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Tuesday 5th July 2016 - 12:12 pm
Comments Off on Business outlook bleak before those shocks

Business outlook bleak before those shocks

by Alan Thornhill

Business confidence in Australia was weak before two recent shocks.

 

A survey, by Dun and Bradsreet, showed that expectations for sales and selling prices, in the three months to the end of September, had hit their lowest levels since 2014.

 

Stephen Koukoulas, an economic adviser to the firm, said this result should be treated with caution, as the survey was conducted before both the British vote to leave the EU and the inconclusive result of last Saturday’s Federal elections.

 

However Mr Koukoulas added: “the slide in business expectations over the past year appears to have been arrested in the most recent survey.”

 

And he added: ““there were some mildly encouraging signs, with expectations for capital expenditure edging up from the recent low point.”

 

But he said: “there were, worryingly, signs of further weakness in expected sales and selling prices…”
The Business Expectations Index is an aggregate of the survey’s measures of sales, profits expected sales and selling prices.
He said the low price expectations confirmed by the survey, “points to ongoing low inflation.”

 

The survey also showed that: “profits, Employment and Selling Prices” in Australia’s construction industry, have all been “plunging into negative territory.”

 

It also revealed that: “the Retail industry fared poorly for the first three months of the year, with its Actual Sales and Actual Employment indices falling to -3.9 points and -4.3 points respectively

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Monday 4th July 2016 - 8:46 am
Comments Off on Australia’s next PM? The one who is better on the blower

Australia’s next PM? The one who is better on the blower

by Alan Thornhill

Australia’s political leaders will be hitting their phones this week, trying to scrape together enough support to give the country stable government for the next three years.

 

The main rivals, Prime Minister, Malcolm Turnbull, who heads a conservative coalition and Bill Shorten, who leads the Labor party both found themselves short of the 76 seats they would need, in the House of Representatives, to govern in their own right, at the end of the initial, but still incomplete, count.

 

Late yesterday, Labor had 67 seats, the Coalition 65, others 5 and 13 were still in doubt.

 

The Australian Electoral Commission had counted 78.2 per cent of the votes cast, at that point.

 

It will not resume the count until Tuesday, and the final result, for the House, will probably not be known until some time next week.

 

Mr Turnbull had made much of the need he saw for stability, during the late stages of the eight week election campaign, particularly after Britain’s vote to leave the EU.
However the swing to Labor, evident in Saturday’s election, showed that voters were more impressed with Mr Shorten’s warning that only Labor could be trusted to protect Australia’s health insurance system, Medicare.

 

Mr Turnbull had sought support for a plan centred on tax cuts for big companies and high income earners.

 

He had warned that a big spending Labor government could not be trusted to manage Australia’s economy responsibly.

 

And, at a news conference today, he welcomed a question from a reporter who asked him if the election result could threaten Australia’s TripleA credit rating.
He thanked the reporter and said: “This is why it is very important … for me to explain what is happening at the moment.”

 

“We are simply going through a process of completing a count,” Mr Turnbull said.

 

The Prime Minister also said that he could still form a new government, for the next three years.

 

However Bill Shorten greeted the initial count with a triumphal declaration.

 

He conceded that the public might not know the outcome of Saturday’s election : “…for some days to come.”

 

“But there is one thing for sure – the Labor Party is back.” he said.

 

But which of these two men is likely to be Australia’s Prime Minister over the next three years?

 

The answer to that question will depend, very much, on their relative telephone skills.

Friday 24th June 2016 - 4:19 pm
Comments Off on Brexit vote rattles markets

Brexit vote rattles markets

by Alan Thornhill

The British Prime Minister, David Cameron, is thinking of stepping down in the wake of his defeat in a campaign to keep his country in the European Union.

 

Although the count in the referendum on this issue is not yet complete, experts at the BBC were predicting, early this afternoon Australian time, that Britain would see a 52-48 per cent vote in favour of Britain leaving the EU, which it joined 43 years ago.

 

The vote in favour of leaving was unexpectedly high, particularly in Britain’s north.

 

The BBC said 15,580,755 Britons had voted to leave the EU at that point, while just 14,439,820  had voted to stay.

