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Tuesday 9th August 2016 - 2:48 pm
Comments Off on New risks loom

New risks loom

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.

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Monday 8th August 2016 - 7:27 pm
Comments Off on Job ads “ease”

Job ads “ease”

by Alan Thornhill

Job advertising fell last month, according to research the ANZ bank published today.

 

The bank said job ads fell by 0.8 per cent in July.

 

It said this was the first decline since April and may reflect heightened uncertainty temporarily delaying the hiring plans of some employers.

 

It added that the annual growth in job ads has slowed to 6.9 per cent from 8.0 per cent  the previous month.

 

 

The bank said too, that the fall in July was driven by both internet and newspaper job ads.

 

Internet job advertisements, which are the main driver of total job ads, declined by 0.7 per cent in July, the bank noted.

 

It said that annual growth in internet jobs ads had slowed from 8.8 per cent  in June to 7.9 per cent in July.

 

The more volatile newspaper ads remain on a structural downward trend and fell further in July, down 12.6 per cent  in the month to be 41.7 per cent  lower than a year ago.

 

The bank’s head of Australian Economics, Felicity Emmett, said:  “the labour market has lost some momentum so far in 2016.”

 

She said there had been :  “slower average growth in both employment and job ads seeing the unemployment rate stabilise around 5.75 per cent.

 

The labour market has lost some momentum so far in 2016, with slower average growth in both employment and job ads seeing the unemployment rate stabilise around 5.75 per cent, in the second half of last year from a peak of 6.3 per cent.”

 

Ms Emmett said, too, that: “more recently, job ads rebounded strongly in May, followed by a modest rise in June.”

 

But she also noted that:  “…these increases have been partly unwound by the decline in July.

 

“Given that ads fell sharply in early July, we think this decline may partly reflect the impact of increased uncertainty following the close federal election on 2 July and the shock decision by the UK to leave the European Union on 24 June,” she said.

 

This impact appears to have been short-lived,

 

Job advertising fell las month, according to research the ANZ bank published today.

 

Ms Emmett also said:  “the labour market has lost some momentum so far in 2016.”

 

Ms Emmett said, too, that: “… job ads rebounded strongly in May, followed by a modest rise in June.”

 

But she also noted that:  “…these increases have been partly unwound by the decline in July.

 

“Given that ads fell sharply in early July, we think this decline may partly reflect the impact of increased uncertainty following the close federal election on 2 July and the shock decision by the UK to leave the European Union on 24 June,” she said.

 

This impact appears to have been short-lived,” Ms Emmett added.

 

 

With surveyed business conditions remaining upbeat and the RBA cutting rates in August, we look for a gradual improvement in hiring intentions over the remainder of the year,” Ms Emmett said.

 

 

Monday 8th August 2016 - 11:47 am
Comments Off on Kim Beazley:the unwritten story

Kim Beazley:the unwritten story

by Alan Thornhill

Many readers will think of Kim Beazley as the former Labor leader, who lost Federal elections in 1998 and 2001.  But this story is not about him.  It is about his father, also Kim Beazley.  It has never been written before.

 

Kim Senior, as we will call him, was also a Federal politician.  Education minister in the Whitlam government, in fact.

 

He was on the Right, in the Whitlam cabinet.

 

 

This was at the height of the Moratorium movement, as the protests against Australian involvement in the Vietnam war were known, back then.

 

And in those turgid times, Kim Senior was invited to “explain his views,” before a Trades and Labor council meeting in Perth. We all knew what that meant.  Big Kim’s job was on the line.  Left wing unions had the numbers 80-20 on the council back then.

 

 

So Kim Senior was fighting for his political life.  Whatever happened, this would be a national story.   Not just one for The West Australian, where I worked, as industrial reporter at the time.   We knew, also, the result would come, either right on The West’s deadline, that night, or just after it.  But the result, itself, was the thing.

 

Kim Senior looked remarkably relaxed, as he rose to speak at that meeting.

 

And his speech ran to just one, or two sentences.

 

“I do not support the Vietnam war,” he said.

 

“Because getting involved in a land war in Asia is the second worst military decision  it is possible to make.”

 

He then sat down, leaving the assembled union officials turning to each other, to ask: “What’s the worst?”

 

After an interval of at least two minutes, Big Kim rose again, and said: “Oh.  And by the way.  The worst is to invade Russia in winter.”

 

In a long career as a reporter, I never heard a better speech.

Thursday 4th August 2016 - 7:29 pm
Comments Off on PM hauls banks before parliament

PM hauls banks before parliament

by Alan Thornhill

The Federal government will haul Australia’s banks before a powerful parliamentary committee as it seeks to persuade them to pass on the Reserve Bank’s latest interest rate cut in full.

