTcJL1mxCFO7wFrvs4pRSeO1djGw/w640-h428/Labour%20Costs.jpg" width="640" /></a></div><br /></div></div></div><div style="font-size: 15.4px; margin: 0cm;"><span style="font-size: 15.4px; text-align: center;"><span style="text-align: left;"><div style="margin: 0cm; text-align: center;"><b>— </b><b>— </b><b>—</b></div><div style="margin: 0cm; text-align: center;"><b><br /></b></div></span></span><div style="font-size: 15.4px; margin: 0cm;"><span style="text-align: center;"><span style="text-align: left;"><div style="margin: 0cm;"><b>National Accounts — Q4 | Production: GDP (P) 0.1%q/q, 1.6%Y/Y</b></div><div style="margin: 0cm; text-align: center;"><div class="separator" style="clear: both;"><br /></div></div><div style="margin: 0cm;"><div style="margin: 0cm;">The GDP production estimate was 0.1% in the December quarter, easing from 1.9% to 1.6% at an annual pace. Gross Value Added to the economy rose at the same pace for goods-related (0.3%) as services-based industries (0.3%) in the quarter. Public administration (1%) was a notable contributor to growth, driven by activity associated with the Voice Referendum. </div><div style="margin: 0cm;"><br /></div><div style="margin: 0cm; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiU_My7SgPvDfPyHm-I8pNxlYOSNSHTepwBg1awtvlmzSveeX7zUBCEG1gwH6GGykb6AJyX7Ab8gc4esLzTu8zdh1-t3kcgPV3uk_dhN5hPJX3-ezT2FqaDQdarPJryQ0FJtDhOoYmhMQsLSFSUZQccZoN60mFyxjFp801Q84nFFrVyaNNXoc9x0-CQ2eE/s859/GDP%20P.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="601" data-original-width="859" height="448" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiU_My7SgPvDfPyHm-I8pNxlYOSNSHTepwBg1awtvlmzSveeX7zUBCEG1gwH6GGykb6AJyX7Ab8gc4esLzTu8zdh1-t3kcgPV3uk_dhN5hPJX3-ezT2FqaDQdarPJryQ0FJtDhOoYmhMQsLSFSUZQccZoN60mFyxjFp801Q84nFFrVyaNNXoc9x0-CQ2eE/w640-h448/GDP%20P.jpg" width="640" /></a></div><br /></div><div style="margin: 0cm;">In the goods-related sector, goods production (0.5%) more than offset weakness in goods distribution (-0.2%). Goods production saw a rise on the back of increased output in the mining industry (1%) and in utilities (0.9%) as warm weather increased demand for electricity. The fall in goods<span style="font-size: 15.4px;"> distribution reflected declines from wholesalers (-0.6%) - associated with a reduction in grain exports - and transport (-0.3%) as demand for postal services eased and imports weakened. </span></div><div style="margin: 0cm;"><br /></div><div style="margin: 0cm; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj_cUX5_MNZmznJsOtSjGTe8_rux7vMOS52jhzoK2hUo071ru7bJfdfEVWImbwCpPN2OBi6m8OvyHI4DZROwPO2F7j2pcJBMdOXRDNSpELuGQpyPQ6KPhuvn-5AIrcd-uA96yoqccL-qPWOt35aFoo6vW0C2Z9d2vB__POzjvbAK-l0ZukxibyaQm9GG4A/s686/GVA.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="610" data-original-width="686" height="570" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj_cUX5_MNZmznJsOtSjGTe8_rux7vMOS52jhzoK2hUo071ru7bJfdfEVWImbwCpPN2OBi6m8OvyHI4DZROwPO2F7j2pcJBMdOXRDNSpELuGQpyPQ6KPhuvn-5AIrcd-uA96yoqccL-qPWOt35aFoo6vW0C2Z9d2vB__POzjvbAK-l0ZukxibyaQm9GG4A/w640-h570/GVA.jpg" width="640" /></a></div><br /></div><div style="margin: 0cm;"><span style="font-size: 15.4px;">Turning to the services sectors, household services stalled (0%) as consumption rotated away from discretionary-related areas to essential services. Accordingly, weakening demand led to declines in accommodation and food services (-3.2%) and in arts and recreation (-0.8%). This contrasts with gains across health (0.5%) and education services (0.4%). Business services advanced 0.5% overall in Q4. Professional services (1.2%) led the way on increased demand for engineering services.</span></div></div></span></span></div></div></div></div></div></span></div></div>James Fosterhttp://www.blogger.com/profile/01305732698755570848noreply@blogger.comtag:blogger.com,1999:blog-1597478006767022660.post-20945878513061984682024-03-05T19:21:00.000-08:002024-03-05T19:21:17.147-08:00Australian GDP 0.2% in Q4<div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">The December quarter National Accounts confirmed that momentum in the Australian economy slowed materially in 2023. Real GDP printed at 0.2% in Q4 (vs 0.2% expected, 0.3% prior) as year-ended growth eased from 2.1% to 1.5%. </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">With the recovery from the pandemic having run its course, household consumption in 2023 became increasingly exposed to the headwinds of higher interest rates and cost-of-living pressures. </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">As this played out, GDP growth slowed from 1% </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">in the first half of the year to 0.5% through the back half, its softest half-year outturn outside of the Covid period since 2008 following the financial crisis. Alongside this, inflation slowed notably into year-end and labour market tightness also eased. </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">The RBA's assessment of the economy operating in excess demand was already contentious and looks even harder to sustain now. </span></div><div style="text-align: left;"><br /></div><div style="text-align: center;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgvx-Jxmb3j_17SftXesiSoe3Tcm_egeUmOZayuHzfh81sJ4McItWtvGPhy5_UgeXexA7RgEyUMhBwhbJtbBx0APQEK5iU2C2BId3ai4oZmE50YJb-kJQGRa5u8cDzpjkf4ZJs3C7xlQ28WJC9jJ7y90JqunnnEw_HwSmpTUwzpy9NyfylxM5s61rszjxI/s802/Real%20GDP.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="536" data-original-width="802" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgvx-Jxmb3j_17SftXesiSoe3Tcm_egeUmOZayuHzfh81sJ4McItWtvGPhy5_UgeXexA7RgEyUMhBwhbJtbBx0APQEK5iU2C2BId3ai4oZmE50YJb-kJQGRa5u8cDzpjkf4ZJs3C7xlQ28WJC9jJ7y90JqunnnEw_HwSmpTUwzpy9NyfylxM5s61rszjxI/w640-h428/Real%20GDP.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;"><span style="font-size: 15.4px;">Over the past year, public demand has been the major driver of growth - as governments have boosted cost-of-living support and progress on infrastructure works have ramped up - </span><span style="font-size: 15.4px;">helping to offset slowing private demand. This was also the case in Q4: domestic demand (0.1%) was held up by </span><span style="font-size: 15.4px;">a 0.4% lift in public demand as </span><span style="font-size: 15.4px;">private demand stalled (0%). Net exports added to growth (0.6ppt) while inventories weighed (-0.3ppt). </span></div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;"><span style="font-size: 15.4px;">Private demand remained supported by business investment (0.7%q/q), </span><span style="font-size: 15.4px;">which has risen strongly over the year (8.3%) on a delayed rebound from the pandemic, but has been weighed by weakness in </span><span style="font-size: 15.4px;">household consumption (0.1%q/q, 0.1%Y/Y) and dwelling investment (-3.8%q/q, 3.1%Y/Y).</span></div></span><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: left;"><br /></div></span><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiCMyPkU2YH0NeduQaUyCrqFIruuWE82ssi9MK6mZRd4yZtf4RBp31qK-X5-al1T9RMfysQOBEHksEnE-088FCsNUrthaS_JJSmmJgDfVfzmtzh3mNGaN8gDVpYZglJNSacb_PJCRGq-UNc8F29RKZmVsk36TarMtmS1FsrxRJbfUEk_mxIZ5ZuimYIC24/s801/Q4%20Contributions.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="534" data-original-width="801" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiCMyPkU2YH0NeduQaUyCrqFIruuWE82ssi9MK6mZRd4yZtf4RBp31qK-X5-al1T9RMfysQOBEHksEnE-088FCsNUrthaS_JJSmmJgDfVfzmtzh3mNGaN8gDVpYZglJNSacb_PJCRGq-UNc8F29RKZmVsk36TarMtmS1FsrxRJbfUEk_mxIZ5ZuimYIC24/w640-h426/Q4%20Contributions.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;"><span style="font-size: 15.4px;">Household consumption has effectively stalled. Over the past year, pressures on finances through higher mortgage payments, increased income tax alongside rising wages and the rise in the cost of living prompted households to wind back discretionary consumption (-1.6%) and prioritise essentials (1.2%). </span></div><div class="separator" style="clear: both; text-align: left;"><span style="font-size: 15.4px;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiV-Z_MG6AJ-cGdKZWoUJofBY3ceazLbQkwOZogJUHzwLFwJaMTn3BwBhRBmzT-VzLhAt1wXCn3OVjSn4C25Z9Ml4mW8sxPjhZiI6Do7WOQm9a8fw1AvnZhI7_Gc9jnNH71aepYFvOjJ0yKKlHcJ-89tC0n3gvNeBKR0r6zeqnLv6PiKu_F5G2_x2MUql8/s673/Household%20Consumption%20contributions.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="375" data-original-width="673" height="356" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiV-Z_MG6AJ-cGdKZWoUJofBY3ceazLbQkwOZogJUHzwLFwJaMTn3BwBhRBmzT-VzLhAt1wXCn3OVjSn4C25Z9Ml4mW8sxPjhZiI6Do7WOQm9a8fw1AvnZhI7_Gc9jnNH71aepYFvOjJ0yKKlHcJ-89tC0n3gvNeBKR0r6zeqnLv6PiKu_F5G2_x2MUql8/w640-h356/Household%20Consumption%20contributions.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;"><span style="font-size: 15.4px;">There were tentative signs, however, that suggest the outlook for consumption could improve. With inflation slowing sharply in Q4 and following an earlier acceleration in wages growth, real disposable income growth turned positive (albeit very slightly) in annual terms (0.3%) for the first time since mid-2022. Over this period of negative real income growth, savings accumulated during the pandemic have been drawn down to support consumption and this could continue into 2024. </span><span style="font-size: 15.4px;">Also helping is that the government's Stage 3 tax cuts will come into effect from the middle of the year, while weakness in the data has firmed expectations for 1-2 RBA rate cuts this year. Furthermore, the </span><span style="font-size: 15.4px;">improved dynamics around real incomes halted the slide in the household saving ratio; however, at 3.2%, </span><span style="font-size: 15.4px;">it remains well short of returning to pre-Covid levels (5-6%). A faster or more substantial weakening in the labour market is the obvious risk to this optimism. </span></div><div class="separator" style="clear: both; text-align: left;"><span style="font-size: 15.4px;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><span style="font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiF7UD88kNw_Eqm12qpCsRS7FXud65pv3IkjNgmMS-DtoSf4DgPgUXUfKaII84oiA5R6hmcUNE2CLWuwLoqviSt20LEXoaLlv2Fi46mk0uVVgfanQ9NgtRN-v9Fmvdg-wBiF3phBs-3jvi5ogR1VIngvERlSXiWoDDbZDIReZi6e9NqZSEs45bz0ILD6_s/s788/Household%20Consumption%20Income%20and%20Saving.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="536" data-original-width="788" height="436" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiF7UD88kNw_Eqm12qpCsRS7FXud65pv3IkjNgmMS-DtoSf4DgPgUXUfKaII84oiA5R6hmcUNE2CLWuwLoqviSt20LEXoaLlv2Fi46mk0uVVgfanQ9NgtRN-v9Fmvdg-wBiF3phBs-3jvi5ogR1VIngvERlSXiWoDDbZDIReZi6e9NqZSEs45bz0ILD6_s/w640-h436/Household%20Consumption%20Income%20and%20Saving.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;"><span style="font-size: 15.4px;">More to come. </span></div><div class="separator" style="clear: both; text-align: left;"><span style="font-size: 15.4px;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiiwkhRVPUOaqnz1RtoUoDS9MER3oB9zSI9BeqxNntVTX2Qyod1uq5bOR-_G2_C4putxLhyphenhyphenxWTYBR4T5ysf2KeABemYIL3JuYCqcm-a6M6a9FHalnoTLi7sFN7c9G-xY3IxP7eIbbgJBbfuq-17TDXoXQYnAqbE5GMQfPAEtuybSyvgJWQXFc-77TwD_mo/s732/GDP%20A.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="246" data-original-width="732" height="216" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiiwkhRVPUOaqnz1RtoUoDS9MER3oB9zSI9BeqxNntVTX2Qyod1uq5bOR-_G2_C4putxLhyphenhyphenxWTYBR4T5ysf2KeABemYIL3JuYCqcm-a6M6a9FHalnoTLi7sFN7c9G-xY3IxP7eIbbgJBbfuq-17TDXoXQYnAqbE5GMQfPAEtuybSyvgJWQXFc-77TwD_mo/w640-h216/GDP%20A.jpg" width="640" /></a></div></div></span></div></div></div></span></div>James Fosterhttp://www.blogger.com/profile/01305732698755570848noreply@blogger.comtag:blogger.com,1999:blog-1597478006767022660.post-16649735212253063702024-03-04T19:19:00.000-08:002024-03-04T19:19:00.289-08:00Australia Current Account $11.8bn in Q4; net exports +0.6ppt<div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Australia's current account surplus rebounded to elevated levels in the December quarter ($11.8bn) as export income advanced and import spending declined. The ABS reported that net exports will contribute 0.6ppt to GDP growth in Q4 - an above consensus outcome - although this belies weakness in underlying trade volumes. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg3xic8eXflI7bcvqpK4HkwOy2Vbq98kejdNbeJENFfWSKO531Cu8PB56e_s-MU5VDh4gyK6m_wTjJFjb8K0D0-oUljCRpUl2TyKkXxjxu8Ax4OHGPUCgYvgtm53M6TA3e7UUz1YLqyr0mWcHJbf9sI9xnIxqNUm5uuXk8RKh78wE0Wpkcv9aWU06uwZaE/s682/Summary.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="423" data-original-width="682" height="396" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg3xic8eXflI7bcvqpK4HkwOy2Vbq98kejdNbeJENFfWSKO531Cu8PB56e_s-MU5VDh4gyK6m_wTjJFjb8K0D0-oUljCRpUl2TyKkXxjxu8Ax4OHGPUCgYvgtm53M6TA3e7UUz1YLqyr0mWcHJbf9sI9xnIxqNUm5uuXk8RKh78wE0Wpkcv9aWU06uwZaE/w640-h396/Summary.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjC0R-Pl-QOk6Twfq50nSwnY7C0aqs1ydWKx_dIl8iufow7NnbNGGug_aarkLeSM5alhNMqyPYGt0cKIz8l36ILj1pqI0bV8yG0KoKfJ_gaHQ4hGAitYmWyJvMyI2syZy633aWxy7WrWQr_9R5VcukFwGiIlHn62mKvLowHx9zwtFhJPo7neTned3zf36A/s888/Q4%20Current%20Acc.