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Tuesday 3rd May 2016 - 5:32 pm
Comments Off on Testing investors

Testing investors

by Alan Thornhill

Analysis

Falling prices have allowed the Reserve Bank to shave interest rates.

But how well with this fit, with the Federal government’s economic policies?

We don’t know yet, because at the time of writing the Treasurer, Scott Morrison, still had not delivered his budget speech, in which he is expected to spell out those aims, in detail.

But we can say, safely, that the patience of Australian investors will be tested, in the months and years ahead.

The Reserve Bank’s decision today, to lower its cash rate from 2 to 1.75 per cent, is of historic significance, in the management of the nation’s finances.

The bank’s Governor, Glenn Stevens, was frank about the bank’s assessment of the circumstances in which it was made.

He said:” This follows information showing inflationary pressures are lower than expected.

“The global economy is continuing to grow, though at a slightly lower pace than earlier expected, with forecasts having been revised down a little further recently.

” While several advanced economies have recorded improved conditions over the past year, conditions have become more difficult for a number of emerging market economies.”

That’s not what investors are looking for, when they decide where to put their money.

Low risk and the prospect of reliable returns are more attractive, or even just acceptable prospects.

Will Mr Morrison’s budget help to produce happier circumstances of that kind?

Well, Australia is, once again, going through a time of quite basic adjustment.

The minerals boom is over.

Investors must look for fresh opportunities, in this time of adjustment.

They will be available.

But will tonight’s budget be compatible with them?

Perhaps that’s the real question.

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Tuesday 3rd May 2016 - 3:57 pm
Comments Off on The Reserve Bank decides

The Reserve Bank decides

by Alan Thornhill

The Reserve bank has cut its cash rate by 25 basis points to 1.75 per cent

In a statement explaining the decision the bank’s Governor, Glenn Stevens, said:”At its meeting today, the Board decided to lower the cash rate by 25 basis points to 1.75 per cent, effective 4 May 2016.

This follows information showing inflationary pressures are lower than expected.

“The global economy is continuing to grow, though at a slightly lower pace than earlier expected, with forecasts having been revised down a little further recently.

” While several advanced economies have recorded improved conditions over the past year, conditions have become more difficult for a number of emerging market economies.

‘”China’s growth rate moderated furthe”r in the first part of the year, though recent actions by Chinese policymakers are supporting the near-term outlook.

“Commodity prices have firmed noticeably from recent lows, but this follows very substantial declines over the past couple of years.

“Australia’s terms of trade remain much lower than they had been in recent years.

“Sentiment in financial markets has improved, after a period of heightened volatility early in the year.

“However, uncertainty about the global economic outlook and policy settings among the major jurisdictions continues. Funding costs for high-quality borrowers remain very low and, globally, monetary policy remains remarkably accommodative.

“In Australia, the available information suggests that the economy is continuing to rebalance following the mining investment boom.

“GDP growth picked up over 2015, particularly in the second half of the year, and the labour market improved.
Indications are that growth is continuing in 2016, though probably at a more moderate pace. Labour market indicators have been more mixed of late.

“Inflation has been quite low for some time and recent data were unexpectedly low. While the quarterly data contain some temporary factors, these results, together with ongoing very subdued growth in labour costs and very low cost pressures elsewhere in the world, point to a lower outlook for inflation than previously forecast.

“Monetary policy has been accommodative for quite some time. Low interest rates have been supporting demand and the lower exchange rate overall has helped the traded sector.

“Credit growth to households continues at a moderate pace, while that to businesses has picked up over the past year or so.

“These factors are all assisting the economy to make the necessary economic adjustments, though an appreciating exchange rate could complicate this.

“In reaching today’s decision, the Board took careful note of developments in the housing market, where indications are that the effects of supervisory measures are strengthening lending standards and that price pressures have tended to abate.

“At present, the potential risks of lower interest rates in this area are less than they were a year ago.

“Taking all these considerations into account, the Board judged that prospects for sustainable growth in the economy, with inflation returning to target over time, would be improved by easing monetary policy at this meeting,”Mr Stevens said.
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Monday 2nd May 2016 - 6:30 pm
Comments Off on Labor again ahead in the polls, but…

Labor again ahead in the polls, but…

by Alan Thornhill

A new Morgan Poll once again puts Labor in front, but the pollster adds that if a federal election were held today, the result would probably be too close to call.

Gary Morgan, the Executive Chairman of Roy Morgan research, said it could well result in a hung Parliament.

He said that in early May ALP support was up 1 per cent at 51 per cent.

The Coalition’s support fell 1 per cent, to 49 cent on a two-party preferred basis.

“ This is the best result for ALP since Malcolm Turnbull became Prime Minister in September 2015,” he added.

Significantly the Roy Morgan confidence level also fell, slightly, to its lowest level ince Mr Turnbull became Prime Minister.

It showed that only with 39.5 per cent of Australians believe that Australia is ‘heading in the right direction’ while 41.5 per cent believe the country is ‘heading in the wrong direction’

This week’s Morgan Poll on Federal voting intention was conducted over the last two weekends, April 23-24, and April 30 and May 1, 2016, with an Australia-wide cross-section of 2,951 Australian electors.

