by Alan Thornhill
Retail sales were flat in July, according to figures the Bureau of Statistics published today.
The bureau also reported that new private capital spending continued to fall sharply in the June quarter.
But it said and that the number of working days lost through strikes – and other industrial disputes – rose over the past year.
The bureau said retail turnover did not change in July, although it had risen by 0.1 per cent in June.
It made this comparison on seasonally adjusted figures.
On the same basis, there were rises in food retailing (0.7 per cent), cafes, restaurants and takeaway food services (1.2 per cent), and other retailing (0.2 per cent).
Sales of clothing, footwear and personal accessories also rose by 0.3 per cent.
However department store sales fell during the month.
The bureau also said that, in seasonally adjusted terms, retail sales rose by 0.5 per cent in Queensland, South Australia and Tasmania while sales in WA rose by 0.3 per cent and those in the ACT increased by 1.2 per cent.
Sales in the Northern Territory rose by 0.4 per cent.
However these rises were offset by falls of 0.6 per cent in Victoria and 0.2 per cent in NSW.
The bureau also noted that private new capital spending fell by 5.4 per cent in the June quarter of this year and dropped 17.4 per cent from the level seen in the same quarter of last year.
These falls are generally associated with the end of the mining boom.
The bureau also noted that Australia lost 100.7 thousand working days through strikes, in the 12 months to the end of June.
That was up from 76.8 thousand working days in the previous 12 months.
by Alan Thornhill
The Federal government says it is “absolutely critical” that Bill Shorten sticks to his promise to support some $650 billion worth of budget cuts.
But, speaking in a television interview, the Minister for Revenue and Financial Services, Kelly O’Dwyer, also hinted at the possibility of further adjustments to a superannuation policy that the Prime Minister, Malcolm Turnbull, once described as ironclad.
Ms O’Dwyer said it is for the Opposition Leader, Bill Shorten, not the government, to explain why Labor is no longer saying that it will support the budget repair measures that it promised to back, before the July 2 elections.
She said Mr Shorten would have: “…no economic credibility if he is prepared to walk back from the commitment that he made to the Australian people prior to the election.
“ Now they banked on over $6.5 billion worth of savings, they banked that in their bottom line, in their Budget figures.
“If they are saying now, ‘no we didn’t really mean it,” that would show that Labor cannot be trusted.
“ We absolutely believe it is important for Bill Shorten to honour his commitments,” Ms O’Dwyer said.
Several Liberal MPs, particularly in the Senate, have been pressing the government for bigger tax breaks on super, than it was prepared to concede before the election.
And Ms O’Dwyer’s reply, when questioned on the subject today, suggests that they may have been making some progress.
She said : “What we have said on superannuation is that as the fiscal pressures increase and as our demographics change we need to make sure that superannuation is fit for purpose going forward.
“That it is affordable, that it is sustainable and that it is flexible and that it allows Australians to be able to save for their retirement.
“We’re going to be legislating an objective for superannuation that says that it is for the retirement incomes of Australians that will either supplement or substitute for the Age Pension.
“What we’re doing at the moment is we are having discussions with stakeholders, we’re having discussions with colleagues as we would ordinarily do…”
She said that is being done with an open mind.
“ We’re encouraging people to put money into their spouse’s superannuation if they’ve got a lower income spouse.
“And we’re giving them a tax offset to do that.
“ We’re making it a level playing field for people who want to be able to have tax deductions for their superannuation contributions so that if they’re employed by a small business that doesn’t actually offer this, they’re not put at a disadvantage.
“ We’re creating a level playing field for people to be able to contribute to their superannuation because at the end of the day, it’s their retirement income and we want them to be able to have a good and strong retirement,” Ms O’Dwyer said.
by Alan Thornhill
The Federal government says there has been ‘encouraging” progress with its efforts to reduce the gap between the pay of men and women.
The Minister for Employment and Women , Senator Michaelia Cash, said today this is reflected in the latest average weekly earnings figures published by the Bureau of Statistics.
These showed, on average, that men working full-time earned $1,613.60 a week in May this year, while women were earning $1,352.50.
Although Senator Cash admitted that this still represents a difference of $261.10 a week, she said a close look at the Bureau’s figures also suggests that women are starting to catch up.
For example, she said that: “between May 2015 and May 2016, women’s weekly earnings grew by 3.4 per cent while men’s weekly earnings grew by 1.3 per cent.”
She said there is other evidence, too, that the “gender gap” between the pay of men and women is being trimmed.
The ABS data, for example, also showed that the gap,for full time employees has narrowed to 16.2 per cent, a decrease of 1.7 percentage points from a year ago.
However Senator Cash also said that while this is “encouraging,” the Government’s determination to cut this still “stubbornly high gap is unwavering.”
