Browsing articles in "manufacturing"
Monday 7th December 2015 - 5:29 pm
Comments Off on Government to spend heavily on innovation

Government to spend heavily on innovation

by Alan Thornhill

Malcolm Turnbull declared today that his government is prepared to invest $1.1 billion, to produce an “ideas boom” in Australia, to replace the minerals boom.

 

The Prime Minister was launching the Innovation and Science Agenda, that he says will help create “a modern, dynamic 21at Century economy” for Australia.

 

He said the opportunities for Australia had “never been greater.”

 

And he declared that government agencies would overhaul the way they purchase local inventions from small business.

 

Mr Turnbull also announced that the CSIRO would get much more money to finance its research.

 

In a joint statement with Science  Minister Christopher Pyne, Mr Turnbull also said:”Australian businesses have unprecedented access to the global economy through our new trade agreements with China, Japan and Korea.

 

“More than half the world’s middle class already live in our region.”
“Our businesses, universities and research organisations like the CSIRO are also among the best in the world.”
“But Australia can improve in key areas:”

 

He warned that:”Australia is falling behind on measures of commercialisation and collaboration, consistently ranking last or second last among OECD countries for business-research collaboration.”
“Our appetite for risk is lower than in comparable countries, which means Australian startups and early stage businesses often fail to attract capital to grow.”
“And participation in science, maths and computing at high school is declining,” Mr Turnbull said.

He nominated four areas for special attention.

These are
·        Culture and capital, to help businesses embrace risk and incentivise early stage investment in startups
·        Collaboration, to increase the level of engagement between businesses, universities and the research sector to commercialise ideas and solve problems
·        Talent and skills, to train Australian students for the jobs of the future and attract the world’s most innovative talent to Australia and
·        Government as an exemplar, to lead by example in the way Government invests in and uses technology and data to deliver better quality services.

 

 

 

 

 

 

 

 

 

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Tuesday 1st December 2015 - 3:28 pm
Comments Off on Rates:Glenn Stevens explains

Rates:Glenn Stevens explains

by Alan Thornhill

At its meeting today, the Reserve bank. Board decided to leave the cash rate unchanged at 2.0 per cent.

In a statement afterwards the bank’s Governor, Glenn Stevens, said the global economy is expanding at a moderate pace.
He noted that there had been some softening in conditions in the Asian region,.

But Mr Stevens also said there had been “continuing US growth and a recovery in Europe.”

He said:” Key commodity prices are much lower than a year ago.”

Mr Stevens said, this reflected “increased supply, including from Australia, as well as weaker demand.”
He warned:“Australia’s terms of trade are falling.”
Mr Stevens said:“ (the)Federal Reserve is expected to start increasing its policy rate over the period ahead, but some other major central banks are continuing to ease monetary policy.”

Hoowever, her added:“Volatility in financial markets has abated somewhat for the moment.
“ While credit costs for some emerging market countries remain higher than a year ago, global financial conditions overall remain very accommodative,” Mr Stevens said.

“In Australia, the available information suggests that moderate expansion in the economy continues in the face of a large decline in capital spending in the mining sector.”

“ While GDP growth has been somewhat below longer-term averages for some time, business surveys suggest a gradual improvement in conditions in non-mining sectors over the past year.”

“This has been accompanied by stronger growth in employment and a steady rate of unemployment.”

“Inflation is low and should remain so, with the economy likely to have a degree of spare capacity for some time yet.”

“Inflation is forecast to be consistent with the target over the next one to two years.”

“n such circumstances, monetary policy needs to be accommodative.”
“ Low interest rates are acting to support borrowing and spending. While the recent changes to some lending rates for housing will reduce this support slightly, overall conditions are still quite accommodative.”
“ Credit growth has increased a little over recent months, with credit provided by intermediaries to businesses picking up.”

“Growth in lending to investors in the housing market has eased.”
“Supervisory measures are helping to contain risks that may arise from the housing market. “
Mr Stevens said:“The pace of growth in dwelling prices has moderated in Melbourne and Sydney over recent months and has remained mostly subdued in other cities.”
“ In other asset markets, prices for commercial property have been supported by lower long-term interest rates, while equity prices have moved in parallel with developments in global markets.”

