by Alan Thornhill
With returns on interest investments at historic lows – and fresh doubts appearing about the future of residential investment, this might be worth some thought.
Especially in view of the results of the National Australia Bank’s latest Commercial Property Survey,which is for Q2 2016
It shows that: “sentiment in the retail commercial property market has risen to its highest level in over six years.”
However, the bank adds: “strong retail market confidence was not enough to offset the lower sentiment recorded across the office, industrial and CBD hotels sectors.
“ Overall, the NAB Commercial Property Index fell 7 points to +5 in the second quarter of this year,” it said.
“This was a strong quarter for capital growth in the retail property sector, with respondents expecting retail to grow 1.5 per cent in the next year.
“As a result, sentiment in the retail commercial property sector rose to its highest level since early 2010,” NAB Group Chief Economist Alan Oster said.
“However, sentiment from respondents was lower across all other sectors, particularly in CBD hotels which was the weakest sector overall .”
“Looking towards the future, confidence levels remain broadly unchanged over the next one to two years across all markets.”
Market sentiment remained strongest in NSW (+37) and Victoria (+28), likely driven by the continued non-mining recovery whilst sentiment fell heavily in SA/NT (-27
to -51) and, although still subdued, improved slightly in WA (up +4 to -48).
The Q2 Survey showed that one in two developers plan to start new works within the next six months.
“But developers have also reported further deterioration in their debt and equity funding situations.”
That is expected to continue over the next six months.
“This is coupled with respondents reporting the average pre-commitment percentage required for developments increased for the fifth straight quarter,” Mr Oster said.
The Bank said About 230 property professionals had participated in the Q2 Survey.
by Alan Thornhill
Lending for investment housing rose by 3.2 per cent last month, on seasonally adjusted figures published by the Bureau of Statistics today.
The Bureau’s figures show that almost $11.8 billion was made available, through fixed loans, for this purpose last month.
The Bureau also reported that there had been a 1.2 per cent rise, in commitments for owner occupied housing last month.
Loans for the construction of dwellings rose by 2.1 per cent in June, while lending for the purchase of established dwellings rose by 1 per cent.
Lending for the purchase of new dwellings rose by 2.7 per cent in June.
by Alan Thornhill
A new business survey shows that while the Australian economy is still strong, medium to longer term risks are becoming more apparent.
These are the conclusions the National Australia Bank’s Chief Economist, Alan Oster, reaches from the results of the bank’s latest monthly business survey.
The bank sid: “for a while now, the NAB Business Survey has provided a relatively consistent message on the health of the Australian economy.”
And it added: “It continues to show a steady recovery in non-mining activity, with the services sectors clearly leading the way.”
However Mr Oster added a warning.
He said: “there were some notable differences in business conditions across industries this month. “
“The largest deterioration was in mining, followed by big falls in transport and wholesale.”
“Retail saw the largest improvement, following a weak result last month.”
But Mr Oster said: “…the contribution from major industries suggests a relatively mixed bag.”
He said the service sectors continue to be the best performers.
“ Signs of a broadening recovery in recent months have again become more obscure following sharp deteriorations in transport and wholesale – although the recovery in retail conditions was encouraging.”
The bank said the economy could run into headwinds from 2017.
And it added: “these headwinds may require additional policy action to support growth, especially if the RBA hopes to see inflation return to within its target band.
“ Both global and domestic disinflationary pressures are expected to keep CPI inflation below the target band for an extended period.
And structural shifts in the economy and modest economic growth would leave the unemployment rate under pressure.
“To stabilise the unemployment rate (at around 5.5 per cent) we expect the RBA will feel the need to provide further medium term support through two more 25bp cuts in May and August 2017 (to a new low of 1 per cent).
“And thereafter raises the prospect of the RBA thinking about the use of non-conventional monetary policy measures,” it added.
by Alan Thornhill
Retail sales rose 0.1 per cent in June on seasonally adjusted figures the Bureau of Statistics published today.
The Bureau said this followed a rise of 0.2 per cent in May 2016.
It said that in seasonally adjusted terms, there were rises in clothing, footwear and personal accessory retailing (3.5 per cent), household goods retailing (0.3 per cent) and department stores (0.7 per cent).
But there were falls in food retailing (-0.6 per cent), cafes, restaurants and takeaway food services (-0.1 per cent) and other retailing (-0.1 per cent) in June 2016.
In seasonally adjusted terms, retail sales rose in Queensland (1.1 per cent) and Western Australia (0.1 per cent).
Turnover in South Australia was relatively unchanged (0.0 per cent).
And there were falls in New South Wales (-0.2 per cent), Victoria (-0.1 per cent), the Australian Capital Territory (-0.6 per cent), the Northern Territory (-1.1 per cent) and Tasmania (-0.2 per cent).
The Bureau also said that the trend estimate for Australian retail turnover rose 0.2 per cent in June following a 0.2 per cent rise in May 2016.