Monday 2nd May 2016 - 12:03 pm
Comments Off on It’s not just iron ore and coal now

It’s not just iron ore and coal now

by Alan Thornhill

Australian wines, lobster and cherries are starting to appear on Chinese tables.

And that’s just the start of it.

The Federal Minister for Trade and Investment, Steven Ciobo, says our Chinese customers are also buying more fresh mangoes, abalone and boneless beef from us as well.

So our trade, with our most important customer, now goes well beyond their traditional purchases of iron ore and coal.

Mr Ciobo wants us to keep all this in proportion.

In a statement today, he merely says Chinese trade data shows “encouraging early signs that the China-Australia Free Trade Agreement (ChAFTA) is delivering for Australian business.

“Between January and March 2016, Chinese imports of Australian bottled wine grew more than 60 per cent compared to the same period 12 months previously, to reach $200 million, as tariffs were cut twice, from 14 per cent to 8.4 per cent,” he added.

He also said:”with tariffs cut, China’s $11.6 million worth of imports of fresh Australian lobster between January and March were triple those of 12 months ago, and exceeded China’s entire 2015 imports of Australian lobster. 

“Milk powder and fresh cherry imports more than doubled.”

Mr Ciobo also said: “Chinese imports of other products – including fresh mangoes, fresh abalone, fresh and frozen boneless beef, various types of cheese, and hay and chaff – grew impressively as ChAFTA cut tariffs and boosted Australia’s competitive position.”

“Imports of Australian manufactures that benefited from tariff cuts – like titanium for pigments, unwrought zinc and various mixed food preparations – also grew strongly.

He said that:”These impressive results occurred alongside the third round of tariff cuts in early 2016 under both the Korea-Australia Free Trade Agreement (KAFTA) and Japan-Australia Economic Partnership Agreement (JAEPA), which are also driving increased Australian exports to these two major markets where protection is being reduced.”

“Through the trifecta of FTAs Australian businesses now have preferential access to all three giant north Asian markets – access that is unmatched by other major advanced economies.”

“This positions Australia to continue to capitalise on the rapid expansion of Asia’s middle classes and their demand for the high quality produce and other goods we can provide.” 

“This means exciting opportunities for Australian businesses and will drive jobs and growth in the Australian economy.”

“With tariffs on Australian products continuing to be cut annually into north Asian markets, these three FTAs will continue to deliver for Australian business for years to come,” Mr Ciobo said.

Thursday 14th April 2016 - 1:50 pm
Comments Off on Trend job growth eases

Trend job growth eases

by Alan Thornhill

Trend employment growth in Australia has eased.
The Bureau of Statistics reported today that this indicator, which the Bureau regards as the most reliable it produces, fell to just 2.2 percent in March.
That was down from 2.6 per cent in December last year.
On its more commonly used seasonally adjusted measure, the Bureau reported that the number of Australians with jobs rose by 26,100 in March.
That left the nation’s seasonally adjusted labour force participation rate for March at 64.9 per cent.
The Bureau said too that – on the same basis – the number of people unemployed fell by 7,300 during the month
This left Australia with a seasonally adjusted unemployment rate of 5.7 per cent for the month, 0.1 percentage points below the February level.

Monday 4th April 2016 - 7:01 pm
Comments Off on Hot weather hits sales

Hot weather hits sales

by Alan Thornhill

Hot weather kept shoppers  at home – and  retail sales flat in February.

 This situation is reflected in figures the Bureau of Statistics published today.

These showed that – overall – the increases that occurred in retail sales in February –were offset by falls, at least on seasonally adjusted figures.

The Bureau reported that sales of clothing, shoes and household goods had all risen during the month.

But we spent less in the nation’s cafes, restaurants, take-away food and other retail outlets.

Our spending also continued t o rise on trend figures, with  the  Bureau reporting a 0.2 per cent rise on this basis for the month.

 

 

 

 

 

 

 

 

 

February 2016 January 2016 to February 2016
$m % change
Turnover at current prices
Trend 24 873.3 0.2
Seasonally Adjusted 24 838.4 0.0

 

Monthly Turnover, Current PricesTrend Estimate

FEBRUARY KEY POINTS

CURRENT PRICES

  • The trend estimate rose 0.2% in February 2016. This follows a rise of 0.2% in January 2016 and a rise of 0.3% in December 2015.
  • The seasonally adjusted estimate was relatively unchanged (0.0%) in February 2016. This follows a rise of 0.3% in January 2016 and a relatively unchanged (0.0%) December 2015.
  • In trend terms, Australian turnover rose 3.7% in February 2016 compared with February 2015.
  • The following industries rose in trend terms in February 2016: Clothing, footwear and personal accessory retailing (0.7%), Household goods retailing (0.3%), Food retailing (0.1%), Cafes, restaurants and takeaway food services (0.1%) and Department stores (0.2%). Other retailing (0.0%) was relatively unchanged in trend terms in February 2016.
  • The following states and territories rose in trend terms in February 2016: New South Wales (0.2%), Victoria (0.2%), Queensland (0.2%), the Australian Capital Territory (1.1%), South Australia (0.3%), Tasmania (0.3%) and the Northern Territory (0.3%). Western Australia (-0.2%) fell in trend terms in February 2016.