 

The Prime Minister, Malcolm Turnbull and his Treasurer, Scott Morrison, made the announcement in a joint statement today.

 

Labor might well have gone further.

 

It promised a royal commission into the behavior of  Australia’s banks, before last month’s Federal elections.

 

Mr Turnbull said that in  challenging economic times globally, it is important that Australians retain faith in our financial institutions and the decisions they are taking.

 

“The Australian economy depends critically on the performance and strength of our banking and financial system,” Mr Turnbull said.

 

” Banks operate under a social licence and have responsibilities to the Australian public.”

 

He said they would be asked, particularly about several matters.when they appear before the House of Representatives Economics Committee.

 

In particular the banks would be required to explain:

  • International economic and financial market developments and how these are affecting Australia
  • Developments in prudential regulation, including capital requirements, and how these are affecting the policies of Australian banks
  • The costs of funds, impacts on margins and the basis for bank interest rate pricing decisions
  • How individual banks and the banking industry as a whole are responding to issues previously raised in Parliamentary inquiries through their package of reforms announced in April 2016
  • Bank perspectives on the performance of the Australian economy, including strengths and risks.

 

The appearance by the banks will ensure they have the important opportunity to transparently account for their decision making and how they balance the needs of borrowers, savers, shareholders and the wider community, Mr Turnbull said.

 

The initial response from Australia’s banks was cautious.

 

Andrew Thorburn, the National Australia Bank’s Chief Executive Officer, said for example that his bank is looking  forward to the dialogue around “how we balance”  the needs of different  stakeholders.

 

He said it is also anticipating “outlining the full cost of being an unquestionably strong bank and bringing further insight to the topic of how we set our interest rates.

 

“I am proud to be a banker,” he added.

 

” It has always required carefully thought through decisions,” he added.

 

“But the focus has been on serving the many people who rely on us to get these decisions right. ”

 

 

Thursday 4th August 2016 - 12:57 pm
Comments Off on Retail sales rise – slightly – in June

Retail sales rise – slightly – in June

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.

Wednesday 3rd August 2016 - 1:59 pm
Comments Off on How we spend our time – and money

How we spend our time – and money

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

Tuesday 2nd August 2016 - 4:17 pm
Comments Off on Rates hit new low

Rates hit new low

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.

Monday 1st August 2016 - 6:12 pm
Comments Off on PM accepts key resignation

PM accepts key resignation

by Alan Thornhill

The Prime Minister, Malcolm Turnbull, has had  to accept the resignation of the man he chose to conduct a Royal Commission into the mistreatment of mainly aboriginal juveniles at the Don Day centre, in the Northern Territory.

 

The Opposition Leader Bill Shorten said Mr Turnbull must to learn to consult more widely before  in future, making such appointments, to avoid similar embarrassments.

 

However Brian Martin, who was to have conducted that job, withdrew after certain Aborigines questioned his suitability for it.

 

He will be replaced by the Aboriginal and and Torres Strait Islander Social Justice Commissioner Mick Gooda and Margaret White.

 

The Law Council President, Stuart Clark, said the appointment of Mr Gooda and Ms White was a vital step to ensuring the Royal Commission could advance its critical agenda.

 

“This Royal Commission is absolutely vital, because of the need to examine, in detail, what appears to be a deep cultural and systemic problem within the NT juvenile detention system,” Mr Clark said.

 

“Mr Gooda and Ms White are extremely well qualified to carry out this important inquiry, with the necessary independence from the Northern Territory Government and confidence of the community.

 

“The broader issue of Indigenous imprisonment is one that overlaps inexorably with juvenile detention in Australia,” he added.

 

Mr Clark also congratulated Mr Martin on putting the community’s interests ahead of his own.

 

In a separate statement, Mr Martin also said both the Prime Minister, Mr Turnbull and his Attorney General, George Brandis, had been disappointed by his decision to quit.

 

But he also said the decision did not indicate that his critics were right.

 

Indeed, Mr  Martin added: “Since my appointment was announced I have been extremely disappointed with the disingenuous and ill-informed comment that has ensued.

 

“ However, notwithstanding the ill-informed nature of the commentary, it has become apparent that, rightly or wrongly, in this role I would not have the full confidence of sections of the Indigenous community which has a vital interest in the inquiry.

 

“As a consequence, the effectiveness of the Commission is likely to be compromised from the outset.

 

“I am not prepared to proceed in the face of that risk,” Mr Martin said.

 

“This Royal Commission is far too important to undertake that risk and, in the public interest, personal considerations must take second place,” he added.

 

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