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="573" data-original-width="888" height="412" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjC0R-Pl-QOk6Twfq50nSwnY7C0aqs1ydWKx_dIl8iufow7NnbNGGug_aarkLeSM5alhNMqyPYGt0cKIz8l36ILj1pqI0bV8yG0KoKfJ_gaHQ4hGAitYmWyJvMyI2syZy633aWxy7WrWQr_9R5VcukFwGiIlHn62mKvLowHx9zwtFhJPo7neTned3zf36A/w640-h412/Q4%20Current%20Acc.jpg" width="640" /></a></div><br /></div><div style="text-align: left;"><div class="separator" style="clear: both; font-family: georgia; font-size: 15.4px;"><span style="font-size: 15.4px;">After narrowing materially through the middle quarters of 2023, the current account surplus rebounded to $11.8bn in the December quarter (around 1.8% of GDP), its highest since Q2 2022. The previous quarter's outcome for the current account was revised to a surplus of $1.3bn from a broadly balanced position of -$0.2bn reported initially. This represents a $10.5bn increase in the current account surplus since Q3, with the key movements being a wider trade surplus ($8.2bn) and a narrower income deficit ($1.9bn). </span></div><div class="separator" style="clear: both; font-family: georgia; font-size: 15.4px; text-align: center;"><span style="font-size: 15.4px;"> <div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgVa1OysuXXnSQ3KkZgk66j13rbv1AhAesC5Zan201RLk8jfcesh-ifcvB9E-ECOT6qd1_iINIezR6Z8oMCWti4OyShgEoC5mpN9FcpjW9fwrgJoxsiv-2qJ3x2efuI_QUTSpPXp0Y0oeJmCMfJsU4EJZyIOs23z7imhls0bPzYnfXjzczU4IWIyjOW0b4/s798/Q4%20nominal.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="534" data-original-width="798" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgVa1OysuXXnSQ3KkZgk66j13rbv1AhAesC5Zan201RLk8jfcesh-ifcvB9E-ECOT6qd1_iINIezR6Z8oMCWti4OyShgEoC5mpN9FcpjW9fwrgJoxsiv-2qJ3x2efuI_QUTSpPXp0Y0oeJmCMfJsU4EJZyIOs23z7imhls0bPzYnfXjzczU4IWIyjOW0b4/w640-h428/Q4%20nominal.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;">The rebound in the current account surplus was driven by the terms of trade - the ratio of export prices to import prices - rising by 2.2%, a net income boost for Australia. Export prices rose by 3.1%, largely on the back of a 9.4% surge in iron ore prices, while import prices lifted by 0.8%. </div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh8Axx4T10Y6LoJQkd4j1EHjgZVkbcl8GMvfehhcxP6qW24ECyC1yThJaMP542kt5D7azt5IKrJNuVDvlc2013QuhEr02bOUWRTMyJ8yt5CziY6i0vOrV2wNxdm-A0Ied6-nC0Obc9BZ-33EWP8pUESkNnJvgYnJzKcg-UgKylB2W5BtHjkCd79JbDTA_c/s799/Q4%20ToT.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="536" data-original-width="799" height="430" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh8Axx4T10Y6LoJQkd4j1EHjgZVkbcl8GMvfehhcxP6qW24ECyC1yThJaMP542kt5D7azt5IKrJNuVDvlc2013QuhEr02bOUWRTMyJ8yt5CziY6i0vOrV2wNxdm-A0Ied6-nC0Obc9BZ-33EWP8pUESkNnJvgYnJzKcg-UgKylB2W5BtHjkCd79JbDTA_c/w640-h430/Q4%20ToT.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;"><span style="font-size: 15.4px;">In price-adjusted or volume terms, exports were soft falling 0.3% in the quarter; however, there was a much larger 3.4% fall in imports. The ABS reports that this combination of outcomes will see the trade component adding </span><span style="font-size: 15.4px;">0.6ppt to GDP growth in Q4, a reversal of its negative contribution to output in Q3. </span></div><div class="separator" style="clear: both; text-align: left;"><span style="font-size: 15.4px;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZaLUPvBejp_bGYsI4pL0Wpz0o6kPId6QsE7nZCYm3XRr2SrZFuVmev01o4xs6QHm235kXkW20TH9_bZUc4SunovpVoa2pUMbAdtJQiHYDIFF66Os-uxyh69Bko3WJZqP2oZyF5Q0i_syew03DpRHfNlVrh_xBagBtQmPG4_EwW_0R_KFldTbjzYinjtc/s802/Net%20exports.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="534" data-original-width="802" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZaLUPvBejp_bGYsI4pL0Wpz0o6kPId6QsE7nZCYm3XRr2SrZFuVmev01o4xs6QHm235kXkW20TH9_bZUc4SunovpVoa2pUMbAdtJQiHYDIFF66Os-uxyh69Bko3WJZqP2oZyF5Q0i_syew03DpRHfNlVrh_xBagBtQmPG4_EwW_0R_KFldTbjzYinjtc/w640-h426/Net%20exports.jpg" width="640" /></a></div><br /></div><div class="separator" style="clear: both; text-align: left;"><span style="font-size: 15.4px;">For exports, its decline in Q4 was driven by goods (-0.4%), reflecting weaker demand for rural goods (-2.3%) and </span><span style="font-size: 15.4px;">non-monetary gold (-8.8%). Services exports lifted by 0.5%q/q, indicating the rebound in the domestic tourism and education sectors continued through Q4. Over the past year, all the growth in exports has come from the services sector. </span></div><div class="separator" style="clear: both; text-align: left;"><span style="font-size: 15.4px;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><span style="font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi1Pu9rhyvMgEdMqEIUGcsgnFAebI81xZmgiBq0mMQXjyFJsoHFt0qfTagukopUDAVrHbkjx9d7HAtIJP4aBqrYq1OBNtz6_tankGtw7XaQwaTIEhyphenhyphen9VjNI9fUf_12s_xcyKRJAiGpabz0Rq-yPFaoyDWFwzQKoG9IrlxSkiKpS_xRiiEGD2Iefmb-y1_o/s683/Exports.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="382" data-original-width="683" height="358" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi1Pu9rhyvMgEdMqEIUGcsgnFAebI81xZmgiBq0mMQXjyFJsoHFt0qfTagukopUDAVrHbkjx9d7HAtIJP4aBqrYq1OBNtz6_tankGtw7XaQwaTIEhyphenhyphen9VjNI9fUf_12s_xcyKRJAiGpabz0Rq-yPFaoyDWFwzQKoG9IrlxSkiKpS_xRiiEGD2Iefmb-y1_o/w640-h358/Exports.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;"><span style="font-size: 15.4px;">The 3.4% contraction in import volumes reflected weakness in both goods (-2.8%) and services (-5.3%). There were falls in consumption (consumer) goods (-5.4%) and capital goods (associated with business investment) (-3.4%); while quarterly movements can be volatile, growth in year-ended terms is negative for consumption goods (-2.9%) and modest for capital goods (1.6%). These are signs of softness in domestic demand conditions. </span><span style="font-size: 15.4px;">The fall in services volumes follows a couple of very strong quarters when many Australians were holidaying overseas. However, services imports remain considerably below pre-Covid levels (-24.7%), whereas services exports have recovered above that baseline (3.2%). </span></div><div class="separator" style="clear: both; text-align: left;"><span style="font-size: 15.4px;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><span style="font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg5Fot6aIxbM_YtmGKupa2vrXUsnGPFWtntlK-7eO9F4jImGyUxzTUPAeDGCbbMCLyrGWPh7MyDX6dVyb6N1l0ryQw9pTBn94u7h97UFwEXTddE02JeBz3Gt-uIUeCpPFMD5w_AzSQYcfyXzJrVTWTPSrn9VdCFQZ1KoOBe8w6ULf6zLomV8Uo_jIebfqU/s799/Q4%20services.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="534" data-original-width="799" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg5Fot6aIxbM_YtmGKupa2vrXUsnGPFWtntlK-7eO9F4jImGyUxzTUPAeDGCbbMCLyrGWPh7MyDX6dVyb6N1l0ryQw9pTBn94u7h97UFwEXTddE02JeBz3Gt-uIUeCpPFMD5w_AzSQYcfyXzJrVTWTPSrn9VdCFQZ1KoOBe8w6ULf6zLomV8Uo_jIebfqU/w640-h428/Q4%20services.jpg" width="640" /></a></div></span></div></span></div></span></div></div>James Fosterhttp://www.blogger.com/profile/01305732698755570848noreply@blogger.comtag:blogger.com,1999:blog-1597478006767022660.post-52270079360259109322024-03-04T03:08:00.000-08:002024-03-04T03:08:05.174-08:00Australian dwelling approvals decline 1% in January<div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Australian dwelling approvals opened the year with a 1% decline in January, remaining around cycle lows. This comes after annual approvals fell to an 11-year low in 2023. Volatile unit approvals rose sharply in the month (14.5%), but this was more than offset by a slide in house (detached) approvals (-9.6%) to mid-2012 levels. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEisGzTnFBc0h8pQzB_YjcvJIFB4zCdjIb5UMEVOhcJ6fhtMQkfYIX6ezHpn_krEjOjpAMuSyl5NxzLJGJSWbG9oe4dblBPF9eF-_ZUR5WER5RksDDsJ3t0zy3skHuMrbUT_cYEpYRJmw5Px1TEIdxodOtEBCySad2Z4ihTfuwrp1chLGNop4n-wVP1CmvI/s800/JAN.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="555" data-original-width="800" height="444" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEisGzTnFBc0h8pQzB_YjcvJIFB4zCdjIb5UMEVOhcJ6fhtMQkfYIX6ezHpn_krEjOjpAMuSyl5NxzLJGJSWbG9oe4dblBPF9eF-_ZUR5WER5RksDDsJ3t0zy3skHuMrbUT_cYEpYRJmw5Px1TEIdxodOtEBCySad2Z4ihTfuwrp1chLGNop4n-wVP1CmvI/w640-h444/JAN.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjlPI4vlUYm0MupnGrs6muYNGy2Y3yX9P8b6JYKxu2WSW9D4wuoTDN4OML9D6YJVkrka7_n5ezd-tBn0o7NlY-GY8QMppLkIlDCPNIVssJ2VaC9T2piVrXOb1pg8JSj2mnX0JZ75OU18XiXLmz6kdWemjzH-ZVBb9T2Sf2GNdqULL8gm6K_HoV6C4RcDR0/s641/Summary.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="641" data-original-width="524" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjlPI4vlUYm0MupnGrs6muYNGy2Y3yX9P8b6JYKxu2WSW9D4wuoTDN4OML9D6YJVkrka7_n5ezd-tBn0o7NlY-GY8QMppLkIlDCPNIVssJ2VaC9T2piVrXOb1pg8JSj2mnX0JZ75OU18XiXLmz6kdWemjzH-ZVBb9T2Sf2GNdqULL8gm6K_HoV6C4RcDR0/w524-h640/Summary.jpg" width="524" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhL9bpEEn6_2PJxSiYEMoQJmTAFYWaLp3ByzbyW72LzrROHv5KkiQDeNlmbJyLvSrZvcAPvD38e1ezDKT2M0VhToPtPtLKSbklsND8MUH1lgxfe2GwCt69-JBQGhy-9QY3U65wmduyKUEfZZRYVdHiRZuHN41h0vcRq0deufmYQHKDgFivzX605QQ-O0Is/s761/States.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="761" data-original-width="686" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhL9bpEEn6_2PJxSiYEMoQJmTAFYWaLp3ByzbyW72LzrROHv5KkiQDeNlmbJyLvSrZvcAPvD38e1ezDKT2M0VhToPtPtLKSbklsND8MUH1lgxfe2GwCt69-JBQGhy-9QY3U65wmduyKUEfZZRYVdHiRZuHN41h0vcRq0deufmYQHKDgFivzX605QQ-O0Is/w576-h640/States.jpg" width="576" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Weakness in house approvals drove dwelling approvals to a 1% decline in January, coming in around 12.9k. This was the third consecutive decline in house approvals, with the current level (7.6k) at its lowest since mid-2012 and around 47% below the cycle peak in early 2021. </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">The combined effects of the withdrawal of construction subsidies, higher interest rates, supply constraints and weak sentiment have all been contributing factors behind the slide. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg37Okyf-aK0TZ8vUjXnD1IqKWReW-pwtUu8X_6y7ygDwis-1ZI8C6UGmoEudpBNoKndxc5honxFqoOuIclXCKXZOpmb7MFY9PWFaT4ZupydwXdQjm67xWsU0Au_DIWFiIoaAUERxXSzE3kzSTw3ISdy8-tTIYPd9rMZagj9nuYNLnNNArzODpommuEMz8/s799/Houses.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="535" data-original-width="799" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg37Okyf-aK0TZ8vUjXnD1IqKWReW-pwtUu8X_6y7ygDwis-1ZI8C6UGmoEudpBNoKndxc5honxFqoOuIclXCKXZOpmb7MFY9PWFaT4ZupydwXdQjm67xWsU0Au_DIWFiIoaAUERxXSzE3kzSTw3ISdy8-tTIYPd9rMZagj9nuYNLnNNArzODpommuEMz8/w640-h428/Houses.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;"><span style="font-size: 15.4px;">Approvals in the unit segment, volatile month to month, rose 14.5% to 5.3k in January following a 22% fall in December. On a 3-month average basis, approvals in the segment sit just above cycle lows. The underlying detail indicates that high-rise and townhouse approvals have declined to very low levels. </span></div><div class="separator" style="clear: both; text-align: left;"><span style="font-size: 15.4px;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj4n_Fc0ORntWj-eTfujTKQrf1Gvy_oysSoZgDNYTzN6bznIEgjTjBBtEQYgDbw6Ye_lmAXaaRiP2C4i2JIBYHKIDWfFc2sSYeWx-i7TZwu8qLu6FDcw-noBGJLeB8WLd2uBGsCUJMw-HMkkBLrPJ3a9grqgiNwnpvr_YyMkf2RHVa2bsoCfm2Fc2vJTA8/s686/Units.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="385" data-original-width="686" height="360" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj4n_Fc0ORntWj-eTfujTKQrf1Gvy_oysSoZgDNYTzN6bznIEgjTjBBtEQYgDbw6Ye_lmAXaaRiP2C4i2JIBYHKIDWfFc2sSYeWx-i7TZwu8qLu6FDcw-noBGJLeB8WLd2uBGsCUJMw-HMkkBLrPJ3a9grqgiNwnpvr_YyMkf2RHVa2bsoCfm2Fc2vJTA8/w640-h360/Units.jpg" width="640" /></a></div></div></span></div>James Fosterhttp://www.blogger.com/profile/01305732698755570848noreply@blogger.comtag:blogger.com,1999:blog-1597478006767022660.post-53853781781752336952024-03-03T18:36:00.000-08:002024-03-03T18:36:07.863-08:00Australian Business Indicators Q4: inventories -1.7%<div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">The Australian Business Indicators report was consistent with a subdued economic growth outcome in the December quarter. Softness in sales volumes reflects the pressures that are weighing on household demand, while volatile inventories </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">will weigh heavily on growth in the quarter. Higher commodity prices drove a rebound in company profits. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEirvW-QEwoJqEsPmQ-3sHQbpBxhF5FnkGsceqGz-Iqx7FrXTfxm3kk48ZoH6Z1ZCgyx1fD3fHPkaxzJxcrrl1lxMAcl7nt2dtff_NVE0jNwpkBJtDcFr65-IQgTIUtGQhtGqVs_oqfIpeX3-gDpdWaAbD2hfMDwuSVJo-ourz9KhnFyAzcEZIn0lmHHyhY/s801/Sales%201.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="535" data-original-width="801" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEirvW-QEwoJqEsPmQ-3sHQbpBxhF5FnkGsceqGz-Iqx7FrXTfxm3kk48ZoH6Z1ZCgyx1fD3fHPkaxzJxcrrl1lxMAcl7nt2dtff_NVE0jNwpkBJtDcFr65-IQgTIUtGQhtGqVs_oqfIpeX3-gDpdWaAbD2hfMDwuSVJo-ourz9KhnFyAzcEZIn0lmHHyhY/w640-h428/Sales%201.jpg" width="640" /></a></div><br /></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhBj-tk1YmXfDUzGYDULNVk-rvLfRvr3bhb-mEKGkXW4sIeKrByEJtHhy__U2mb5qHBfPrezW4SKkv9OU9bvQh2hoNUjRKLlP71Qqpbcv2DkSvdOYZYxcqwOd7TkXLcdepQYeW88oPg3zcRQruSWjlGSwO0I8w8sq0h5SP3Iat-FUK61JEzcUJIPlLo5rE/s716/Boards.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="716" data-original-width="599" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhBj-tk1YmXfDUzGYDULNVk-rvLfRvr3bhb-mEKGkXW4sIeKrByEJtHhy__U2mb5qHBfPrezW4SKkv9OU9bvQh2hoNUjRKLlP71Qqpbcv2DkSvdOYZYxcqwOd7TkXLcdepQYeW88oPg3zcRQruSWjlGSwO0I8w8sq0h5SP3Iat-FUK61JEzcUJIPlLo5rE/w536-h640/Boards.jpg" width="536" /></a></div><br /></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Ahead of the GDP figures for Q4 (out Wednesday), today's Business Indicators series has validated expectations for subdued growth. The demand backdrop was soft over the back half of the year; higher interest rates, cost-of-living pressures and the winding down of the pandemic rebound all playing a role. After a 0.1% lift in Q3, sales volumes lifted by just 0.2% in Q4. </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">The main takeaway is that this is consistent with a </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">subdued economic growth outcome. As the chart below shows, the quarterly change in sales volumes has a strong correlation with </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">growth in the production estimate of GDP. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgYauQWZT0wMe3jh1m1TrdCjrBJONf-VjGFJTsX7cqy5sRVtUqiH1ekdY1IaFzsQ4otUXE-xjDa6ioh5JDa6fx6CSJ44gdQjGm-U2uw6IaeQqYeLzlWwY-2NYsW4FsQESGFn5zLvZbGWuugpz9UJyC0T5sGXmIT9ncCZTjRc9dUGAMKN3nBbdTj9ncL8g8/s685/GDP%20P.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="383" data-original-width="685" height="358" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgYauQWZT0wMe3jh1m1TrdCjrBJONf-VjGFJTsX7cqy5sRVtUqiH1ekdY1IaFzsQ4otUXE-xjDa6ioh5JDa6fx6CSJ44gdQjGm-U2uw6IaeQqYeLzlWwY-2NYsW4FsQESGFn5zLvZbGWuugpz9UJyC0T5sGXmIT9ncCZTjRc9dUGAMKN3nBbdTj9ncL8g8/w640-h358/GDP%20P.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Sales growth remains patchy across the economy. Some industries saw sales increase into year-end, but that was largely offset by weakness in others. From the perspective of households, demand for hospitality (-3.2%q/q) and </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">arts and reaction services (-1.7%q/q) weakened sharply, but other areas </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">such as transport (1.1%q/q) and retail (0.6%q/q)</span><span style="background-color: white; font-family: georgia; font-size: 15.4px;"> lifted. </span></div><div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi8Wj6Idze-FmZHpXj4f4BApDTdsI37lrgX3mJ5QapaNRU1Ctux2C_6BkZw76YXbj5OfKmzmgoKQjhplBN7RroRSxIzmM8Mb84Oi1UJ4zCY6Q4cUllgr7-5UU2ocrcqLFLVQNRcknxGNZKpb7a7cggNTecMeWfgf2DIEi9dgRL3wSRB-YjSHmQ2cY76ZN8/s800/Sales.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="535" data-original-width="800" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi8Wj6Idze-FmZHpXj4f4BApDTdsI37lrgX3mJ5QapaNRU1Ctux2C_6BkZw76YXbj5OfKmzmgoKQjhplBN7RroRSxIzmM8Mb84Oi1UJ4zCY6Q4cUllgr7-5UU2ocrcqLFLVQNRcknxGNZKpb7a7cggNTecMeWfgf2DIEi9dgRL3wSRB-YjSHmQ2cY76ZN8/w640-h428/Sales.jpg" width="640" /></a></div><br /></span></div><div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">With sales essentially flatlining over the year (0.6%), inventories have trended sideways around quarterly swings. The quarterly profile for inventories in 2023 was: Q1 1.4%, Q2 -1.4%, Q3 1.2%, and Q4 -1.7%.</span></div><div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjHKo0nnu-YuAtWZj6AlFSSX6F98hOdoEBdfw-mn0R_j0YChKYYiPWwb6AwUoGzlMvPYlZNg5owfJFIkX2dQTUaBhPqxgC05I-cjOR9_qo4-T7I8kZprjt1wCz6Z3gIjvRvv-xIgCBCzHew6RErqrp4wyeFkLXk-TgzB19u87Lcme-HE3bhUGHWeQ8d_N0/s685/IN%20and%20Sales.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="385" data-original-width="685" height="360" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjHKo0nnu-YuAtWZj6AlFSSX6F98hOdoEBdfw-mn0R_j0YChKYYiPWwb6AwUoGzlMvPYlZNg5owfJFIkX2dQTUaBhPqxgC05I-cjOR9_qo4-T7I8kZprjt1wCz6Z3gIjvRvv-xIgCBCzHew6RErqrp4wyeFkLXk-TgzB19u87Lcme-HE3bhUGHWeQ8d_N0/w640-h360/IN%20and%20Sales.jpg" width="640" /></a></div><br /></span></div><div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Whereas in Q3 inventories added considerably to GDP growth (0.9ppt), this looks to reverse in Q4. Based on today's report, inventories are estimated to deduct 1ppt from Q4 GDP. The mining industry - the main factor behind higher inventories in Q3 due to transport delays - saw a 5.5% contraction in Q4 as these disruptions cleared. </span></div><div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiaxuFqGKJFL49hOQeta7EsLlbGjHJaY5Lk2vBOZ9BF8C2Po5Ji6ukX583dB8chVsBcisE1QN-I3ojskZ9YLw_XPcn6sY_RMKzLgGrXg1FaD4KsUUZkU14p0rTpBZPXpa0YDVJBrcZ567vjP8YtaM6tl3jVpeRk32W-gEXFAtRFSsx5VEK_edcq89AZJCI/s794/INV.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="484" data-original-width="794" height="390" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiaxuFqGKJFL49hOQeta7EsLlbGjHJaY5Lk2vBOZ9BF8C2Po5Ji6ukX583dB8chVsBcisE1QN-I3ojskZ9YLw_XPcn6sY_RMKzLgGrXg1FaD4KsUUZkU14p0rTpBZPXpa0YDVJBrcZ567vjP8YtaM6tl3jVpeRk32W-gEXFAtRFSsx5VEK_edcq89AZJCI/w640-h390/INV.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Company profits rose by a robust 7.4% in the quarter to $141bn, but were down 5.4% on a year ago. Quarterly profits lifted thanks almost entirely to the mining sector (17.3%), driven by higher commodity prices, while non-mining profits were broadly flat (0.1%). Adjusting for changes in inventory valuations (a similar approach is used in the National Accounts), underlying company profits lifted by a more modest 3.8%q/q to be down 5.9% through the year, reflecting headwinds from earlier falls in commodity prices, higher input costs and slowing demand. </span></div><div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg0nS0g236XomyEKYS7QAvvXtzrJu7R2LhkvBP1onHxCbnTJorsi_8wRtfThrnPXSWJCMqLDQa3ngSHOoOHWwDMOX7D96gLbUesfYb6ZUe1yz_aNArkMZeuXLk5FPucanz02dzfgAo5Ns9F26vjbn_8biQmdLJkpI52_cd42wiIWdG7QDJxYF_vfNE2lNE/s877/Profits.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="534" data-original-width="877" height="390" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg0nS0g236XomyEKYS7QAvvXtzrJu7R2LhkvBP1onHxCbnTJorsi_8wRtfThrnPXSWJCMqLDQa3ngSHOoOHWwDMOX7D96gLbUesfYb6ZUe1yz_aNArkMZeuXLk5FPucanz02dzfgAo5Ns9F26vjbn_8biQmdLJkpI52_cd42wiIWdG7QDJxYF_vfNE2lNE/w640-h390/Profits.jpg" width="640" /></a></div></div></div></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Growth in the wages bill continues to slow, reflecting the easing in labour market conditions that has occured, with employment growth moderating and businesses cutting back on hours worked. </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Annual growth remains elevated at 8% but is down from the peaks above 11% in late 2022 and early 2023. Quarterly growth slowed to 0.9%, its weakest outcome since Q3 2021 which was impacted by Covid lockdowns (-1%). The wages bill was coming off a 3% acceleration in Q3 as rises to the minimum wage and awards came into effect. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjkikAsWU1Zy9qnejhujruVbqxaJUaPrKC7N8R2eHVPxpIlOYH6uTi1-0AUfgiwUre6HdWmYbwLPzEEjLrWFSl1I4VJNgN2TM92SfrUlpqmsUpjjB7_VxqIPctQwacrhs2nI8gyyXwyDou329yd65gftfaW5hRzItEU2iIy8sO5U7FJan8Q7lZIhSOH4uE/s800/Wages.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="536" data-original-width="800" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjkikAsWU1Zy9qnejhujruVbqxaJUaPrKC7N8R2eHVPxpIlOYH6uTi1-0AUfgiwUre6HdWmYbwLPzEEjLrWFSl1I4VJNgN2TM92SfrUlpqmsUpjjB7_VxqIPctQwacrhs2nI8gyyXwyDou329yd65gftfaW5hRzItEU2iIy8sO5U7FJan8Q7lZIhSOH4uE/w640-h428/Wages.jpg" width="640" /></a></div></div>James Fosterhttp://www.blogger.com/profile/01305732698755570848noreply@blogger.comtag:blogger.com,1999:blog-1597478006767022660.post-42145404932898140492024-03-01T17:55:00.000-08:002024-03-01T17:55:02.405-08:00Macro (Re)view (1/3) | Disinflation still intact <div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;">Higher US inflation in January has not deterred markets from anticipating Fed rate cuts from the middle of the year. In fact, </span></span></span></span></span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Treasury yields ended the week lower, driven by the front end (2yr -16bps), enabling </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">equities to remain buoyed up. </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">The US dollar remained firm through the week. </span></div><div style="text-align: left;"><br /></div><div style="text-align: center;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjgsmBvWODFlWRCg2ftMVNJXZ6QhBaTLkkaMaCysTKN_zNO7ejBaXHxl4fnNaKcC1o3_QbVsCXTCZ5ny5gtC5Iu6eo9qx7WwvdrneX-vbpXDVKSFofwmVDxcVT0CiiqhC1olVFNq3XXDgqwCxWXGBqcURMjuBE3kJK0dNy8pG3pY66xbz7Au1Z4hsH3EYE/s808/1-3.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="287" data-original-width="808" height="228" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjgsmBvWODFlWRCg2ftMVNJXZ6QhBaTLkkaMaCysTKN_zNO7ejBaXHxl4fnNaKcC1o3_QbVsCXTCZ5ny5gtC5Iu6eo9qx7WwvdrneX-vbpXDVKSFofwmVDxcVT0CiiqhC1olVFNq3XXDgqwCxWXGBqcURMjuBE3kJK0dNy8pG3pY66xbz7Au1Z4hsH3EYE/w640-h228/1-3.jpg" width="640" /></a></div><span style="font-family: georgia; font-size: 15.4px;"><br /></span></span></span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;">The Fed's preferred inflation gauge rose 0.4% month-on-month, its fastest rise since early 2023, validating </span></span><span style="font-size: 15.4px;">the uptick in January's consumer and producer price readings. The annual rate was softer at 2.8% from 2.9% previously. The monthly print was a clear acceleration from the back half of 2023 where the gauge's average increase was 0.2%, a run rate consistent with </span></span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">the Fed's 2% inflation target. However, this appears to be a case of disinflation delayed rather than derailed. In the past two years, </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">core PCE deflator rose by 0.5% in January, putting the 2024 outcome in context. Signs in the report that US consumer demand may be starting to wane also points to a favourable backdrop for disinflation to continue. Personal consumption growth slowed from 5.9% to 4.5%yr (low to Feb-21), while in real terms the pace stepped down to a subdued 2.1%yr from 3.2% in December. On the surface, income growth was strong, up 1%m/m to 4.8%yr; however, that was boosted by temporary factors such as dividend and transfer payments. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEitgDEDg5xvBlSwqdZR9qMoPrv8tMdgk7jmGfs_lf2Evfa00cVJaIiQzqweUMBuVmXjRv2vXu4CsaPV5oqlv257o4CQkiSDX62FhuOz22GIalDyzexb81wWdB6wR_AF7SSS5Ot6lWGt8BwfqB0aWr65Er0Xe4ySHzQWOJLY-eeHKgdXiOOPfFZ_FkwX2y8/s800/JAN%20pce.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="535" data-original-width="800" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEitgDEDg5xvBlSwqdZR9qMoPrv8tMdgk7jmGfs_lf2Evfa00cVJaIiQzqweUMBuVmXjRv2vXu4CsaPV5oqlv257o4CQkiSDX62FhuOz22GIalDyzexb81wWdB6wR_AF7SSS5Ot6lWGt8BwfqB0aWr65Er0Xe4ySHzQWOJLY-eeHKgdXiOOPfFZ_FkwX2y8/w640-h428/JAN%20pce.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">February's preliminary estimates reported further declines in euro area inflation, headline easing from 2.8% to 2.6%yr and core in from 3.3% to 3.1%yr. The ECB is likely to remain cautious at next week's policy meeting, continuing to highlight its focus on services inflation and wage developments; however, the Governing Council may lay more of the groundwork to begin cutting rates from the middle of the year. The ECB will publish a new set of economic forecasts next week, which could pave the way </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">for any tweaks in messaging. On current projections, inflation is expected back at the target in the second half next year, but with growth weak and inflation continuing to decline, this timeline could potentially shift forward. </span></div><div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgE9JlDzwdJloYMGycdVGXPI9YJXa7JS8ZJnhE2lTmYtQfr7ZJyBmT8xrWNRBAk07vwb32TM-2ddSMG97N2ny4Zeu-9j9td24aT27ntW7xV4R8nqnVljp674GMmXlgPi7Ozwu8Wx9_nBcas6v6AJeKNUvJ1LKkwDTeL6WM-PlmZ_sDnXyyLUkmrSmF0Qqk/s801/FEB.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="535" data-original-width="801" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgE9JlDzwdJloYMGycdVGXPI9YJXa7JS8ZJnhE2lTmYtQfr7ZJyBmT8xrWNRBAk07vwb32TM-2ddSMG97N2ny4Zeu-9j9td24aT27ntW7xV4R8nqnVljp674GMmXlgPi7Ozwu8Wx9_nBcas6v6AJeKNUvJ1LKkwDTeL6WM-PlmZ_sDnXyyLUkmrSmF0Qqk/w640-h428/FEB.jpg" width="640" /></a></div><br /></div></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Australia's headline inflation rate remained at 3.4% in January, printing marginally below the 3.5% consensus forecast (reviewed <a href="https://jamesfostermacro.blogspot.com/2024/02/australian-cpi-34-in-january.html" target="_blank">here</a>). After slowing sharply into the end of last year, inflation looks set to continue declining in the months ahead. Inflation slowed </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">in both </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">3-month (2.7%) and 6-month (3.0%) annualised terms, suggesting the recent momentum in prices is broadly consistent with inflation coming back to the RBA's 2-3% target band. However, the monthly series can be volatile </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">and an </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">absence of updates on key services prices in January may have </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">prevented markets from pricing earlier RBA rate cuts, currently expected in the back half of the year. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi7eb5TPcc5ug32mfSrKHX6d12iDyaga_5wn25Zp-8NR-nQt65rPSNGN0nIOhjnWBXU1PH1AphyQNgtQYdEzLPEqxak3BPbZWadz5FR-a71HjsHgr9iLRLCQwly5WNHzQ6gIuotlrmt7d8K20y7lTLd1RYEyf-H1WL8077zkzH9wSpjy29uqfrnzC5MwmA/s687/Headline.