“The Australian dollar is adjusting to the significant declines in key commodity prices.”
“At today’s meeting the Board again judged that the prospects for an improvement in economic conditions had firmed a little over recent months and that leaving the cash rate unchanged was appropriate.”
“Members also observed that the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand.”
“The Board will continue to assess the outlook, and hence whether the current stance of policy will most effectively foster sustainable growth and inflation consistent with the target,” Mr Stevens said.
For Immediate Release
Statement by Glenn Stevens, Governor: Monetary Policy Decision
At its meeting today, the Board decided to leave the cash rate unchanged at 2.0 per cent.
The global economy is expanding at a moderate pace, with some softening in conditions in the Asian region, continuing US growth and a recovery in Europe. Key commodity prices are much lower than a year ago, reflecting increased supply, including from Australia, as well as weaker demand. Australia’s terms of trade are falling.
The Federal Reserve is expected to start increasing its policy rate over the period ahead, but some other major central banks are continuing to ease monetary policy. Volatility in financial markets has abated somewhat for the moment. While credit costs for some emerging market countries remain higher than a year ago, global financial conditions overall remain very accommodative.
In Australia, the available information suggests that moderate expansion in the economy continues in the face of a large decline in capital spending in the mining sector. While GDP growth has been somewhat below longer-term averages for some time, business surveys suggest a gradual improvement in conditions in non-mining sectors over the past year. This has been accompanied by stronger growth in employment and a steady rate of unemployment.
Inflation is low and should remain so, with the economy likely to have a degree of spare capacity for some time yet. Inflation is forecast to be consistent with the target over the next one to two years.
In such circumstances, monetary policy needs to be accommodative. Low interest rates are acting to support borrowing and spending. While the recent changes to some lending rates for housing will reduce this support slightly, overall conditions are still quite accommodative. Credit growth has increased a little over recent months, with credit provided by intermediaries to businesses picking up. Growth in lending to investors in the housing market has eased. Supervisory measures are helping to contain risks that may arise from the housing market.
The pace of growth in dwelling prices has moderated in Melbourne and Sydney over recent months and has remained mostly subdued in other cities. In other asset markets, prices for commercial property have been supported by lower long-term interest rates, while equity prices have moved in parallel with developments in global markets. The Australian dollar is adjusting to the significant declines in key commodity prices.
At today’s meeting the Board again judged that the prospects for an improvement in economic conditions had firmed a little over recent months and that leaving the cash rate unchanged was appropriate. Members also observed that the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand. The Board will continue to assess the outlook, and hence whether the current stance of policy will most effectively foster sustainable growth and inflation consistent with the target.

Monday 30th November 2015 - 8:08 pm
Comments Off on The economy stirs

The economy stirs

by Alan Thornhill

The Australian economy has stirred over recent months.

 

Manufacturing sales rose 0.8 per cent – on seasonally adjusted figures – in the September quarter – after six quarters of falls.

 

However this small rise – on a volume basis – seen in figures published by the Bureau of Statistics – was dwarfed by a 5.1 per cent fall over the year.

 

A survey, also published today showed business confidence fading in recent months as results failed to meet expectations.
The fall in business optimism was reflected  in the results of the  latest Dun & Bradstreet’s Business Expectations Survey.

 

These suggest a fairly subdued outlook for the first quarter of 2016.

 

However Westpac Economist, Andrew Hanlan, said the tone of the bureau’s business indicators’ survey had been more positive than anticipated.
Adam Siddique, the Head of Group Development at Dun & Bradstreet, broadly concurred.

 

He said business confidence remains historically strong,.

 

However he warned that cooling in housing market activity might present challenges in the year ahead.

 

“There can be no doubt the Sydney and Melbourne housing markets are now slowing down, which is to be expected after a period of spectacular growth,” Mr Siddique said.

 

The firm also reported that, as the new year approaches, business are reporting lowered expectations for activity across sales, profits, employees and capital investment.

It said that in the September quarter, the percentage of  businesses reporting an actual increase in activity minus percentage of businesses reporting an actual decrease fell short of expectations a across all components, except selling prices,

 

That exceeded expectations by a marginal 0.33 points.

 

Meanwhile, the actual increase in both selling prices and employment exceeded expectations for the September quarter:

Twenty five point 2 per cent of businesses reported an increase in selling prices for Q3, compared to the 24.2 per cent that had expected an increase, while 23.0 per cent of businesses reported an increase in employees for the quarter, compared to the 21.1 per cent that had expected an increase.

 

D&B said the muted outlook came despite an improvement in actual indices for profit, capital investment and selling prices in the September quarter over the June quarter.

 

Only the actual sales index decreased; while the actual employees Index remained unchanged since the previous quarter.

Monday 30th November 2015 - 5:38 pm
Comments Off on Pollster says support for Turnbull government still strong

Pollster says support for Turnbull government still strong

by Alan Thornhill

The Turnbull government has maintained its lead over Labor in the latest Morgan poll.

 

It would easily win an election held today.

 

The poll results, published today , give the government 56 per cent support, on a two party preferred basis, to Labor’s 44 per cent.