 

The knock-on effects were immediate.

 

Australian shares were 3.57 per cent down at 2.15 PM AEST, while the  $A was then hovering at 73.44US cents, a 3.84 per cent fall on the day.

 

And confusion reigned on global financial markets.

 

 

Mr Cameron had campaigned hard to keep Britain in the European Union.

 

 

So his apparent failure to do so is both a big personal and political set back for him.

 

 

The British pound dropped to levels not seen in 25 years, as news of the referendum result spread.

 

 

Austerity measures, adopted by his government, are believed to have made a big contribution to the result of the referendum.

 

 

It has lessons, too, for Australia which is to hold a Federal election on July 2.

 

 

Perhaps, though, the main one is that there is, in the end, only one poll that really counts.

 

 

For opinion polls, published just one day before the referendum in Britain, suggested

that Mr Cameron’s forces would prevail.

 

 

They didn’t.

Friday 24th June 2016 - 1:11 pm
Comments Off on High Brexit vote hits markets

High Brexit vote hits markets

by Alan Thornhill

The $A tumbled today, as the vote to leave the EU came in higher than expected.

 

However, a short time ago, the BBC still had the vote to stay higher than the vote to leave.

 

At that point, 2,933,388 Britons had voted to stay in the EU.

 

But 2,841,709 had voted to leave.

 

The $A fell by 1.35 per cent, to 75.35 US cents in the confusion that followed the unexpectedly high vote to leave.

 

That vote is seen, in large part, as a product of British impatience with calls for austerity.

 

But British Conservatives are being urged today to maintain their faith in the British Prime Minister, David Cameron, who campaigned hard for the no vote, that would keep Britain in the EU.

Thursday 16th June 2016 - 1:43 pm
Comments Off on Looking behind those unemployment figures

Looking behind those unemployment figures

by Alan Thornhill

Analysis

 

The job market figures, that were published today, don’t look too bad.

 

Indeed graphs that the Bureau of Statistics presented with its  May labour force figures appear to show things moving both strongly and in the right directions.

 

They show Australia’s unemployment rates unmistakably on  a downward path.

 

Total employment, too, is rising strongly.

 

The Bureau’s integrity, too, is beyond question.

 

So why, then, does the uncomfortable feeling, that perhaps the monthly labour force figures are no longer capturing the full picture, of Australia’s increasingly complex labour markets,  persist?

 

There are, of course, special cases, as there always will be.

 

The nation’s latest youth unemployment rate, for example, has not yet been published.

 

But it will probably turn out to be roughly double the general unemployment rate of 5.7 per cent.

 

What else, though, is actually going on out  there in the real  world?

 

One figure, that the bureau did publish today, offers a clue.

 

The bureau said Australia’s labour force underutilisation rate was steady in May, at 14.2 per cent.

 

That means, at the very least, that many workers who have lost “old” jobs, perhaps in the now abandoned car industry, are still waiting around – maybe  in part time work – until they can get better “new” jobs – making submarines.

 

But will that part time work pay their grocery bills?

 

And what do we mean by full time work, anyway?

 

There are still many  questions to be asked – and answered – about Australia’s new workplace practices.

Tuesday 14th June 2016 - 12:34 pm
Comments Off on A steady recovery:but where are the jobs?

A steady recovery:but where are the jobs?

by Alan Thornhill

The Australian economy – outside mining -is continuing to show signs of a steady recovery – as the July 2 elections approach, according to a new survey.

 

The National Australia’s monthly business survey for May, which has just been published, cautioned, though, that the full impact of this improvement is not yet showing up in the nation’s job market.

 
The bank’s Chief Economist, Alan Oster, said: “the Survey is suggesting further improvement for the non-mining sectors going into Q2, with some evidence that growth is becoming more broad-based”.

 

Mr Oster said business conditions had remained strong   strong on the activity side.

However he added “…firms continue to be relatively restrained in terms of their demand for labour”.
“But most industries did record an improvement in business conditions for May.

“Service industries continue to lead the way, which now includes distributional services such as retail.

“But mining and construction remain quite weak.

Mr Oster said this was”partly a reflection of the ongoing downturn in spending on resource projects”  Mr Oster added.