Compared to June 2015 the trend estimate rose 3.1 per cent.
Online retail turnover contributed 3.4 per cent to total retail turnover in original terms.
In seasonally adjusted volume terms, turnover rose 0.4 per cent in the June quarter 2016, following a rise of 0.5 per cent in the March quarter 2016.
The largest contributor to the rise was “other retailing,” which rose 1.9 per cent in seasonally adjusted volume terms in the June quarter 2016.
by Alan Thornhill
Malcolm Turnbull directly challenged Australia’s big banks today, saying they should pass on the rate cut the Reserve Bank announced earlier this week in full, or explain why.
So far the banks have been passing on about half of the 0.25 per centage point cut.
That has left families with $300,000 mortgages some $20 a month out of pocket.
The Prime Minister said Australia had needed a period of economic transition after its huge mining construction boom.
“That’s why we have the big trade export deals, the big deals, the big free trade deals,” he said.
However the shadow Treasurer, Chris Bowen disagreed.
He said the government was simply “chest beating” on the rate cut.
So, this is a Government which is being exposed for a lack of economic leadership, for a lack of economic plan,” Mr Bowen said.
He said the government had no plan to increase investment in the non-mining sector, to ensure that we have jobs for the future. “
Malcolm Turnbull and Scott Morrison are simply not up to the job,” Mr Bowen said.
by Alan Thornhill
Hard working Australians, who leave themselves little time to shop, are buying more of their food and groceries online.
The National Australia Bank, which watches these trends, says we spent more than $20 billion, making online purchases over the past year.
And the strongest growth, seen in that time, was among those aged 35 to 44.
That is people of prime working age.
Their spending on groceries and liquor rose by 20,5 per cent over the past year.
They also spent 19.2 per cent more on homewares and appliances.
Meanwhile 18-24 year olds spent 22 per cent more on fashion and 19.9 per cent more on media.
The bank said that while overall growth in online spending was still quite strong, it had flattened from that seen back in 2011 when the index was first established.
The bank’s Chief Econmomist, Alan Oster, said “the $20.1 billion spent online by Australians in the last year is equivalent to 6.8 per per cent of spending in the bricks and mortar’ retail sector.
“And growth by online businesses is far outpacing these traditional retailers,” he added.s
by Alan Thornhill
The Reserve Bank today cut its cash rate by 25 basis points, to its lowest level ever, just 1.5 cent.
Explaining the decision, the bank’s Governor, Glenn Stevens said: “the global economy is continuing to grow, at a lower than average pace.
“Several advanced economies have recorded improved conditions over the past year, but conditions have become more difficult for a number of emerging market economies.
“Actions by Chinese policymakers are supporting the near-term growth outlook, but the underlying pace of China’s growth appears to be moderating, “ Mr Stevens said.
He noted that: “commodity prices are above recent lows.”
However he added: “…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.
“Financial markets have continued to function effectively.
Mr Stevens said: ” Funding costs for high-quality borrowers remain low and, globally, monetary policy remains remarkably accommodative.
“In Australia, recent data suggests that overall growth is continuing at a moderate pace, despite a very large decline in business investment,” he added.
“Other areas of domestic demand, as well as exports, have been expanding at a pace at or above trend.
“Labour market indicators continue to be somewhat mixed, but are consistent with a modest pace of expansion in employment in the near term.
“Recent data confirm that inflation remains quite low.
“Given very subdued growth in labour costs and very low cost pressures elsewhere in the world, this is expected to remain the case for some time.
“Given very subdued growth in labour costs and very low cost pressures elsewhere in the world, this is expected to remain the case for some time,” Mr Stevens said.
The Bureau of Statistics reported that Australia’s inflation rate, on the Consumer Price Index, stood at just 1 per cent in the 12 months to the end of June.
That is well below the bank’s target range – of 2 to 3 per cent inflation – over the course of a business cycle.
by Alan Thornhill
The main appointments Mr Shorten made to his new ministry and cabinet include:-
Deputy Opposition Leader and shadow minster for education Tanya Plibersek.
Shadow foreign affairs minister, and Senate Opposition Leader Penny Wong.
Shadow special minister of state and Deputy Senate Opposition Leader, Stephen Conroy
Shadow Treasurer Chris Bowen
Shadow minister for families and social services Jenny Macklin
Shadow minister for the environment and water Tony Burke
Shadow minister for climate change and energy Mark Butler
Shadow minister for defence Richard Marles
Shadow minister for finance Jim Chalmers
Shadow minister for employment and workplace relations Brendan O’Connor
Shadow Attorney General Mark Dreyfus QC
Shadow minister for immigration and border protection Shayne Newman
Weathercoast by Alan Thornhill
A novel on the murder of seven young Anglican Christian Brothers in the Solomon Islands.
Available now on the iTunes store.
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
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