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="384" data-original-width="687" height="358" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi7eb5TPcc5ug32mfSrKHX6d12iDyaga_5wn25Zp-8NR-nQt65rPSNGN0nIOhjnWBXU1PH1AphyQNgtQYdEzLPEqxak3BPbZWadz5FR-a71HjsHgr9iLRLCQwly5WNHzQ6gIuotlrmt7d8K20y7lTLd1RYEyf-H1WL8077zkzH9wSpjy29uqfrnzC5MwmA/w640-h358/Headline.jpg" width="640" /></a></div><br /></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">In other key developments, retail sales lifted by 1.1% in January (see <a href="https://jamesfostermacro.blogspot.com/2024/02/australian-retail-sales-rise-11-in.html" target="_blank">here</a>) but underwhelmed expectations (1.5%) in the context of a sizeable post-Black Friday fall in December (-2.1%). This increases attention around household consumption and finances going into next week's National Accounts. </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Real GDP growth is likely to have been subdued in Q4, putting the RBA's </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">assessment of excess demand in the economy under the spotlight. My full preview of the National Accounts can be accessed <a href="https://jamesfostermacro.blogspot.com/2024/02/preview-gdp-q4.html" target="_blank">here</a>; the key dynamics are </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">subdued household consumption growth amid ongoing headwinds to finances, softer momentum in business investment as capex lifted by 0.8% in Q4 (see <a href="https://jamesfostermacro.blogspot.com/2024/02/australian-capex-08-in-q4-202324.html" target="_blank">here</a>) and mixed detail around construction activity (0.7% in Q4), with strength in infrastructure projects offsetting weakness in the residential segment (see <a href="https://jamesfostermacro.blogspot.com/2024/02/australian-construction-work-07-in-q4.html" target="_blank">here</a>). </span></div>James Fosterhttp://www.blogger.com/profile/01305732698755570848noreply@blogger.comtag:blogger.com,1999:blog-1597478006767022660.post-5702471189170621302024-02-29T19:12:00.000-08:002024-03-05T06:24:15.379-08:00Preview: GDP Q4 <div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;">The Australian National Accounts for the December quarter are due to be published by the ABS this morning (11:30am AEDT). Real GDP growth is expected to have been subdued at around 0.2% in the quarter, reflecting similar outcomes in other advanced economies. The RBA's assessment of excess demand in the economy is set to face a key test. </span><span style="font-family: georgia; font-size: 15.4px;">Much of the focus is on the household sector </span><span style="font-family: georgia; font-size: 15.4px;">amid the various crosscurrents to consumption, but other components of demand that have been providing offsetting strength look to have softened in the quarter. </span></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;"><b><br /></b></span></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;"><b>A recap: Growth slowed further in Q3 as consumption stalled</b></span></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;">The Australian economy slowed further in the September quarter as cost-of-living pressures and interest rate rises continued to weigh on household spending. Real GDP expanded by 0.2% in the quarter and 2.1% through the year, down sharply from a 5.8% pace a year earlier. Aside from real GDP slowing, the past year had also been characterised by weakness in per capita growth and productivity outcomes. </span></div><div style="text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiu7qogtghMQYZ9ODR1SXECW78-se_2kyXpVOc4Zkq7rGk3VtcrpBoVoRFYfOhKDw4iDp1zuF3H5rR9dyoJvX1zbZy_B54EFGgh4vX_KAuaY0z6bHOBqbsqnq_Y-RV4z19aCnZf6dEHHyaZdy8ZscqgmzUsmMRQrzSkOWHUqZWTn9KUKwV41LSxXYga28c/s801/Real%20GDP.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="536" data-original-width="801" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiu7qogtghMQYZ9ODR1SXECW78-se_2kyXpVOc4Zkq7rGk3VtcrpBoVoRFYfOhKDw4iDp1zuF3H5rR9dyoJvX1zbZy_B54EFGgh4vX_KAuaY0z6bHOBqbsqnq_Y-RV4z19aCnZf6dEHHyaZdy8ZscqgmzUsmMRQrzSkOWHUqZWTn9KUKwV41LSxXYga28c/w640-h428/Real%20GDP.jpg" width="640" /></a></div><div style="text-align: center;"><br /></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;">Household consumption growth stalled in the most recent quarter, effectively </span><span style="font-family: georgia; font-size: 15.4px;">flatlining over the past year (0.4%). </span><span style="font-family: georgia; font-size: 15.4px;">The post-pandemic rebound in spending had largely run its course by late 2022, leaving consumption increasingly exposed to </span><span style="font-family: georgia; font-size: 15.4px;">high inflation, rising interest rates and an increased tax burden. Reflecting this, </span><span style="font-family: georgia; font-size: 15.4px;">discretionary-related consumption weakened over the past year (-0.8%) as the consumption </span><span style="font-family: georgia; font-size: 15.4px;">of essential goods and services - what households have to purchase - </span><span style="font-family: georgia; font-size: 15.4px;">increased (1.2%). Meanwhile, </span><span style="font-family: georgia; font-size: 15.4px;">the household saving ratio declined to 1.1%, its lowest since Q4 2007. </span></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFVLDNEc1_JyvGsA8-F3uxvWCWcrdK1wKbE7T0gZMQyhVQaO_G6Ar8OICI_qXjItMd2r_4npAwgoVreok2-yivnpYlFf3xfeyx4J4sUsptbo-ogOEXQlyDAVsSEDA7adQUcP72CzdtrrDb54b2EaJWcPJvpSmwuUTMZnzw_bWdD9R47Me8f-2ge9X8AEY/s787/Household%20Consumption%20Levels.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="535" data-original-width="787" height="436" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFVLDNEc1_JyvGsA8-F3uxvWCWcrdK1wKbE7T0gZMQyhVQaO_G6Ar8OICI_qXjItMd2r_4npAwgoVreok2-yivnpYlFf3xfeyx4J4sUsptbo-ogOEXQlyDAVsSEDA7adQUcP72CzdtrrDb54b2EaJWcPJvpSmwuUTMZnzw_bWdD9R47Me8f-2ge9X8AEY/w640-h436/Household%20Consumption%20Levels.jpg" width="640" /></a></div><br /></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;">Higher interest rates and ongoing capacity pressures have driven weakness in residential construction activity (-0.3%Y/Y). By contrast, activity in the non-residential construction sector has risen at a solid pace, underpinning growth in business investment </span><span style="font-family: georgia; font-size: 15.4px;">(8%Y/Y) and public demand (4.2%). Exports (6.8%Y/Y) have also supported growth, driven by the recovery in the tourism and education sectors. </span></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh9iKyJoOZVK3SYYamBQkH2qi-dWFUiYaUNDltfh13W3w-QF3qvwTYaJo5GEsit2gjbhEZ5dRsEi_dSGLIvi0FSaajfTluXnQNvHH_SgLv1gy2Vsh0Uek_AqTHfRT303hA7fanWFJ2XQwhyphenhyphen0-x94M3q9agQHzuMGAKQWqv9q1oaTj8Pzs-sYnfdBhz3FDY/s799/GDP.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="534" data-original-width="799" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh9iKyJoOZVK3SYYamBQkH2qi-dWFUiYaUNDltfh13W3w-QF3qvwTYaJo5GEsit2gjbhEZ5dRsEi_dSGLIvi0FSaajfTluXnQNvHH_SgLv1gy2Vsh0Uek_AqTHfRT303hA7fanWFJ2XQwhyphenhyphen0-x94M3q9agQHzuMGAKQWqv9q1oaTj8Pzs-sYnfdBhz3FDY/w640-h428/GDP.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div></div><div style="text-align: left;"><b style="font-family: georgia; font-size: 15.4px;">A preview: Headwinds to growth persisted into year-end</b></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;">Outside of the US, growth in most advanced economies was modest </span><span style="font-family: georgia; font-size: 15.4px;">in the final quarter of 2023, pointing to a similar outcome in Australia.</span><span style="font-family: georgia; font-size: 15.4px;"> Incoming data indicate that household consumption was subdued, while the resumption of the RBA's tightening cycle in November resulted in a decline in consumer sentiment readings. However, the dynamic around real household incomes improved as inflation declined sharply towards the end of the year. </span></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg2KKDjXIAuKjnRz9FKfNV6MB4tZO4rC5QktK2Jiq_U_5hZMmYnoOm9zID0tKBzRsT7RZrsH4GaGSkd6iXjIDH8N-AV6U_3kbPASsM2yO3n9GggYd8Ki-BhcCILJQlsfot1AVwAYUG_1qVAy-ALvaGt37hKBymGT8blN2IZ8zssFkM8BAn0x-U2F6xml0Y/s688/Mth%20Dec.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="385" data-original-width="688" height="358" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg2KKDjXIAuKjnRz9FKfNV6MB4tZO4rC5QktK2Jiq_U_5hZMmYnoOm9zID0tKBzRsT7RZrsH4GaGSkd6iXjIDH8N-AV6U_3kbPASsM2yO3n9GggYd8Ki-BhcCILJQlsfot1AVwAYUG_1qVAy-ALvaGt37hKBymGT8blN2IZ8zssFkM8BAn0x-U2F6xml0Y/w640-h358/Mth%20Dec.jpg" width="640" /></a></div><br /></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;">Leading indicators point to subdued growth in household consumption in Q4. The seasonal rise in spending in the lead-up to Christmas may have been less pronounced than in recent years. Discretionary spending was partly boosted by Black Friday sales, an event of increasing prominence amongst Australian households. </span></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><span style="font-family: georgia; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjYBYBpeo4fP9FDMoUcEskhTmS4RNACrnVVwGhxZRai1WgENHvjFwwo5LL7yLrh-7Zy1xLyTfMPMoM9NXp1FeCOPN9glAmC6qUJSGo33tB9cTYbALnDZxfCEGKETwXBODh7UP9O3jsNEgvLEqQOdhCvT-2-MnZmJyUIefpVMKSfvGrgk8XrK6wmc28RhwQ/s799/Dec.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="535" data-original-width="799" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjYBYBpeo4fP9FDMoUcEskhTmS4RNACrnVVwGhxZRai1WgENHvjFwwo5LL7yLrh-7Zy1xLyTfMPMoM9NXp1FeCOPN9glAmC6qUJSGo33tB9cTYbALnDZxfCEGKETwXBODh7UP9O3jsNEgvLEqQOdhCvT-2-MnZmJyUIefpVMKSfvGrgk8XrK6wmc28RhwQ/w640-h428/Dec.jpg" width="640" /></a></div><br /></span></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;">A robust labour market continued to support household consumption. The earlier acceleration in wages growth followed by the subsequent fall in inflation saw real wages growth turning marginally positive in Q4. </span><span style="font-family: georgia; font-size: 15.4px;">A slowing economy has, however, seen labour market conditions ease over the course of 2023. </span><span style="font-family: georgia; font-size: 15.4px;">The unemployment rate averaged 3.8% over the back half of the year, rising from an average of 3.6% in the first half and up from the 3.4% cycle lows in late 2022. Hours worked declined by 0.7% in the December quarter, a sign of adjustment to softening demand conditions. </span></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEivpPtyVUX3eAiP4b6A7jiHIEFQvwofcQlFIz7_A_UsN_jVKPNNME-aqXvHvEegFplblFZI_nNVh_LwdeN-OMG6E6Tv67g0Njs2crHvl9A-7D0vU1k_UDPQHIUQ_0WpZoLEUcOklI476W2aBbhQ8UDwiTQE7IoTSQ54ek8kYOIHi3YhFmaMHQyDI46H_70/s799/Labour%20market.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="534" data-original-width="799" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEivpPtyVUX3eAiP4b6A7jiHIEFQvwofcQlFIz7_A_UsN_jVKPNNME-aqXvHvEegFplblFZI_nNVh_LwdeN-OMG6E6Tv67g0Njs2crHvl9A-7D0vU1k_UDPQHIUQ_0WpZoLEUcOklI476W2aBbhQ8UDwiTQE7IoTSQ54ek8kYOIHi3YhFmaMHQyDI46H_70/w640-h428/Labour%20market.jpg" width="640" /></a></div><br /></div><div style="text-align: left;"><span style="font-family: georgia; font-size: 15.4px;">Capital city housing price gains have slowed over recent months but still lifted by 9-10% on a nationwide basis in 2023. </span><span style="font-family: georgia; font-size: 15.4px;">Strong population growth and ongoing constraints limiting the completion of new homes have contributed to rising housing prices, despite the effects of the RBA's hiking cycle. </span></div><div style="text-align: left;"><br /></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg0MKBQ4sVVJ7EDZKSStEncmpXgDN_dD5uKGLrcBK-fYsx9e4fm-vn5IKW6cY_EVzIU43h8kFx7EfDoXLupHaOAENW0u-74w_-p2PKyYvJtmL2K-4XvMVNN-KFQKY9eAkE2f-muNjerkptaZaEGJAHdzaGsZT0Wn4GURyw4uYfKKktMuR4iFGoZEcs-Czo/s1104/Prop%20track%20JAN.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="592" data-original-width="1104" height="344" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg0MKBQ4sVVJ7EDZKSStEncmpXgDN_dD5uKGLrcBK-fYsx9e4fm-vn5IKW6cY_EVzIU43h8kFx7EfDoXLupHaOAENW0u-74w_-p2PKyYvJtmL2K-4XvMVNN-KFQKY9eAkE2f-muNjerkptaZaEGJAHdzaGsZT0Wn4GURyw4uYfKKktMuR4iFGoZEcs-Czo/w640-h344/Prop%20track%20JAN.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><span style="font-family: georgia; font-size: 15.4px; text-align: left;"><i>PropTrack chart</i></span></div></div><div style="text-align: left;"><div style="background-color: white; font-family: georgia; font-size: 15.4px;"><b><br /></b></div><div style="background-color: white; font-family: georgia; font-size: 15.4px;"><b>Summary of key dynamics in Q4</b><br /><b><br /></b></div><div style="background-color: white; font-family: georgia; font-size: 15.4px;"><b>Household consumption </b><b><span style="font-weight: 400;">— An improved dynamic around real incomes may have provided support to households. Retail sales volumes lifted by 0.3%, a modest rise but its </span></b><b style="background-color: transparent; font-size: 15.4px;"><span style="font-weight: 400;">strongest increase since mid-2022 nonetheless.</span></b></div><div style="background-color: white; font-family: georgia; font-size: 15.4px;"><b style="font-size: 15.4px;"><b><br /></b></b></div><div style="background-color: white; font-family: georgia; font-size: 15.4px;"><b style="font-size: 15.4px;"><b>Dwelling investment </b><span style="font-weight: 400;">— New home building and alterations activity weakened sharply in Q4. Higher interest rates and supply and labour constraints remain strong headwinds in the sector.</span></b></div><div style="background-color: white; font-family: georgia; font-size: 15.4px;"><b style="font-size: 15.4px;"><b><br /></b></b></div><div style="background-color: white; font-family: georgia; font-size: 15.4px;"><b style="font-size: 15.4px;"><b>Business investment </b><span style="font-weight: 400;">— Capital expenditure by private sector firms lifted modestly, led by buildings and structures investment. Equipment spending stabilised following a strong increase over the first half of the year. </span></b></div><div style="background-color: white; font-family: georgia; font-size: 15.4px;"><b style="font-size: 15.4px;"><b><br /></b></b></div><div style="background-color: white; font-family: georgia; font-size: 15.4px;"><b style="font-size: 15.4px;"><b>Public demand </b><span style="font-weight: 400;">— </span></b><b style="background-color: transparent; font-size: 15.4px;"><span style="font-weight: 400;">Increased by 0.5% in Q4, moderating from stronger growth in prior quarters. Public spending (0.6%) was the main driver as momentum in investment (0.1%) slowed. </span></b><b style="font-size: 15.4px;"><span style="font-weight: 400;"> </span></b></div><div style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></div><div style="background-color: white; font-family: georgia; font-size: 15.4px;"><b style="font-size: 15.4px;"><b>Inventories </b><span style="font-weight: 400;">— Expected to deduct 0.5ppt from quarterly growth. Mining inventory levels declined after shipments were disrupted in Q3, but this was moderated by an increase in public sector inventories. </span></b></div><div style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></div><div style="background-color: white; font-family: georgia; font-size: 15.4px;"><b style="font-size: 15.4px;"><span style="font-weight: 400;"><b><b>Net exports</b><span style="font-weight: 400;"> — Will add 0.6ppt to Q4 growth, a reversal of Q3's negative contribution. Export volumes were soft falling 0.3%, though imports saw a much larger 3.4% decline. </span></b></span></b></div></div>James Fosterhttp://www.blogger.com/profile/01305732698755570848noreply@blogger.comtag:blogger.com,1999:blog-1597478006767022660.post-48945831474829051722024-02-29T03:44:00.000-08:002024-02-29T03:44:37.633-08:00Australian Capex 0.8% in Q4; 2023/24 investment plans $178bn<div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Australian private sector capital expenditure increased modestly by 0.8% in the December quarter. Capex has risen strongly through the past year or so; however, the momentum has started to fade. Forward-looking investment plans were upgraded in this survey and generally remain upbeat amid an outlook for slower growth. </span></div><div style="text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhZP8o1XXC7x6XP8JqwA5ML1-BMFfO6B9RqoQdHSWncLt9o1lQPULAUgr2UkDfma09T8YBUEC6kf-l7gXtFI58ikw6rYhMCdHctifWsOEfNMgRe4A5x_8ifKpBzr3-7ZdpdCccFdxgi4uzIzBCvdtTwam9aPkRYAO5Cr1hnxJPUnIV9zUm2C0DENlTdQS8/s800/Capex.