NOTES

FORTHCOMING ISSUES

ISSUE Release Date
March 2016 5 May 2016
April 2016 2 June 2016
May 2016 5 July 2016
June 2016 4 August 2016
July 2016 1 September 2016
August 2016 5 October 2016

CHANGES IN THIS ISSUE

This issue includes updated online retail turnover estimates for the February 2016 reference month.

REVISIONS

Revisions have been applied to the original estimates for January 2016 as a result of updates to survey respondent information. Net revisions totalled $24.2 million. Revisions were applied to all publication industries.

Revisions to seasonally adjusted estimates are due to revisions to original estimates as well as the concurrent methodology for deriving seasonal factors.

TIME SERIES DATA

Data available from the Downloads tab of this issue on the ABS website include longer time series of tables in this publication:

  • Monthly retail turnover by state and 15 industry subgroups in trend, seasonally adjusted and original terms
  • Monthly retail turnover completely enumerated and sample sectors, by six industry groups and also by state in original terms
  • Monthly retail turnover completely enumerated sector, total level in trend, seasonally adjusted and original terms
  • Quarterly retail chain volume measures by six industry groups and also by state in trend, seasonally adjusted and original terms
  • Quarterly retail turnover per capita in trend, seasonally adjusted and original terms
  • Quarterly sales to households by selected service industries in original terms.

INQUIRIES

Inquiries about these and related statistics, contact the National Information and Referral Service on 1300 135 070. The ABS Privacy Policy outlines how the ABS will handle any personal information that you provide to us.

Friday 18th March 2016 - 8:55 am
Comments Off on Senate’s marathon debate drags on

Senate’s marathon debate drags on

by Alan Thornhill

The  Federal government has threatened to keep Parliament sitting until Easter if necessary to get controversial legislation, which would affect the way Senators are appointed passed.

The threat was made by a senior West Australian Liberal, Matthias Cormann, during debate on a bill containing this proposal.

Labor Senators responded angrily, saying they were prepared to sit until the middle of the year, to protect voters’ rights, to choose Senators from small parties or those who stand as independents.

So the Senate, unable to resolve its differences, sat past midnight, and was still sitting at 6am today.

All this has left the Prime Minister, Malcolm Turnbull, with very little time to call the double dissolution he is expected to hold on July 2.

Thursday 10th March 2016 - 6:49 pm
Comments Off on The good customer that keeps getting better

The good customer that keeps getting better

by Alan Thornhill

China is already Australia’s best customer.

However new research suggests it could be much better.

It also suggests that your business might well benefit.

The research, published by the Australia China Relations Institute points out that at 109 million in 2015, China’s middle class is already bigger than that in the United States.

Seventeen million bigger in fact.

So we can expect to sell more than iron ore and coal in future.

The Institute also says : “Australia’s ‘China Resources boom’ may have peaked but 57 cents in every dollar increase in Australian exports between 2009-10 and 2014-15 still came from China”

And it adds: “If managed well, Australia’s ‘China dining and services boom’ could run for decades.

There is much more on the Institute’s website at Australia China Relations.Org

Here, though, are some samples:-

In 2014-15 Australia’s agricultural exports to China stood at $9.0 billion

That was up from $3.7 billion in 2009-2010 and 72 percent more than to the US, our second largest customer.

In 2014-2015 Australia’s services exports to China stood at $8.8 billion.

This was up from $5.5 billion in 2009-2010 and 24 percent more than to the US, our second largest customer.

In 2015 more than one million Chinese  tourists visited Australia spending $7.7 billion.

That was up from $3.3 billion in 2010 and more than double that of UK visitors in second place.

By 2020 Chinese tourist spending is forecast to reach $13 billion and account for 44 percent of the growth in total tourist spending to 2024-25,the Institute said.

It  added:“ China’s middle class is no longer confined to the tier-one metropolises of Beijing, Shanghai, Guangzhou and Shenzhen.

By 2022 84 percent of the middle class is expected to live outside these cities.”

“In 2011 the only direct flights to Australia were from Beijing, Shanghai, Guangzhou and Shenzhen”

“ Now there are direct flights from 11 Chinese cities, including inland centres such as Chengdu, Chongqing, Wuhan and Xian.”

“ In 2015 there were 170,212 enrolments by Chinese students at Australian educational institutions, 2.4 times the number of students from India in second place

In 2013-14 the number of Australian student visa applications lodged from China’s traditionally less wealthy inland provinces was 12,345, up 30 percent from a year earlier.

“Those from coastal provinces stood at 23,805, up 24.6 percent.”

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Alan Thornhill is a parliamentary press gallery journalist.
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