 

However, he noted too, that: “despite elevated business conditions, firms are reporting slightly lower levels of confidence.

 

The confidence index eased 2 points to +3 index points in May, pushing the index further below its long-run average.

 

And he added: “the RBA’s cut to interest rates did not help lift business confidence as we had hoped, even as sales activity continues to improve”.
He said, though, that “uncertainty around the upcoming election might be a factor here, but mixed results across industries suggest that other factors are at play”.

Thursday 2nd June 2016 - 1:28 pm
Comments Off on Retail sales rise – slightly

Retail sales rise – slightly

by Alan Thornhill

Australia’s retail sales rose by 0.2 per cent in April.

And our trade deficit shrank by 20 per cent during the month.

These seasonally adjusted figures were published by the Australian Bureau of Statistics today.

The Bureau also said that, on similarly adjusted figures, sales in cafes, restaurants and take away food stores had all risen during the month.

We also spent more on clothing and shoes.

But we spent less on food.

Tne small rise in our spending in April followed a rise of 0.4 per cent on the same indicator in March.

The Bureau also reported yesterday that – spurred by exports – thee Australian economy grew by 3.1 per cent in the 12 months to the end of March.

Tuesday 31st May 2016 - 12:34 pm
Comments Off on Super:Who’s missing out?

Super:Who’s missing out?

by Alan Thornhill

Analysis

So you are young and self-employed, but you’ve remembered retirement, right?

Well, perhaps.

But there is a special reason for asking that, apparently intrusive, question.

Recent research, by the Association of Superannuation Funds of Australia (ASFA) found that almost one young, self employed Australian in four has no super.

The Association’s Chief Executive Officer Pauline Vamos also says it is “extremely concerning” that older Australians, who have been self employed, often have much less money in their superannuation accounts than others, as they approach retirement.

She is urging young self-employed Australians to do a little retirement planning.

Ms Vamos admits that she is also disturbed by another finding that emerged from ASFA’s research.

Nearly 10 per cent of the workforce is self-employed and it is currently not compulsory for them to make superannuation contributions.

In the run up to retirement, those who are self-employed and are aged 60-64, have around half the superannuation of employees.

Only 27 per cent of those in their 60s who are self-employed, and soon to reach retirement, have more than $100,000 in superannuation, compared to 50 per cent of employees under the Superannuation Guarantee (SG).

Ms Vamos said that is “extremely concerning.”

The research also found that said people with lower-value business assets were also found to be more likely to have lower superannuation balances, or no super at all.

Those with lower-value business assets were also found to be more likely to have lower superannuation balances, or no super at all.

Ms Vamos said many sald many self-employed Austtralians would not have enough money fpr a comfortable retirement

““We encourage all Australians to think about the lifestyle they want in retirement and to setup, and make regular contributions to superannuation,”
she said .

“Business assets such as financial, shares or investment properties are often believed to serve as de-facto superannuation. However many of those who are self-employed do not have significant business or financial assets, and may struggle sustaining the standard of living they are used to when they reach retirement age.

“Business assets such as financial, shares or investment properties are often believed to serve as de-facto superannuation. However many of those who are self-employed do not have significant business or financial assets, and may struggle sustaining the standard of living they are used to when they reach retirement age.

“Superannuation is a purpose built system for the building of retirement savings. Because it is a long-term investment, the earlier you start putting more into super, the more you benefit from the effects of compounding interest. Contributing to super makes for a sound business decision.”

Because it is a long-term investment, the earlier you start putting more into super, the more you benefit from the effects of compounding interest. Contributing to super makes for a sound business decision,” Ms Vamos said.

While making contributions to super is currently not compulsory for the self-employed, if they do, there are a number of benefits they can potentially claim from the Government, such as bonus co-contributions, she added.

“Now is an opportune time for all, particularly those who are self-employed, to assess where they are in terms of their retirement planning, where they want to get to and how to save enough money to get there,” Ms Vamos concluded.

“Now is an opportune time for all, particularly those who are self-employed, to assess where they are in terms of their retirement planning, where they want to get to and how to save enough money to get there,” Ms Vamos concluded.

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Alan Thornhill is a parliamentary press gallery journalist.
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