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="536" data-original-width="800" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhZP8o1XXC7x6XP8JqwA5ML1-BMFfO6B9RqoQdHSWncLt9o1lQPULAUgr2UkDfma09T8YBUEC6kf-l7gXtFI58ikw6rYhMCdHctifWsOEfNMgRe4A5x_8ifKpBzr3-7ZdpdCccFdxgi4uzIzBCvdtTwam9aPkRYAO5Cr1hnxJPUnIV9zUm2C0DENlTdQS8/w640-h428/Capex.jpg" width="640" /></a></div><div style="text-align: center;"><br /></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi4YPMWC1JPzd8ctNFLy3jD7c3YCvWIIGO5gVFjaXfOtUKVHHwUmE1Hz382N93gWpJnUHrIMDs2vdGs4fz2OsNyzKF6vBOW9LZ9StBQk87GMug8nfVg_GsMIKJpeerIxsPHb5IVgrzFJTksPRQNRKYH2w6jfxWGCk4IfTKyKtLs-4JDhJZ57LI0Odhj1Xw/s766/Summary%201.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="401" data-original-width="766" height="336" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi4YPMWC1JPzd8ctNFLy3jD7c3YCvWIIGO5gVFjaXfOtUKVHHwUmE1Hz382N93gWpJnUHrIMDs2vdGs4fz2OsNyzKF6vBOW9LZ9StBQk87GMug8nfVg_GsMIKJpeerIxsPHb5IVgrzFJTksPRQNRKYH2w6jfxWGCk4IfTKyKtLs-4JDhJZ57LI0Odhj1Xw/w640-h336/Summary%201.jpg" width="640" /></a></div><div style="text-align: center;"><br /></div></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhW3GWGPhOzUptIayYff4CFH3sagX-qauuA3LloYa6GGgkTTLeB2p86Ap3D8mzDrgRuHEloitdcJ7YaEKt-JH7fr_suMsUELnKj1avrb7aADqaPkIiJ9XBrqz6JRPP4XygvYu6FJTBbfqrDMm5CvBWTIi75XWqRCafU3liN_V-Nx6SuyIpZ-_88-g_R-hM/s767/Summary%202.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="483" data-original-width="767" height="404" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhW3GWGPhOzUptIayYff4CFH3sagX-qauuA3LloYa6GGgkTTLeB2p86Ap3D8mzDrgRuHEloitdcJ7YaEKt-JH7fr_suMsUELnKj1avrb7aADqaPkIiJ9XBrqz6JRPP4XygvYu6FJTBbfqrDMm5CvBWTIi75XWqRCafU3liN_V-Nx6SuyIpZ-_88-g_R-hM/w640-h404/Summary%202.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhwWgh64ln5ojxqz2Gwx4FNFXoZH4nA83V9wl5aTlZqR7ettQvYzCUuL1n6CGuqYlTT64WK5ez8lMIxibff_v992w6fCcDQUo5Gj5NHT4zhuYNT5Azsg3WSRUks1ky0h4UQ35bJtqw8fKLhSRht88eXsxJBjAiib4h8xDJ4pQ-d1ZL0V-ZZFk1DmFk3nPY/s895/Summary%203.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="223" data-original-width="895" height="160" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhwWgh64ln5ojxqz2Gwx4FNFXoZH4nA83V9wl5aTlZqR7ettQvYzCUuL1n6CGuqYlTT64WK5ez8lMIxibff_v992w6fCcDQUo5Gj5NHT4zhuYNT5Azsg3WSRUks1ky0h4UQ35bJtqw8fKLhSRht88eXsxJBjAiib4h8xDJ4pQ-d1ZL0V-ZZFk1DmFk3nPY/w640-h160/Summary%203.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><span style="font-size: 15.4px;">Private sector capex - a partial indicator of business investment that feeds through to the National Accounts - lifted by 0.8% in the December quarter, coming in above the </span></span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">consensus estimate (0.4%). The capex cycle has been in an upturn since mid 2022, but some of this momentum faded over the back half of 2023. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Capex advanced by a sharp 6.8% in the first half of 2023 before easing to a 1.1% pace for the back half. </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">This dynamic was evident </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">in both major segments: buildings and structures 1.6% (2nd half) from 7.5% (1st half) and equipment 0.5% from 5.9%. </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">The withdrawal of pandemic-related tax incentives at the end of the 22/23 financial year partly drove this slowdown, after capex - particularly on equipment - was frontloaded into the first half. Meanwhile, the profile around buildings and structures is consistent with the picture painted in yesterday's <a href="https://jamesfostermacro.blogspot.com/2024/02/australian-construction-work-07-in-q4.html" target="_blank">construction activity</a> data for Q4. </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;"> </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;"> </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><span style="font-size: 15.4px;"><br /></span></span></div><div style="text-align: center;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjyhRBfx7MKABP2NAkfI8WPNqpODUEK0bxoCsMpritgs0EnePQTpAZ3L1zKDR-2ZD88Nz6LJbRLTw7AeJoheoZHgO-vo9ryEVqDAwmySKiDhR45X7tdE8CoGkmmJX9Bt13VEZ_ZfbKX5N8CAqaTKHApZE-oGEUUmPYqkQ-8vbhSAp-K1tagd8NEiCLmuZs/s800/Qtr.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="536" data-original-width="800" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjyhRBfx7MKABP2NAkfI8WPNqpODUEK0bxoCsMpritgs0EnePQTpAZ3L1zKDR-2ZD88Nz6LJbRLTw7AeJoheoZHgO-vo9ryEVqDAwmySKiDhR45X7tdE8CoGkmmJX9Bt13VEZ_ZfbKX5N8CAqaTKHApZE-oGEUUmPYqkQ-8vbhSAp-K1tagd8NEiCLmuZs/w640-h428/Qtr.jpg" width="640" /></a></div></span></div><div style="text-align: left;"><br /></div><div style="text-align: left;"><span style="font-family: georgia;"><span style="background-color: white; font-size: 15.4px;">By sector, capex in the non-mining sector lifted by 0.6% in Q4, to be down by 1% for the second half of the year. But this was more than offset by a lift in mining sector capex, </span></span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">up by 1.1% quarter-on-quarter and 6.7% in the second half. This brought mining sector capex to its highest level since mid-2016. Non-mining capex sits near record highs. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiAgKiAFGh8CpHAO6BYMvoWwhVZLdOgwYa9lUtpVpC0aKsmVtFcJvLNS1P7kCMLAVjBuPj05-qVlGqsg3Ra2wxQuw9HRk2kuMMg43ZcTo3lwqLh_l-qi6wE-QHO6YpvOle7U9jHn8Cg3vMLCcooiis26gArzLX6ROUBc22niJxdWg3rjUpOkEXfoD9o88c/s801/Non%20mining%20mining.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="536" data-original-width="801" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiAgKiAFGh8CpHAO6BYMvoWwhVZLdOgwYa9lUtpVpC0aKsmVtFcJvLNS1P7kCMLAVjBuPj05-qVlGqsg3Ra2wxQuw9HRk2kuMMg43ZcTo3lwqLh_l-qi6wE-QHO6YpvOle7U9jHn8Cg3vMLCcooiis26gArzLX6ROUBc22niJxdWg3rjUpOkEXfoD9o88c/w640-h428/Non%20mining%20mining.jpg" width="640" /></a></div><br /></div><div style="text-align: left;"><span style="font-family: georgia;"><span style="background-color: white; font-size: 15.4px;">Today's report also included firms' updated estimates of spending plans. The 5th estimate for capex in 2023/24 was nominated at $177.7bn, a rise of 4% on the previous estimate put forward 3 months ago and up 12.2% on a year-to-year basis. Within this figure, non-mining investment plans were revised up by 4.3% to $125.4bn (+12.6% year-to-year) and mining sector plans were raised by 3.2% to $52.3bn (+11.3% year-to-year). </span></span></div><div style="text-align: left;"><br /></div><div style="text-align: center;"><span style="font-family: georgia;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgpLISiJ5WNfCORuOygCTfEOZYTyQ9wf8TvqIR0dLMlmgbNBzJBte0BvxTQnX1PX1PIKWzTuGCI9-OpYZdpqkGmwiIkBNyEwPDxoI4i1Q7UeqeDdBnSlwI5uHf83bFYxCueA5xxU7HP677a65TjoQnAh_OIjArdVoyLondt0FPAVLrYnh13goPycSeE2zo/s837/Exp.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="535" data-original-width="837" height="410" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgpLISiJ5WNfCORuOygCTfEOZYTyQ9wf8TvqIR0dLMlmgbNBzJBte0BvxTQnX1PX1PIKWzTuGCI9-OpYZdpqkGmwiIkBNyEwPDxoI4i1Q7UeqeDdBnSlwI5uHf83bFYxCueA5xxU7HP677a65TjoQnAh_OIjArdVoyLondt0FPAVLrYnh13goPycSeE2zo/w640-h410/Exp.jpg" width="640" /></a></div><br /><div style="text-align: left;"><span style="background-color: white; font-size: 15.4px;">Firms also put forward an initial estimate of capex plans for the 2024/25 financial year. This was put at a notional $145.6bn, the highest 1st estimate in 11 years and up 12.6% on estimate 1 for 2023/24. Non-mining plans were projected at $100.9bn (+15.1% year-to-year) and mining plans came in at $44.8bn (+7.3% year-to-year). </span></div><div style="text-align: left;"><span style="background-color: white; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><span style="background-color: white; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhQWWYjVD46rUmq0HR_72Dum4DzV7zZE8aDNqU14cPcLeXX57AvDlEYvVnFjSJEirBg4-hh54UhJWN1HK5SfW3hruS460WNMzyvQcu9s5FxSemVMYRSi5erfZY5ST2NZsi67vd_oAe-AIyThmO5inBdjsA5r4x50a7dnTrJhD2waMFBe-1M3Ukubo82slw/s801/Est%201.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="535" data-original-width="801" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhQWWYjVD46rUmq0HR_72Dum4DzV7zZE8aDNqU14cPcLeXX57AvDlEYvVnFjSJEirBg4-hh54UhJWN1HK5SfW3hruS460WNMzyvQcu9s5FxSemVMYRSi5erfZY5ST2NZsi67vd_oAe-AIyThmO5inBdjsA5r4x50a7dnTrJhD2waMFBe-1M3Ukubo82slw/w640-h428/Est%201.jpg" width="640" /></a></div></span></div></span></div>James Fosterhttp://www.blogger.com/profile/01305732698755570848noreply@blogger.comtag:blogger.com,1999:blog-1597478006767022660.post-91338261513751883472024-02-28T18:43:00.000-08:002024-02-28T18:43:22.483-08:00Australian retail sales rise 1.1% in January <div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Australian retail sales increased by 1.1% in January, falling short of the 1.5% rebound expected after </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">sales declined by 2.1% (revised from -2.7%) in December.</span><span style="background-color: white; font-family: georgia; font-size: 15.4px;"> Shifts in seasonal spending patterns have led to heightened volatility in the data, but the underlying momentum in retail sales looks soft. </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;"> </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;"> </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiT4sNKBM7OxnCC02hkpYgLOWRO0YSWWl2Dkci6pftPiFttbYjiYfuLKTgzq0xe_haVdSp0xKvYRi3vBlCV-lUfAsNQXK5fQ5EqvAxSiuZ0rg21PfeRLDTnvVR5hOpGMnBxsfLrUDYW25j2nI91Dv4lSw3203fiJZzU_SMKfYV6tvmvAb5oeotWSlIem64/s801/JAN.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="535" data-original-width="801" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiT4sNKBM7OxnCC02hkpYgLOWRO0YSWWl2Dkci6pftPiFttbYjiYfuLKTgzq0xe_haVdSp0xKvYRi3vBlCV-lUfAsNQXK5fQ5EqvAxSiuZ0rg21PfeRLDTnvVR5hOpGMnBxsfLrUDYW25j2nI91Dv4lSw3203fiJZzU_SMKfYV6tvmvAb5oeotWSlIem64/w640-h428/JAN.jpg" width="640" /></a></div></div><div style="text-align: left;"><br /></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhvFLRJOHpcNd-0CoLs2cWYOgahRRKLdD9ZtVmELEOCf9In6t-fX-hStJabwxVPbc9o6wm74MXnT0Hwih_uiznBMOfaoR-RoAQ6E-ZiP40VZ7sMhK7XZN32qbdSey8q9suqPygAIZ-s0DosBIsBD1H9ERWYGDVDunzqG-w5Cld-VtqgYrzEBhv31MdvPPA/s701/Summary.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="360" data-original-width="701" height="328" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhvFLRJOHpcNd-0CoLs2cWYOgahRRKLdD9ZtVmELEOCf9In6t-fX-hStJabwxVPbc9o6wm74MXnT0Hwih_uiznBMOfaoR-RoAQ6E-ZiP40VZ7sMhK7XZN32qbdSey8q9suqPygAIZ-s0DosBIsBD1H9ERWYGDVDunzqG-w5Cld-VtqgYrzEBhv31MdvPPA/w640-h328/Summary.jpg" width="640" /></a></div></div><div style="text-align: left;"><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><br /></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;">January's 1.1% rise in retail sales came after a 2.1% pullback in December, which had followed a strong 1.5% lift in November driven by Black Friday sales. As noted in today's <a href="https://www.abs.gov.au/media-centre/media-releases/retail-sales-rebound-january-underlying-growth-stalling" target="_blank">release</a>, the ABS's seasonal adjustment processes are struggling to account for shifts in seasonal spending patterns that are now occurring at this time of year, leading to this run of highly volatile outcomes. On a 3-month average basis, sales to January were 0.2%, consistent with subdued household demand as cost-of-living pressures continue to constrain spending. In level terms, January sales ($35.7bn) were in line with their level in September-October. </span></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjJjhfetNyv6AMQZeQfWvGDPC0ljk2eqMrCb1MlUACOdYKVL1EB7wMRgk6H6n5gd0955t8rYs6iXNzHPTZvzqg_KWXVS2B3-u1MEFb1aS_1w8S-HkfRDNrvw8ORMGo4HF-ETRKpEH7jkHbfbZWmWI3oHHsNtc6nZpJvSlLTbBBGuqs6fpe1z_16wZWaKPA/s685/3m.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="385" data-original-width="685" height="360" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjJjhfetNyv6AMQZeQfWvGDPC0ljk2eqMrCb1MlUACOdYKVL1EB7wMRgk6H6n5gd0955t8rYs6iXNzHPTZvzqg_KWXVS2B3-u1MEFb1aS_1w8S-HkfRDNrvw8ORMGo4HF-ETRKpEH7jkHbfbZWmWI3oHHsNtc6nZpJvSlLTbBBGuqs6fpe1z_16wZWaKPA/w640-h360/3m.jpg" width="640" /></a></div><br /></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;">At the category level, food spending was broadly flat (0.1%) in January following a 0.7% rise in December. Discretionary spending across all other categories rebounded by 1.8% from a 3.9% decline in the prior month. Within this, household goods (2.3%) and clothing and footwear (2.4%) saw similar increases, while department stores and other retailing were both up 1.7%. Cafes and restaurants (1.3%) posted their strongest outcome in 13 months, with the ABS attributing this to strong attendances at the various tennis events and BBL cricket across Australia in January. </span></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px; text-align: center;"><span style="font-family: georgia; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgM7T2UeSJE-5ISynbG_i-Fpvf-Ap-4o9WsRhvNgKRkHEdQ4q11r1jJkxZ2awJcaRKtGgY3KBr3bVaVWJcFRpqTabuy4eeU31DuCgORIkk0iVP_up_ESBeQhoNfyAx2dwSpqOgQ-jplehnp7VzLhovJ0iyXTjSSB8RrOMhV8JzBEPLqHYHLtzYMDsOv_B4/s799/Categories.