 

They also show confidence in the government up 2.5 points to 122, its highest level since March 2011.

 

Pollster Gary Morgan said the study showed the Turnbull Government’s honeymoon continuing  as Australia heads towards Christmas.

 

This week Prime Minister Turnbull has travelled to the Commonwealth Heads of Government Meeting in Malta – his first meeting with the Queen since becoming Prime Minister – and on to the United Nations Climate Conference in Paris.

 

“However, despite the issues of Global Warming and terrorism dominating the news headlines lately, Turnbull’s most important task as Prime Minister is to ensure a growing Australian economy which provides gainful employment to as many Australians as possible.”

 

“Ultimately it is job creation and sustainable economic growth in Australia which will decide the success or otherwise of Turnbull’s Prime Ministership,” Mr Morgan said.
“To be a successful Prime Minister Turnbull needs to take advantage of the boost to confidence his ascension to the top job has created …. and not allow Labor and the Greens to obstruct the implementation of overdue reforms to the Australian economy.

 

“If they continue to hold-up needed reforms, Turnbull must bypass this ‘blackmail’ and let Australian electors decide by calling an election early in 2016.” Mr Morgan added.

Monday 30th November 2015 - 2:00 pm
Comments Off on Business confidence fades as results weaken

Business confidence fades as results weaken

by Alan Thornhill

Business optimism falls away
Business optimism has weakened as results fail to meet expectations .
This is reflected in the latest Dun & Bradstreet’s Business Expectations Survey.

 

The results of the survey, which were published today, suggest a fairly subdued outlook for the first quarter of 2016.

The firm reports that, as the new year approaches, business are lowering their expectations  sales, profits, employees and capital investment.
It said, too,  that in the September quarter, the percentage of businesses reporting an actual increase in activity minus percentage of businesses reporting an actual decrease fell short of expectations a across all components, except Selling Prices,

 

That exceeded expectations by a marginal 0.33 points.

 

Meanwhile, the actual increase in both Selling Prices and Employees exceeded expectations for the September quarter.

 

The firm said 25.2 per cent of businesses reported an increase in selling prices for q3, compared to the 24.2 per cent that had expected an increase.

 

It noted too that  23.0 per cent of businesses had reported an increase in employees for the quarter, compared to the 21.1 per cent that had expected an increase.

The firm said the muted outlook comes despite an improvement in Actual Indices for Profit, Capital Investment and Selling Prices in the September quarter compared to the June quarter.

 

Only the actual sales index decreased; the actual employees index remained unchanged from the previous quarter.

Adam Siddique,  the Head of Group Development at Dun & Bradstreet, said business confidence remains historically strong,.

 

However he warned that  the cooling in housing market activity might present challenges in the year ahead.

 

“There can be no doubt the Sydney and Melbourne housing markets are now slowing down, which is to be expected after a period of spectacular growth,’ he said.

 

In light of the Treasury’s recent cut to its growth forecast, from 3  per cent to 2.75 percent, it will be interesting to see how business confidence fares if this key driver of economic activity begins to fade,” Mr Siddique said.
“Housing, along with construction and other related activities, has underpinned growth following the end of the mining boom.”

 

“The lack of business investment in non-mining areas of the economy suggests there will be no obvious candidates to pick up the slack should this turn into a sustained easing in the housing market.”
“The recent trend of Actual and Expected results gradually aligning in the headline and component indices has continued, and this is something we’ll track with interest as we head into 2016,” Mr Siddique added.

Friday 27th November 2015 - 7:30 am
Comments Off on Malcolm;s big statement

Malcolm;s big statement

by Alan Thornhill

Some might call it a mini-budget.

 

All the Prime Minister said, in an interview with Leigh Sales on the ABC last night, though, is that his government would release “an innovation statement” within the next two weeks.

 

Well, perhaps he did add a little dressing, to make the prospect enticing.

 

How?

By promising, for example, that he would would “set out a very large number of substantial measures. to drive the innovation that would ensure that Australians, their children and grandchildren, will have great jobs.”

 

“…better jobs in the future that will drive our economy,” he added.

 

Then he laid it on the line.
“I don’t think anybody has any doubt that if we are to remain the high wage, generous social welfare net country, first world country that we want to be then we need to be more innovative, more competitive, more productive and the innovation statement will be a good example of the measures the government is undertaking to achieve that.”

 

Yet Mr Turnbull, himself, has some catching up to do in this regard.
He saddled Australia with the pursuit of an internet system which, even if achieved, would offer speeds be well below those of many other first world countries, such as France.
Of course, with its vast expanses to connect, Australia does have difficult – and expensive – problems to overcome, in building anything that could – even remotely – be called a fast internet system.

