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
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
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.
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. ”
by Alan Thornhill
By Alan Thornhill
Twice this year, Glenn Stevens has done something that central bankers don’t like doing.
That is cutting interest rates to previously unprecedented levels
That happened first in May.
Then – again – from Wednesday.
Both time rates were cut by 25 basis points
The reason Reserve bank chiefs, like Glenn Steven, don’t like taking this step is simple.
But not, necessarily, obvious.
After all, young home buyers will generally welcome the relief they will get in their home loan repayments, when their banks pass, at least some of the benefit they receive on to them.
If that’s all there was to it, Mr Stevens would, undoubtedly be among the most popular men in the country right now.
But although he is, by all accounts, is a fine fellow, things aren’t as simple as that.
What about those probably somewhat older people, we might call the Savers, who have been relying on a little interest income, perhaps through their superannuation accounts, to help them pay their grocery bills in retirement.
There is another thing, too, that can keep central bankers awake at night, when interest rates fall to unprecedented levels, on their watch.
That’s walking down a dark path, on a moonless night.
Who knows what might go wrong?
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
A submarine led recovery?
That’s not advocated in any respectable economic text book.
Yet it is precisely the path the Federal government is taking us down.
At a cost of some $800 million over 10 years
Money the Productivity Commission says might well have been better spent elsewhere.
The government’s decision to build our new subs in Australia is being accompanied by the slow spread of what might well be called a ”barbed wire broadband.”
That is one based on copper wire, rather than the then superior fibre to the node system, that Labor was proposing when the two choices were first offered.
The slower copper wire system, that Malcolm Turnbull pushed, also ended up costing more than the snazzier Labor model.
Even though the man who is now Prime Minister said it would be substantially cheaper
And the man appointed to run it, has since described the Turnbull alternative as a “colossal mistake.”
However, as Mr Turnbull’s lieutenant, Christopher Pyne, has since explained “Australians don‘t need a faster internet.”
So that’s alright, then.
The government has its explanations.
Mr Pyne, for example, also says it will make Australia “a defence hub.”
But the Productivity Commission won’t have a bar of it.
It notes that building a sub in Australia means that it will cost 30 per cent more than simply buying one overseas.
While necessarily based on hypothetical data, because of time differences, its example reveals that the effective rate of assistance provided to Australia’s submarine industry might well exceed that provided to tne nation’s vehicle industry and its textile, clothing and footwear indsustries, while those payment were s their respective peaks.
The commission also notes that paying more to have the subs built in Australia without getting sufficient value in return diverts productive resources such as labour, capital and land away from more efficient uses that need less assistance. .
This damages Australia’s capacity to get the best possible benefits from the community’s resources.
Its report leaves no room for its readers to doubt about the fact that the commission regards the Federal government’s decision to promote with submarine construction in Australia was a dreadfully dud deal.
So why did it happen?
The commission notes that “iconic” factories were closing and local areas, particularly in South Australia and Victoria, were doing it tough, as a closely fought election, on July 2, approached.
And those who suspect that political, not economic judgements prevailed in this case, won’t get much argument from the Productivity Commission.
by Alan Thornhill
Australia’s annual inflation rate fell to just 1 pr cent in the June quarter.
That was the weakest annual rise since the June quarter of 1999.
This is shown in the June quarter Consumer Price Index figures just released by the Australian Bureau of Statistics.
The fall in the annual rate – from 1..3 per cent at the end of the March quarter – occurred even though consumer prices rose by 0.4 per cent in the June quarter.
This followed a fall of 0.2 per cent in the March quarter.
The Bureau said the most significant price rises this quarter are in medical and hospital services (+4.2 per cent), automotive fuel (+5.9 per cent) and tobacco (+2.1 per cent).
But it added: “These rises are partially offset by falls in domestic holiday travel and accommodation (–3.7 per cent), motor vehicles (–1.3 per cent) and telecommunication equipment and services (–1.5 per cent).
The bureau also said that the increase of 4.2 per cent for medical and hospital services was driven by the annual increase in Private Health Insurance (PHI) premiums.
These rise on 1 April every year.
It said also that the increase of 5.9 per cent for automotive fuel follows three consecutive quarterly falls.
The rise included increases in unleaded, premium and ethanol fuels.
The bureau noted that world oil prices increased from a 12-year low last quarter.
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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