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="536" data-original-width="799" height="430" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgM7T2UeSJE-5ISynbG_i-Fpvf-Ap-4o9WsRhvNgKRkHEdQ4q11r1jJkxZ2awJcaRKtGgY3KBr3bVaVWJcFRpqTabuy4eeU31DuCgORIkk0iVP_up_ESBeQhoNfyAx2dwSpqOgQ-jplehnp7VzLhovJ0iyXTjSSB8RrOMhV8JzBEPLqHYHLtzYMDsOv_B4/w640-h430/Categories.jpg" width="640" /></a></div></span></div></div>James Fosterhttp://www.blogger.com/profile/01305732698755570848noreply@blogger.comtag:blogger.com,1999:blog-1597478006767022660.post-78664959866771759102024-02-28T05:32:00.000-08:002024-02-28T05:32:12.253-08:00Australian construction work 0.7% in Q4<div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Australian construction work expanded by a further 0.7% in the December quarter (vs 0.8% expected), rising for the 6th quarter in succession. Construction activity is up by a sharp 8.7% through the year, with public sector infrastructure projects continuing to define this cycle. By contrast, residential construction remains weak as s</span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">upply and labour constraints - legacy issues associated with the pandemic - and higher interest rates continue to impact. </span></div><div style="text-align: left;"><br /></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhMOF2FzIdeDNbkxve28xZdlB-noM4LxgNNKzfw_2suuF9ZTlo_0jg9TGW1CtIaAPmU8X_YXIA7Z29DJpEzIjJmD4vNxs8IYd6SsFGWiZLbBSTVSczx75NzweEJG5BEwimLTz8uEPz6mhNBjWdzrfwC4bueNr87vthdWxlOpAUXNdsnEm6X5O5DPToFMnE/s800/CWD%201.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="533" data-original-width="800" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhMOF2FzIdeDNbkxve28xZdlB-noM4LxgNNKzfw_2suuF9ZTlo_0jg9TGW1CtIaAPmU8X_YXIA7Z29DJpEzIjJmD4vNxs8IYd6SsFGWiZLbBSTVSczx75NzweEJG5BEwimLTz8uEPz6mhNBjWdzrfwC4bueNr87vthdWxlOpAUXNdsnEm6X5O5DPToFMnE/w640-h426/CWD%201.jpg" width="640" /></a></div></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><br /></div></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg2W1MPajGCu-uk9eoINkqGVeWRPr5_ODuD2sKhrcuymFWZ4qWbAhphk5ryOtD7ZWtDXrPJYWR5BuLJJsBuqO4hfRhd6EF9B71FMC6kVyxAVGNuIZ4_1ghwFbd45WN-3dovLME8KPKhUn-LSjgX9dAxGrH_nuIX1A-SgVAoPi5_6RW0TalNF8Tj01BDEj4/s784/Summary%201.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="304" data-original-width="784" height="248" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg2W1MPajGCu-uk9eoINkqGVeWRPr5_ODuD2sKhrcuymFWZ4qWbAhphk5ryOtD7ZWtDXrPJYWR5BuLJJsBuqO4hfRhd6EF9B71FMC6kVyxAVGNuIZ4_1ghwFbd45WN-3dovLME8KPKhUn-LSjgX9dAxGrH_nuIX1A-SgVAoPi5_6RW0TalNF8Tj01BDEj4/w640-h248/Summary%201.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgh_1iInJirUgSutZAEWwDlhL4V-Jcu_jznbvtl-WgiqIJHDn4vePFIhGmjidF3zuvePOpH5kqpwiwuhIpbVlm_CKxtinpQSK3U93Rnbxgl_TZE7f3aZsd6e4Kr4ojtwG0N5LE2ed87nIo0Ej2taG-Wekm_2hboItwc3Yl_GwmFRvaKADo7NH5iJaS02mg/s740/Summary%202.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="642" data-original-width="740" height="556" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgh_1iInJirUgSutZAEWwDlhL4V-Jcu_jznbvtl-WgiqIJHDn4vePFIhGmjidF3zuvePOpH5kqpwiwuhIpbVlm_CKxtinpQSK3U93Rnbxgl_TZE7f3aZsd6e4Kr4ojtwG0N5LE2ed87nIo0Ej2taG-Wekm_2hboItwc3Yl_GwmFRvaKADo7NH5iJaS02mg/w640-h556/Summary%202.jpg" width="640" /></a></div><div style="text-align: center;"><br /></div></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">A 0.7% increase in construction work came through in the December quarter. The engineering component led the way posting a 2.7% quarter-on-quarter lift to be up by 15% through the year. Much of this strength has come in the public sector (6.1%q/q, 20.5%Y/Y), reflecting increased progress on major infrastructure projects that governments across Australia sought to roll out on an accelerated basis to support the economic recovery from the pandemic. This has, however, generated an associated boost for private sector engineering work (-0.1%q/q, 10.5%Y/Y). </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjyLDB0eE09fx-y9BzQo9qhAUUQbCN1qdCTOi0Q3-lDa9L930MMCHc-zCoGpMN6zcFk_vA1id6hiZS0Cn1S-JqGRpNhP4YXK7yxpTkhyphenhyphenUXX65tYDLl0_tv5ByTqspizVQ-aL9n-zAQpNMELW-tCg2XfWkMVETlGWQVpXNH2a0Zuqh933dZ4P1hh5ywBC0A/s800/Public.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="535" data-original-width="800" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjyLDB0eE09fx-y9BzQo9qhAUUQbCN1qdCTOi0Q3-lDa9L930MMCHc-zCoGpMN6zcFk_vA1id6hiZS0Cn1S-JqGRpNhP4YXK7yxpTkhyphenhyphenUXX65tYDLl0_tv5ByTqspizVQ-aL9n-zAQpNMELW-tCg2XfWkMVETlGWQVpXNH2a0Zuqh933dZ4P1hh5ywBC0A/w640-h428/Public.jpg" width="640" /></a></div><br /></span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Building work was down 1.1% overall in the quarter, with growth through the year easing from 4.2% to 3.6%. Although non-residential work accelerated by 5% in the quarter (12.1%Y/Y) this was more than offset by a 5.2% fall from residential work (-1.9%Y/Y). In terms of non-residential work, industrial projects have been a beneficiary following low vacancy rates and rising rents. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhVSxdctT491DPmudyRV165U4hvk0nVcAcgCGg7UI67GNO2z5RwfX1zjCZuxIRMIVRv9H1Bz1L0hafFa9QgZaO2sJEWDI6geIeTfTsPDzAtz5nsIXZSPlK5yXs6O6OzSeASIb4K24atCvHfNf-1FAIzEd2N7fCsoLMWlIcC18L2XoYPBEtaA2RWjQpQo8s/s801/Non%20resi.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="534" data-original-width="801" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhVSxdctT491DPmudyRV165U4hvk0nVcAcgCGg7UI67GNO2z5RwfX1zjCZuxIRMIVRv9H1Bz1L0hafFa9QgZaO2sJEWDI6geIeTfTsPDzAtz5nsIXZSPlK5yXs6O6OzSeASIb4K24atCvHfNf-1FAIzEd2N7fCsoLMWlIcC18L2XoYPBEtaA2RWjQpQo8s/w640-h426/Non%20resi.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">In the residential segment, private sector activity in new home building (-4.8%) and alterations (-7.8%) contracted sharply, leaving both components down through the year at -1.3% and -6.5% respectively. Despite a large pipeline of homes under construction, progress through to completion continues to be hindered while higher interest rates may have deferred some of this activity from coming through. The alterations space is normalising from the highs reached during the pandemic when this activity was supported by construction subsidies and low interest rates. </span></div><div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhk0OCybhAxmv1ymDx9yARDuOZnpmFgumL2vdnhhxaACtiolnWre-ElZFaV23edOm01ZewYpsz7rYGA6OXv1dsv0a_B7iZnvgrqCwktZWc13YlCf0aQzo7vwmxSyL5vAvo23m1M4Ek_SK453CH56WkQpbZ0_wwIdkrGhrOh_oLQClOs7sxxMqVdCSpThps/s762/Resi.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="762" data-original-width="685" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhk0OCybhAxmv1ymDx9yARDuOZnpmFgumL2vdnhhxaACtiolnWre-ElZFaV23edOm01ZewYpsz7rYGA6OXv1dsv0a_B7iZnvgrqCwktZWc13YlCf0aQzo7vwmxSyL5vAvo23m1M4Ek_SK453CH56WkQpbZ0_wwIdkrGhrOh_oLQClOs7sxxMqVdCSpThps/w576-h640/Resi.jpg" width="576" /></a></div></div></div>James Fosterhttp://www.blogger.com/profile/01305732698755570848noreply@blogger.comtag:blogger.com,1999:blog-1597478006767022660.post-33031419397199736412024-02-27T19:57:00.000-08:002024-02-27T19:57:22.795-08:00Australian CPI 3.4% in January <div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><span style="font-size: 15.4px;">Australia's headline inflation rate remained at 3.4% </span></span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">on a 12-month basis in January, in line with late 2021 lows and </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><span style="font-size: 15.4px;">defying expectations for a rise to 3.5%. After peaking in late 2022 at 8.4%, inflation slowed sharply over 2023 and </span></span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">today's result holds onto this progress. The recent momentum in the CPI </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">points to further declines in inflation over the first half of 2024, amid the backdrop </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">of a slowing economy and an easing labour market. This will only encourage markets to keep RBA rate cuts priced into the profile for the back half of the year. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiyDdIoE3069Ygi3zJTr8mcvBVSCzOKykDt61aYLYFPuHa2WBz1V8Y5slypy01BFHHJe5U4oi3gYasVttDUP-yyfhfe9Vpvtrrd1OI4FkXzn7pSydZxwo0S9D5RsMMYfjxdAW_ms-Eg7ZHQnGVNh_92Zeh9LssRvRD1oxrtaxHWR91CoupiGL_nuH2wVDg/s687/Headline.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="384" data-original-width="687" height="358" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiyDdIoE3069Ygi3zJTr8mcvBVSCzOKykDt61aYLYFPuHa2WBz1V8Y5slypy01BFHHJe5U4oi3gYasVttDUP-yyfhfe9Vpvtrrd1OI4FkXzn7pSydZxwo0S9D5RsMMYfjxdAW_ms-Eg7ZHQnGVNh_92Zeh9LssRvRD1oxrtaxHWR91CoupiGL_nuH2wVDg/w640-h358/Headline.jpg" width="640" /></a></div><br /></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiEj67CBxOqShFXNAlA8moSpMaiRq7BwgAGjwxkMZeeF28RriXwwUxLwciBa31Si17ubj8xdtRGMIR77femd5KAsfs6ckDcBq8DqSvuEw-01KkpK_DJeV_OyQxeLqb6ibdy4kLulS1HskIOrzFhZmV4IJGyD3MO2xUTUY54XLna3yLZf9bJ2JyOOxwv8Ak/s647/Summary.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="421" data-original-width="647" height="416" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiEj67CBxOqShFXNAlA8moSpMaiRq7BwgAGjwxkMZeeF28RriXwwUxLwciBa31Si17ubj8xdtRGMIR77femd5KAsfs6ckDcBq8DqSvuEw-01KkpK_DJeV_OyQxeLqb6ibdy4kLulS1HskIOrzFhZmV4IJGyD3MO2xUTUY54XLna3yLZf9bJ2JyOOxwv8Ak/w640-h416/Summary.jpg" width="640" /></a></div><br /></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">January's report was broadly encouraging indicating that the disinflationary process has at least remained intact </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">through the early part of 2024. There are, however, a couple of </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">caveats hanging over this assessment: firstly, </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">the January series updates only around 62% of prices, including only </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">a small number of updates for services prices, the RBA's main area of focus, and secondly, </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">the ABS has incorporated its annual reweightings into the January CPI. All this means the RBA will look for more data to be assured that inflation remains on track to come back to target. But there are already encouraging signs that this is likely to be the case, with headline inflation running </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">within the upper half of the target band in both 3-month (2.7%) and 6-month (3.0%) annualised terms. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiDGzu00jBtIXcLuKmE7QFDADZYPelEjsHtRNH-msXDP4UJD1fr4l5glVEOCWDySe6rTza7HJbaP8Eikx7qtVRuf9bgx6Tt9F4IAj25ixti9UvcwkozKi7WjBSHxS1kCAGarK3YErzq4BOdAix2pHdBu7D7JF2BOTcnjwcSUzDoEiXhJC71P4USz4Dm31I/s686/3m.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="384" data-original-width="686" height="358" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiDGzu00jBtIXcLuKmE7QFDADZYPelEjsHtRNH-msXDP4UJD1fr4l5glVEOCWDySe6rTza7HJbaP8Eikx7qtVRuf9bgx6Tt9F4IAj25ixti9UvcwkozKi7WjBSHxS1kCAGarK3YErzq4BOdAix2pHdBu7D7JF2BOTcnjwcSUzDoEiXhJC71P4USz4Dm31I/w640-h358/3m.jpg" width="640" /></a></div><br /></span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">The various measures of underlying inflation in the monthly series softened in January, but as above, the RBA will view this with caution, awaiting more details on services prices. In January, trimmed mean CPI was 3.8% (from 4%) and CPI ex-volatile items and holiday travel (seasonally adjusted) was 4% (from 4.2%). </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiAOmS_xSpAwLxfm5jLnoXlXHUbWeqHak59OdP8hAnkgivp0uH7ks0xi0XqKi1jGpoFnCZ_cJNYusnjTrDQ0SEC5BaM-7Ge18WYUlNyZ1C9VnljJ3iziS6-QVSCg3DPWBFRBn8BmoanXs2jeFEnd8AyB3mAjx5447cficrGkR5gCnlb3En1SBXcgITopCc/s689/Underlying.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="385" data-original-width="689" height="358" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiAOmS_xSpAwLxfm5jLnoXlXHUbWeqHak59OdP8hAnkgivp0uH7ks0xi0XqKi1jGpoFnCZ_cJNYusnjTrDQ0SEC5BaM-7Ge18WYUlNyZ1C9VnljJ3iziS6-QVSCg3DPWBFRBn8BmoanXs2jeFEnd8AyB3mAjx5447cficrGkR5gCnlb3En1SBXcgITopCc/w640-h358/Underlying.jpg" width="640" /></a></div><br /></span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Turning to the categories, the main change in annual inflation came in household gas falling from 8.5% in December to -1.4% in January, driven by a large price rise (8.1% in January 2023) falling out of the annual calculation. Meanwhile, the effect of government rebates has held electricity prices to a 0.8%yr rise - the ABS reports the measures have kept what would have otherwise been a 15.3%yr rise at bay. Meanwhile, fuel prices eased from 5.3% to 3.1%yr on the back of a 0.9% month-on-month fall January. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi6qc-lEJA8e3bZkt6hNJ1-xn6ltVmPl-nR_78SKHEGht0-ppy3RtrOSp5K8wgQw3_UBqnld3I8rrSiZ-NQWLj9X2YirnYy_y6NeRy3LYEDp6oVXDR8ud57LQIbf7XThGb_3XTsb5QRRh5uWaD2Hkvt3XceK6HfdyeXMtfpRqPWGpkHGnCCBn0LbihNKEU/s687/Jan%201.