 

Yet the picture emerging from Mr Turnbull’s attempt to do so – on the cheap – has not been impressive, so far.

 

Long waits for connection.

Cost over-runs.

 

There can be no doubt about one thing.

 

This “innovation statement, when it appears, will be drawn up to underwrite Mr Turnbull’s bid for re-election next year.

 

Politically, his situation has its difficulties, despite what some are calling his initial “honeymoon” period.

 

He is still the man who became Prime Minister, without a popular mandate.

 

And he is not short of opponents who stand ready to remind him of that fact, if he starts making mistakes, as most Prime Ministers do, as they start to settle into office.

Mr Turnbull also declared during his interview last night that he is “comfortable” in his new job.

 

But make no mistake.

 

His handling of the Brough affair is already being watched very closely.

Wednesday 18th November 2015 - 7:07 pm
Comments Off on Wage growth hits new low

Wage growth hits new low

by Alan Thornhill

Australian wages – measured on the wage price index – grew by just 2.3 per cent in the 12 months to the end of September.

 

The Bureau of Statistics, which published this trend figure today, said private sector wage growth of just 0.5 per cent in the September quarter and 2.1 per cent in the 12 months to the end of September, on seasonally adjusted estimates had been the lowest on record.

 

The Bureau first started keeping wage growth statistics in their current form in 1997.

 

Public sector wages grew by 2.7 per cent over the past year.
However ohn Osborn, Director of Economics and Industry Policy at the Australian Chamber of Commerce and Industry, said :the wage growth figures don’t tell the full story,

 

“There is also low inflation and the fact real wage growth is in line with its five and ten year average.

 

“What the latest figures actually show is the importance of securing wide ranging economic reform.

 

“We want Australia to have high real wages, but this can only be achieved sustainably through greater productivity growth and stronger investment.”

 

To secure that, we need genuine economic reform of tax, workplace relations and our Federation, Mr Osborn added.

Wednesday 18th November 2015 - 12:25 pm
Comments Off on RBA chief sees new opportunities in China

RBA chief sees new opportunities in China

by Alan Thornhill

A Reserve Bank chief says Australia can expect to benefit from changing patterns of demand in China and Asia generally.

 

Christopher Kent, the bank’s Assistant Governor (Economic), made the observation at a UBS conference in Sydney today.

 

He said a slowing in the Chinese economy had already affected Australia in at least two ways..
First, the substantial slowing in industrial production has contributed to a further decline in commodity prices over the course of this year,” Mr Kent said.

 

 

Second, the shift in demand towards services and agricultural products within China and the Asian region more broadly presents new opportunities for Australian exporters.

 

And he added:“ While our comparative advantages in service industries are perhaps less obvious than they are for mineral resources, the rise in the demand for services from a large and increasingly wealthier populace in our region will no doubt be to our benefit.
Mr Kent also said:”The easing in the growth of the Chinese economy over the past year or so has two related parts.

 

The economy is slowing as it matures, and this is to be expected.

 

Overlaying that, there has been a substantial slowing in the industrial sector, linked in part to earlier excesses in construction.

 

How all of this will play out and the effects on the Australian economy are uncertain.

 

But he added:I’ll briefly highlight some possibilities.”

 

“Let me be clear though, many of these have positive implications for our economy.
It is natural for the speed of China’s economic development to ease and for its nature to evolve.”
He also  said:”part of this reflects slower growth of the working-age population, which is now in decline.

 

Other than increasing the retirement age, there is little that can be done to alter that in the coming years, notwithstanding the ending of the one-child policy.
“However, growth continues to be supported by the process of urbanisation, which uses commodities intensively.”
“This has further to run, albeit at a more gradual pace.”
“Productivity growth appears to be slowing as windfall gains from earlier reforms have waned.”

 

“But there remains a large gap between productivity in China and in advanced economies.”

 

“That gap could be closed more quickly via additional reforms to allow a greater role for market forces in allocating productive resources.”

“The authorities have expressed support for such reforms.”
“The authorities would also like to see growth rebalancing from investment towards consumption.”

 

“That is happening gradually.”

 

“It is also being accompanied by a rise in the share of activity accounted for by the services sector as the economy develops and household incomes rise.”
“While these longer-run changes imply a decline in the growth rates of investment and industrial production, both have also experienced a noticeable cyclical slowing over the past year or more,” Mr Kent said.

 

“As earlier excesses in residential construction gave rise to a large stock of unsold housing, house prices declined and so too did housing construction.”

 

“Sales and prices have recovered a bit since the start of this year, but there is little sign to date of a sustained improvement in construction activity.”

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