“Given that less than two years ago the gender pay gap was 18.5 per cent, these figures demonstrate significant progress,” Senator Cash said.
She claimed progress, too, in the government’s efforts to employ more women.
“In the month of July, the level of employment for women rose by 8,100 and is now at a record high of over 5.5 million.
“Furthermore, the participation rate for women has also trended upwards over the last 12 months,” she said.
Senator Cash also said: “the Turnbull Government is working to close the gender pay gap by:
* Ensuring women have the skills and support they need to work in growth industries, with $13 million invested through the National Innovation and Science Agenda in
getting more women into science, technology, engineering and maths
* Shining the light on pay equity through the work of the Workplace Gender Equality Agency
* Setting a new target of men and women each holding 50 per cent of Australian Government board positions and strengthening the BoardLinks program and
* Its scholarship and mentoring programs, improving gender diversity in senior leadership roles
*Partnering with UnitingCare on the Springboard Project to give women the opportunity to train and build a career in the UnitingCare network, while also
providing the flexibility to care for their families
* Supporting Australian women to participate in the workforce through our Jobs for Families Child Care package
* Boosting the superannuation of women who have taken time out of work through the Low Income Superannuation Tax Offset.
Senator Cash said it is clear from these latest figures that employers are taking action and this effort is producing results.
“To see these encouraging results continue we all need to maintain our attention on improving gender equality and that applies to Government, employers and individuals – ensuring we achieve true gender equality will require a concerted and lasting commitment from everyone,” she added.
by Alan Thornhill
The Reserve Bank admitted today that estimates of recent housing price growth had been “overstated.”
The admission, made in the minutes of the meeting of the bank’s board meeting on August 2 , is significant.
That’s because the bank has been relying on stronger than expected growth in the building and housing sectors to offset weaker performances in major resource export sectors, such as coal and iron ore.
However in today’s minutes the bank said: “data on housing price growth from CoreLogic, which had been discussed at previous meetings, indicated that housing prices had increased very strongly in several cities in April and May.”
But it added: “… new information had revealed that these growth rates were overstated.”
The bank said that had happened: “.. because of changes to CoreLogic’s methodology.”
And it added: “data from other sources indicated that housing price growth had instead remained moderate in the June quarter.
“Other information showed that, while auction clearance rates had recently picked up a little in Sydney and Melbourne, the number of auctions was lower than in the preceding year and the average number of days that properties were on the market had increased.
“Housing credit growth had been little changed in recent months and remained below that of a year earlier.
“Rent inflation had declined to its lowest level since the mid 1990s and the rental vacancy rate had drifted higher to be close to its long-run average.”
However, the minutes also noted that net exports are expected to make a positive contribution to output growth over the forecast period, supported by the earlier exchange rate depreciation and ramp-up in LNG production.
“ In contrast, mining investment was expected to fall further,” the bank said.
It said there had been some signs that non-mining business investment was rising in some parts of the economy.
But, overall, “it is still expected to remain subdued in the near term,” the bank’s notes said.
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
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
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 Reserve Bank is waiting for fresh information, before it decides whether to cut interest rates again, as it did in May.
The bank clarified its position in the minutes from its July 5 Board meeting which it released today.
It said growth in Australia’s major trading partners appeared to have remained slightly below average over recent months.
This was in line with earlier forecasts.
“ GDP growth in China appeared to have eased further, which was continuing to affect economic conditions throughout the Asian region,” the bank added.
It said, too, that: “monetary policy remained very accomodative across the major economies.”
That was expected to remain so given that inflation was below most central banks’ targets.
However, the bank added, this was despite improvements in labour markets leading to full employment in several large advanced economies.
It said: “ GDP growth in China appeared to have eased further, which was continuing to affect economic conditions throughout the Asian region.
“Monetary policy remained very accommodative across the major economies.
And it is expected to remain so given that inflation was below most central banks’ targets, despite improvements in labour markets leading to full employment in several large advanced economies, the bank added
It said: “the United Kingdom’s vote to leave the European Union had led to considerable financial market volatility, which had since settled.
“Financial markets had functioned effectively throughout the episode and borrowing costs for high-quality borrowers remained low.
Any effects of the referendum outcome on UK and global economic activity remained to be seen.
In any event, the referendum result implied a period of uncertainty about the outlook for the United Kingdom and the European Union. In the absence of significant financial dislocation, the staff’s central case was that this uncertainty was expected to have only a modest adverse effect on global economic activity.
Commodity prices had generally increased since the previous meeting. At the time of the present meeting, the Australian dollar (in trade-weighted terms) was around the levels assumed in the forecasts at the time of the May Statement on Monetary Policy
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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