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="383" data-original-width="687" height="356" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi6qc-lEJA8e3bZkt6hNJ1-xn6ltVmPl-nR_78SKHEGht0-ppy3RtrOSp5K8wgQw3_UBqnld3I8rrSiZ-NQWLj9X2YirnYy_y6NeRy3LYEDp6oVXDR8ud57LQIbf7XThGb_3XTsb5QRRh5uWaD2Hkvt3XceK6HfdyeXMtfpRqPWGpkHGnCCBn0LbihNKEU/w640-h356/Jan%201.jpg" width="640" /></a></div><br /></span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Pushing in the other direction, food inflation increased from 4% to 4.4%yr, but this is still well down from the highs of 9-10% in late 2022. There was a rise in the clothing and footwear category from -0.8% to 0.4%yr, likely associated with the end of Black Friday and Boxing Day sales. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgcBpldCSCeB7lOvyvuCkMSw2r94heTJ3pOIzKCjswNoncoLAAuOtaCAuNg59pcN3_G4qP6dZU2Ai3l6mb9RjIxx7EChRVzpiatJM8YBMMzLPLsBJ7wNu0FjbVjSAHO9znlBMYmIlSqMaEty7s-rNSzJZLMqP7zUXmz7Yv-odSeKz_4-ZCPaSWpUkhuQxc/s685/Jan%202.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="384" data-original-width="685" height="358" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgcBpldCSCeB7lOvyvuCkMSw2r94heTJ3pOIzKCjswNoncoLAAuOtaCAuNg59pcN3_G4qP6dZU2Ai3l6mb9RjIxx7EChRVzpiatJM8YBMMzLPLsBJ7wNu0FjbVjSAHO9znlBMYmIlSqMaEty7s-rNSzJZLMqP7zUXmz7Yv-odSeKz_4-ZCPaSWpUkhuQxc/w640-h358/Jan%202.jpg" width="640" /></a></div></div>James Fosterhttp://www.blogger.com/profile/01305732698755570848noreply@blogger.comtag:blogger.com,1999:blog-1597478006767022660.post-85024797617425642592024-02-23T18:04:00.000-08:002024-02-23T18:04:13.132-08:00Macro (Re)view (23/2) | Equities flying high <div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Stellar results from tech giant Nvidia had by far the biggest impact on broad market sentiment this week. Various equity indices across the US, Europe and Japan went into the weekend sitting at record highs, </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">unperturbed by what has been a notable climb in Treasury yields since the start of the year as Fed rate cut expectations have been wound back. This suggest that equities have been content to push higher on the basis that </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">higher bond yields are reflecting an expectation for improving economic conditions.</span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj3T7Z-UwWfF46XG8oWBxm2AABgQiRC2PTucB4JIIxIsjLmSnrTJAwDCVbnhWGUBGPIJreDmIzwaaE3IyTThvdLtLgFVxlLjhkReJvW-PW8d61GC7sLSTPpZyztPX_Kqb3SAqk3-IgNCb7zi9R6f_Ex9kwnKitBRIBC16JE2wmknn0ud5Bne9yDOgGJoQk/s809/23-2.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="285" data-original-width="809" height="226" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj3T7Z-UwWfF46XG8oWBxm2AABgQiRC2PTucB4JIIxIsjLmSnrTJAwDCVbnhWGUBGPIJreDmIzwaaE3IyTThvdLtLgFVxlLjhkReJvW-PW8d61GC7sLSTPpZyztPX_Kqb3SAqk3-IgNCb7zi9R6f_Ex9kwnKitBRIBC16JE2wmknn0ud5Bne9yDOgGJoQk/w640-h226/23-2.jpg" width="640" /></a></div><br /></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><span style="font-size: 15.4px;">There was little reaction to the <a href="https://www.rba.gov.au/monetary-policy/rba-board-minutes/2024/2024-02-06.html" target="_blank">minutes</a> of the RBA's February meeting. The main themes in the minutes had largely already been communicated via the Statement on Monetary Policy and at various public appearances post the meeting. </span></span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">That said, more nuance was introduced to the reasoning behind the Board's decision to leave rates on hold. In December, the Board said that limited data releases </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">allowed it to pause tightening and watch developments over </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">its summer break. </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">On this occasion, the Board concluded that maintaining the cash rate at 4.35% would "best balance" making progress towards its inflation and full employment objectives. This was on the basis that the data received through the early part of the year had given the Board "more confidence that inflation would return to target within a reasonable timeframe while allowing employment to continue to grow". In response, the Board softened its tightening bias, though it continues to highlight upside risks to the inflation outlook from services prices. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Elevated services inflation is partly a function of rising labour costs. This made for a closely watched update </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">of the Wage Price Index (WPI) for the December quarter. Wages growth lifted in line with expectations rising by 0.9% in the quarter, firming the annual pace from 4.1% to 4.2% (full review <a href="https://jamesfostermacro.blogspot.com/2024/02/australian-q4-wage-price-index-09-42yr.html" target="_blank">here</a>). Annual wages growth is running near to a 15-year high but there were signs that the peak is nearing. Tightness in the labour market eased over the back half of 2023 and wages growth in the parts of the labour market that are most responsive to conditions appears to be reflecting this. Notably, private sector wages growth eased from 4.3% to 4.2% and the public sector </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">- after lagging all the way through the cycle - accelerated from 3.5% to 4.3% as new enterprise agreements came into effect. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiPTgm9bVaNUOeJinm6vNwzNfdke-paDMJBIFZoNFkab9T-pdI3db8Y4kTJdWdR7jw9O0yheqowRiJkon3a8vxvcYPTru5hLNgC6ZGvsVHDsCtjyG67EnU9btEas4mTARbmaZKU2I8zLuHGdacPY_2ATO2Vp-osX4huZk8EB4KxRtzlulDG02e876WLPqw/s800/WPI.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="536" data-original-width="800" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiPTgm9bVaNUOeJinm6vNwzNfdke-paDMJBIFZoNFkab9T-pdI3db8Y4kTJdWdR7jw9O0yheqowRiJkon3a8vxvcYPTru5hLNgC6ZGvsVHDsCtjyG67EnU9btEas4mTARbmaZKU2I8zLuHGdacPY_2ATO2Vp-osX4huZk8EB4KxRtzlulDG02e876WLPqw/w640-h428/WPI.jpg" width="640" /></a></div><br /></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">In the US, the <a href="https://www.federalreserve.gov/monetarypolicy/fomcminutes20240131.htm" target="_blank">minutes</a> of the FOMC's January meeting and various appearances from Fed officials during the week conveyed the message that </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">there is no rush to cut rates. The minutes noted that "most participants" were alert to the risks associated with easing monetary policy prematurely; however, "a couple of participants" had pointed to the damage that could be done by maintaining restrictive settings for too long. The FOMC has been consistent in its messaging that it needs to gain "greater confidence" that the decline in inflation is durable and that it is on track to return to 2%. In holding this line, the market has had to come towards the Fed, with the number of rate cuts priced for 2024 declining from as many as 7 to the 3-4 currently anticipated. </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;"> </span></div><div style="text-align: left;"><br /></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">While Q4 GDP data was weak in both the UK and euro area, February's flash PMI readings painted a more constructive picture of growth in early 2024. The UK PMI strengthened from 52.9 in January to 53.3 in February, indicating an acceleration in activity. Optimism around the UK was also helped by comments from BoE Governor Bailey to the <a href="https://parliamentlive.tv/event/index/85cf5afe-fe04-48be-8e5f-3e09d8976e24" target="_blank">Treasury Committee</a> that rates could start to be cut before inflation had been brought back to the 2% target. </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">In the euro area, February's PMI improved to 48.9 </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">from 47.9. While this remains </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">in a contractionary range below 50, this reading suggests </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">there had been an easing in the pace of decline in activity. Meanwhile, the ECB reported that negotiated wages slowed to a 4.5% year-on-year increase in Q4 from 4.7% in Q3. While this will offer the ECB some assurance that wage pressures are easing, the <a href="https://www.ecb.europa.eu/press/accounts/2024/html/ecb.mg240222~1af5fcd5f9.en.html" target="_blank">account</a> of the January meeting noted that, </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">assuming productivity growth of 0.5-1%, wages growth of around 3% would be consistent with its 2% inflation target.</span></div>James Fosterhttp://www.blogger.com/profile/01305732698755570848noreply@blogger.comtag:blogger.com,1999:blog-1597478006767022660.post-61349791507509157092024-02-20T20:01:00.000-08:002024-02-20T20:01:04.040-08:00Australian Q4 Wage Price Index 0.9%; 4.2%yr<div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Australia's Wage Price Index (WPI) increased by 0.9% in the final quarter of 2024, moderating from an acceleration in the previous quarter (1.3%). Annual wages growth firmed from 4.1% to 4.2%, its fastest since Q1 2009. </span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh7MNuRHDdSQxONH7Y3C7PoojjPlfY67FjKzKaotXm4SBeAfxlG4z3gnD0cF6Xvwr94gf-Uv5moCytAuEh-SdTXXAlaVH01P6CQxmv-lGc_skKrGuvzY7xDNdn-AhUN5GVb_8dyIaSAtqnYWYKSNVVDf18bbcYv9VzxJ6g6AJhUdC-sX8AB3MwNNzaBdaY/s800/WPI.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="536" data-original-width="800" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh7MNuRHDdSQxONH7Y3C7PoojjPlfY67FjKzKaotXm4SBeAfxlG4z3gnD0cF6Xvwr94gf-Uv5moCytAuEh-SdTXXAlaVH01P6CQxmv-lGc_skKrGuvzY7xDNdn-AhUN5GVb_8dyIaSAtqnYWYKSNVVDf18bbcYv9VzxJ6g6AJhUdC-sX8AB3MwNNzaBdaY/w640-h428/WPI.jpg" width="640" /></a></div><br /></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjvrC6qTNEd_zCAc7wWcQ_jfwR8haVdWcbVuUPNkmAaqK8VsqUYpeeRaZyLFVR-bY68qWEHK5ZPrgMnJwB0HXi-S8AUUTAxaR1MItHwGEhyboDGxBahQjTsVq77Cs7J4so97NY_JHudRpcNKlwW_LI_Kj7HLNoWyEqJfXNfI9EuprFNbscAyUlTqcdQy9I/s616/WPI%20summary.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="541" data-original-width="616" height="562" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjvrC6qTNEd_zCAc7wWcQ_jfwR8haVdWcbVuUPNkmAaqK8VsqUYpeeRaZyLFVR-bY68qWEHK5ZPrgMnJwB0HXi-S8AUUTAxaR1MItHwGEhyboDGxBahQjTsVq77Cs7J4so97NY_JHudRpcNKlwW_LI_Kj7HLNoWyEqJfXNfI9EuprFNbscAyUlTqcdQy9I/w640-h562/WPI%20summary.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg6FNSf2u5nGDzvcNlsRr1bynegF_ZYCeEcMDFDPAjqOLBXOfcgRuXa6xIxLW4-33hKbhRbXhJeQ0ky46zGnRSLgVRW-ncjXQdxiRENLIhiUXUv5QoUwZEgDxNxrGAbLq5HcYXL9ITcLHWNTXT6KLPb0CAegN3SxmeUh_pzamWkuCXSUiqnfp4h0eSmiXA/s615/WPI%20states.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="401" data-original-width="615" height="418" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg6FNSf2u5nGDzvcNlsRr1bynegF_ZYCeEcMDFDPAjqOLBXOfcgRuXa6xIxLW4-33hKbhRbXhJeQ0ky46zGnRSLgVRW-ncjXQdxiRENLIhiUXUv5QoUwZEgDxNxrGAbLq5HcYXL9ITcLHWNTXT6KLPb0CAegN3SxmeUh_pzamWkuCXSUiqnfp4h0eSmiXA/w640-h418/WPI%20states.jpg" width="640" /></a></div><br /><div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">The WPI - a measure of the growth in base wages in the Australian labour market - advanced by 0.9% in the December quarter, matching expectations. Base wages have increased by 4.2% over the past year, a near 15-year high pace reflecting strong labour market conditions, legislated increases to pay settings and elevated inflation. The main dynamic in the quarter was an acceleration in public sector wages, with the fastest quarterly rise (1.3%) coming through in 15 years. This accelerated annual growth from 3.5% to 4.2%, seeing the public sector - which has lagged all the way through the post-pandemic cycle - overtaking wages growth in the private sector. </span></div><div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj8-1-918A-5nnDSuhgNOCQALSaorlh_Dg3gVojSZ7_syZpcOrRwSVg8DtIPEZnMKI6IveN4OfsJHdOkzRz7-B535d0lwlZkD8oaoQsPoriucOAmef1j86Nk2bPW7OLPfvBMNcUh4IKU9NlJwX7DlX_i7NjRd95MlZK7KITdvYWcqO6FKwCQT1xKsLBidc/s686/Private%20public.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="384" data-original-width="686" height="358" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj8-1-918A-5nnDSuhgNOCQALSaorlh_Dg3gVojSZ7_syZpcOrRwSVg8DtIPEZnMKI6IveN4OfsJHdOkzRz7-B535d0lwlZkD8oaoQsPoriucOAmef1j86Nk2bPW7OLPfvBMNcUh4IKU9NlJwX7DlX_i7NjRd95MlZK7KITdvYWcqO6FKwCQT1xKsLBidc/w640-h358/Private%20public.jpg" width="640" /></a></div><br /></div><div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">The ABS attributed the acceleration in public sector wages to the implementation of new state-based enterprise bargaining agreements (EBAs) in the health and education sectors. The contribution of EBAs to wages growth was higher than typically seen at this time of year; the ABS reports that 38% of public sector jobs saw a pay rise in Q4, up from 29% a year earlier, while the average pay rise received was 4.3% compared to 2.8% in Q4 2022. </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Meanwhile, after new awards came into effect and many annual reviews occured in Q3, </span><span style="background-color: white; font-family: georgia; font-size: 15.4px;">the contributions from individual agreements and awards to wages growth lessened in Q4.</span></div><div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgDkuQydsI3YxWsFRAS7wkDSS3PlWWd59PVXZ6pQQ9GHZTDGDgiZFYkgyoVRmFiZIrmvSadH2IjbBR7iebv2lzJSnBfVdonFT5PsWZwcll0QXUOmGJg5UTU-EAzLnsgWHyGwfj2dxgXHCMcQp0rObZ2Y9C6FwUOHo8jGSEAYx8URxZIFzcoSj-azQkC68Y/s799/Contributions.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="610" data-original-width="799" height="488" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgDkuQydsI3YxWsFRAS7wkDSS3PlWWd59PVXZ6pQQ9GHZTDGDgiZFYkgyoVRmFiZIrmvSadH2IjbBR7iebv2lzJSnBfVdonFT5PsWZwcll0QXUOmGJg5UTU-EAzLnsgWHyGwfj2dxgXHCMcQp0rObZ2Y9C6FwUOHo8jGSEAYx8URxZIFzcoSj-azQkC68Y/w640-h488/Contributions.jpg" width="640" /></a></div><br /></div><div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Coming off a spike in Q3 (1.5%), private sector wages growth retraced to 0.9% in Q4 - the same pace seen in the first two quarters of the year. Annual growth eased a touch from 4.3% to 4.2%. Almost 1 in 2 private sector jobs saw a pay movement in Q3, but just 16% of jobs recorded a change in Q4. The average pay rise received slowed sharply to 4.4% in the most recent quarter from 5.8% in Q3, though that needs to be taken with a degree of caution as a signal given the large seasonal decline in the number of jobs that saw a pay rise in Q4. </span></div><div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiHFReNWVA43pYIBygtNdK5NMFjhHPcLZe-Pb6MIC6wJHyXlOp4kDEkw34erNB4OHm8A5gD9dgl0o1n147d2C1tnp-mEkDcKDLnR80JZ-Fk5d87KyfRHxYVGh4ysKSkpMDxH8p1D423EOYD7r-7EPM4PUkhjXHAHHhplmE3vNE-DnGw6QEcQF5oZ_5wjaw/s684/Private%20sector.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="610" data-original-width="684" height="570" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiHFReNWVA43pYIBygtNdK5NMFjhHPcLZe-Pb6MIC6wJHyXlOp4kDEkw34erNB4OHm8A5gD9dgl0o1n147d2C1tnp-mEkDcKDLnR80JZ-Fk5d87KyfRHxYVGh4ysKSkpMDxH8p1D423EOYD7r-7EPM4PUkhjXHAHHhplmE3vNE-DnGw6QEcQF5oZ_5wjaw/w640-h570/Private%20sector.jpg" width="640" /></a></div><br /><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">From a broad industry viewpoint, wages growth in household services has continued to rise, nearly pressing 5% at an annual rate on my estimations; however, this is partly reflecting the boost from public sector EBAs in the health and education that won't be repeated. Wages growth across business services has effectively moved sideways over the past year.</span></div><div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="text-align: center;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjfSKXX8jsWh_veWeen3Bjw4FsE-L81Cr4LqlTsfl7Xm6Da9q4kaQ9QzsAqN2m3do2JEkONkuhTPI-Oe0X_MIlnnAkoNGyvHIgzU-EiH9D_fico8f4eeCX9vCYnbbAPXoaA_Q7hQD1KvDDH6MG5Wye79E8OLQNCEwyiwsWCMbHh9vuRNappMzodMGG8yXg/s688/Broad%20sector.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="383" data-original-width="688" height="356" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjfSKXX8jsWh_veWeen3Bjw4FsE-L81Cr4LqlTsfl7Xm6Da9q4kaQ9QzsAqN2m3do2JEkONkuhTPI-Oe0X_MIlnnAkoNGyvHIgzU-EiH9D_fico8f4eeCX9vCYnbbAPXoaA_Q7hQD1KvDDH6MG5Wye79E8OLQNCEwyiwsWCMbHh9vuRNappMzodMGG8yXg/w640-h356/Broad%20sector.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;"><span style="font-size: 15.4px;">Within individual industries in business services, wages growth has softened in some industries - likely reflecting eased labour market tightness - though it has yet to peak in other industries. </span></div><div class="separator" style="clear: both; text-align: left;"><span style="font-size: 15.4px;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgq9maFxp4tTnuzoPEqFXcQRWlohOptsWL32kKvUOs8RYCbYeoixVVuHto8nJWTtnjapLSVzyOgmNnQz6nFs6NPS8EOlha8LdmOZKLFkxxcuTps85Si_kTtG0RCTL18ePeHsrij7Glfw-BZDSu0nBXSguW0S35ij5u7HkxVaTTU2P_IlYeZjCCeFKB1eN4/s964/Business%201.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="686" data-original-width="964" height="456" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgq9maFxp4tTnuzoPEqFXcQRWlohOptsWL32kKvUOs8RYCbYeoixVVuHto8nJWTtnjapLSVzyOgmNnQz6nFs6NPS8EOlha8LdmOZKLFkxxcuTps85Si_kTtG0RCTL18ePeHsrij7Glfw-BZDSu0nBXSguW0S35ij5u7HkxVaTTU2P_IlYeZjCCeFKB1eN4/w640-h456/Business%201.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgtBlDZBNbDgULRSetuYQvmDzMGMOADL7UmS5mGLSkKbP_xRXRFc1C6E44i33e7hwum3v7s7O5O_y2rVqCIMTum6HPugxmgqgbnAXe7TjLKN6ZWmZ8aNlSmXv0RIMuP2cHUr0dogCqfGig252AjYbt9v4N1sGUlAIywQvJhy7e0mevC_SG8Yv_knQl3re4/s964/business%202.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="346" data-original-width="964" height="230" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgtBlDZBNbDgULRSetuYQvmDzMGMOADL7UmS5mGLSkKbP_xRXRFc1C6E44i33e7hwum3v7s7O5O_y2rVqCIMTum6HPugxmgqgbnAXe7TjLKN6ZWmZ8aNlSmXv0RIMuP2cHUr0dogCqfGig252AjYbt9v4N1sGUlAIywQvJhy7e0mevC_SG8Yv_knQl3re4/w640-h230/business%202.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;"><span style="font-size: 15.4px;">Lastly, wages growth in the goods-related sector may also be topping out. Wages growth remains elevated across many of these industries - some of which are still known to be dealing with skills shortages - but the pace of rises is easing. </span></div><div class="separator" style="clear: both; text-align: left;"><span style="font-size: 15.4px;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiHAADmvY4Xkk0GMbZxDqHEI6kHI1OO22bc0rzcRZhypnLBQusWMJkCuFiuZ6QEKIZKAfP4le3OnenD6PbnbxL3EJOGEm2CwSyWKPszs6qfwTfYHZXmfJKhghkT9LXKudaE-n2xOCFc506jY3QSBa6GpUJWsQDNW-xDpry7BlWJNBPNEDsUH8ctdAdWa-Y/s964/Goods%201.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="686" data-original-width="964" height="456" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiHAADmvY4Xkk0GMbZxDqHEI6kHI1OO22bc0rzcRZhypnLBQusWMJkCuFiuZ6QEKIZKAfP4le3OnenD6PbnbxL3EJOGEm2CwSyWKPszs6qfwTfYHZXmfJKhghkT9LXKudaE-n2xOCFc506jY3QSBa6GpUJWsQDNW-xDpry7BlWJNBPNEDsUH8ctdAdWa-Y/w640-h456/Goods%201.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhqfedC10g1wn8-iIjMQ51OnvDgDZzfQOy9C_B0rHzDwT76jZ3SEPCaRg1_A6Q742y6G-cw1sJfAK_PdJ_pf3fUeqZtJg7yykGbH5bJvjCNPv2vlY0HLo_Xa3i5rOeS0DdKxqZzTTgL3eSMUlLfE_Lqd9mUIMvhwx4rJM9bKpnkPudNs62C6hiT8cVCnMY/s964/Goods%202.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="685" data-original-width="964" height="454" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhqfedC10g1wn8-iIjMQ51OnvDgDZzfQOy9C_B0rHzDwT76jZ3SEPCaRg1_A6Q742y6G-cw1sJfAK_PdJ_pf3fUeqZtJg7yykGbH5bJvjCNPv2vlY0HLo_Xa3i5rOeS0DdKxqZzTTgL3eSMUlLfE_Lqd9mUIMvhwx4rJM9bKpnkPudNs62C6hiT8cVCnMY/w640-h454/Goods%202.jpg" width="640" /></a></div></div></div></span></div></div></div>James Fosterhttp://www.blogger.com/profile/01305732698755570848noreply@blogger.comtag:blogger.com,1999:blog-1597478006767022660.post-14629374198334552552024-02-20T14:32:00.000-08:002024-02-20T14:32:41.234-08:00Preview: Wage Price Index Q4<div style="text-align: left;"><span style="background-color: white; font-family: georgia; font-size: 15.4px;">Australia's Wage Price Index (WPI) for the December quarter is due at 11:30am (AEDT) today. After accelerating in the previous quarter as increases to the minimum wage and awards came into effect, wages growth is expected to have moderated into year-end. Annual wages growth is likely around its peaks and the RBA forecasts it to slow from the middle of the year as labour market conditions ease. </span></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><span style="font-family: georgia;"><br /></span></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><span style="font-family: georgia;"><b>A recap: Wages growth accelerated sharply in Q3 </b></span></div><div style="background-color: white; font-family: "IM Fell French Canon"; font-size: 15.4px;"><span style="font-family: georgia;"><b><br /></b></span></div><div style="background-color: white; font-size: 15.4px;"><span style="font-family: georgia;">The WPI posted its fastest quarterly increase on record rising by 1.3% in Q3, lifting the annual pace from 3.6% to 4%, a high dating back to 2009. During Q3, wages growth accelerated as the increases to the minimum wage (8.6%) and award rates (5.75%) determined by the Fair Work Commission came into effect. This extended the rebound in wages growth from the lows reached during the pandemic, driven by very robust labour market conditions, adjustments to pay settings and high inflation. </span></div><div style="background-color: white; font-size: 15.4px;"><span style="font-family: georgia;"><br /></span></div><div style="background-color: white; font-size: 15.4px; text-align: center;"><span style="font-family: georgia;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhoKa2YEq0_E4iqeZxT4cUWrAp_ItY4YaY1ExHxU0plnDhDNiwNwInLuuk3J5xWpadnGMssTzT8PwyImx-9WxqZLW9K38olcTxM6Uh0YAdsSMC_Cy8Ckzv0TOfPbFwsJd6ep8FUm4GVxHu2AcDMypm_GfQ9MQKvJWkhHd6BPpcQrki02guBUy9x80pxe8Q/s799/WPI%20Q3.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="534" data-original-width="799" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhoKa2YEq0_E4iqeZxT4cUWrAp_ItY4YaY1ExHxU0plnDhDNiwNwInLuuk3J5xWpadnGMssTzT8PwyImx-9WxqZLW9K38olcTxM6Uh0YAdsSMC_Cy8Ckzv0TOfPbFwsJd6ep8FUm4GVxHu2AcDMypm_GfQ9MQKvJWkhHd6BPpcQrki02guBUy9x80pxe8Q/w640-h428/WPI%20Q3.jpg" width="640" /></a></div><br /></span></div><div style="background-color: white; font-size: 15.4px;"><span style="font-family: georgia;">Sizeable contributions to wages growth in Q3 came from new enterprise bargaining agreements and awards. In addition, </span><span style="font-family: georgia; font-size: 15.4px;">individual agreements also boosted wages growth but by a similar magnitude to the same period a year earlier. </span></div><div style="background-color: white; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="background-color: white; font-size: 15.4px; text-align: center;"><span style="font-family: georgia; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg_9WI0CAJU1UOlKebF7EvU0ZYjKFveT8itctRvSmGf7qhU5smwxyzODPdtrivY-1ziTgtXteE6N8VywwH8p77iEpUrDsuXODZrXnBt9Kpr0yWmnANrHv6PmbYCKuteblBs96kBh4Mi69tNW5a97Y8DB4GejufxPN8R7STXG70ZqYFEsiLW3f6P_kfYEVE/s799/Contributions.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="608" data-original-width="799" height="488" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg_9WI0CAJU1UOlKebF7EvU0ZYjKFveT8itctRvSmGf7qhU5smwxyzODPdtrivY-1ziTgtXteE6N8VywwH8p77iEpUrDsuXODZrXnBt9Kpr0yWmnANrHv6PmbYCKuteblBs96kBh4Mi69tNW5a97Y8DB4GejufxPN8R7STXG70ZqYFEsiLW3f6P_kfYEVE/w640-h488/Contributions.jpg" width="640" /></a></div><br /></span></div><div style="background-color: white; font-size: 15.4px;"><span style="font-family: georgia;">In the private sector, base wages lifted by 1.4% in the quarter to be up by 4.2% through the year. By contrast, wages growth in the public sector has lagged through the cycle </span><span style="font-family: georgia; font-size: 15.4px;">rising by a more modest 0.9% in the quarter to 3.5% in annual terms. This reflects the effects of pay caps on public sector wages, policies that have been superseded over the past year or so. </span></div><div style="background-color: white; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;"><br /></span></div><div style="background-color: white; font-size: 15.4px; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJhBS9iqTNj_YqCc1gf7v_MT4v5bT3OjumaeQbhV_yTINaw9ejirRV8TLgysPdQGt7EobcoYiRqTFsKp6yOpuXURj0ZOiq-Wskf07KKbywz2Ej9ctyWH1PKZS1dlF1PKBVyUsEB2q8-L-cGhSdmZy53dsRhoc4Xl5725YPbqStVB74_3CS7B55bDT4sxo/s799/Private%20public.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="534" data-original-width="799" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJhBS9iqTNj_YqCc1gf7v_MT4v5bT3OjumaeQbhV_yTINaw9ejirRV8TLgysPdQGt7EobcoYiRqTFsKp6yOpuXURj0ZOiq-Wskf07KKbywz2Ej9ctyWH1PKZS1dlF1PKBVyUsEB2q8-L-cGhSdmZy53dsRhoc4Xl5725YPbqStVB74_3CS7B55bDT4sxo/w640-h428/Private%20public.jpg" width="640" /></a></div><br /></div><div style="background-color: white; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;"><b style="font-size: 15.4px;">Wages growth to moderate in the December quarter</b></span></div><div style="background-color: white; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;"><b style="font-size: 15.4px;"><br /></b></span></div><div style="background-color: white; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;"><span style="font-size: 15.4px;">The wage-setting process in Australia conforms to a seasonal pattern where most jobs receive pay increases in Q3, following the completion of the previous financial year. This can be seen in the 'Methods of Pay Setting' chart above. Wages growth then typically eases in Q4. As a result of this, markets forecast wages growth to moderate to a 0.9% rise in the quarter (range: 0.8% to 1.1%), which would hold the annual pace at 4%.</span></span></div><div style="background-color: white; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;"><span style="font-size: 15.4px;"><br /></span></span></div><div style="background-color: white; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;"><span style="font-size: 15.4px;">In its recent Statement on Monetary Policy, the RBA forecast that wages growth is currently around its peaks for the cycle. Its outlook for the labour market is for conditions to ease such that the unemployment rate rises to around 4.5% over the next couple of years. This easing of the labour market is anticipated to result in wages growth slowing to the 3s by the end of the year, and this is </span></span><span style="font-family: georgia; font-size: 15.4px;">backed by insights </span><span style="font-family: georgia; font-size: 15.4px;">picked up in the Bank's Liason program. </span></div><div style="background-color: white; font-size: 15.4px;"><span style="font-family: georgia; font-size: 15.4px;"><span style="font-size: 15.4px;"><br /></span></span></div><div style="background-color: white; font-size: 15.4px; text-align: center;"><span style="font-family: georgia; font-size: 15.4px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh8tZznRYvBIOhgJObwHPMP0LCYN_4aoZNw-xQf-OIBa-kvvgUSSVpJa547-ikCAesEqgubVVfrEn269uGAuIeYJ9FmMFs5d7k9wZ2oVCtE7XabDs3_7svJy4kEbR6CXZX0P234gBZf-S7Dak6TeOi8Ujc1xNlqRd3P2K22-K2cy08eSODF798hDrF8Ipg/s532/WPI%20forecast.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="507" data-original-width="532" height="381" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh8tZznRYvBIOhgJObwHPMP0LCYN_4aoZNw-xQf-OIBa-kvvgUSSVpJa547-ikCAesEqgubVVfrEn269uGAuIeYJ9FmMFs5d7k9wZ2oVCtE7XabDs3_7svJy4kEbR6CXZX0P234gBZf-S7Dak6TeOi8Ujc1xNlqRd3P2K22-K2cy08eSODF798hDrF8Ipg/w400-h381/WPI%20forecast.jpg" width="400" /></a></div><div class="separator" style="clear: both; text-align: center;"><span style="font-size: 15.4px; text-align: left;">RBA chart</span></div></span></div>James Fosterhttp://www.blogger.com/profile/01305732698755570848noreply@blogger.com