Tag: ABS

Home Lending Booms: But What Have They Got To Hide?

The ABS released their monthly lending indicators for September today, and it showed a strong uptick in new mortgage loans, in contrast to poor household spending trends and confidence overall, though as we will see there are questions about this dataset too. Significantly, we also note the ABS is about to terminate its monthly reporting of new loans data, saying the monthly Lending Indicators publication will transition to a quarterly release.

My observation is different because the monitoring of new loans for housing is an essential barometer for the economy, without the monthly data it will be easier for lenders to continue their push to reduce lending standards (something evidently being supported by the opposition party) and so drive home prices even higher.

So credit for home lending, especially investors is booming. Worth recalling here the RBA’s recent warning that falling interest rates could trigger a property price boom that encourages households to take on too much debt.

As you know my surveys highlight some households are under extreme financial pressure, and I will be discussing this in my live show next Tuesday, so official data on household spending, is also an important indicator. So conveniently, the ABS also released household spending data for August today. However, I have issues with these figures too as this data excludes, Rent and other dwelling services, Electricity, gas and other fuels, Communication Services, Education Services and Insurance and other financial services. IN other words, the spending data is partial and incomplete, and excludes more than half of a typical mortgaged or renting household.

So all up, the spending indicators are not really meaningful, yet the ABS will be enhancing the Monthly Household Spending Indicator and ceasing the Retail Trade publication after the June 2025 reference period. On the other hand, the data on lending will be only released four times a year.

This is another example of data not fit for purpose, and I assume the financial pressure the ABS is under. But it does beg the question. What have they got to hide – and who is pulling their strings?

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Home Lending Booms: But What Have They Got To Hide?
Loading
/

Don’t Be Misled By Vendor Discounting!

Are property markets morphing into buyers markets and vendor dropping their asking prices? Well, according to recent news corp articles, home seekers are bagging properties for an average of up to 15% below the list price in pockets of Sydney.

Vendor discounting tends to reflect price growth recorded a few months ago, rather than signalling the direction of future price growth. But its complex, Especially now.

Because of the over quoting and under quoting issue, I think it is really very hard to get a read on the true vendor discounting. The averages quoted are often misleading, there is considerable variation, even within the same areas.

Bottom line, is more than ever it is important to understand the granular data in the area you are looking at, rather than the averages, which mask what is really going on. In fact in my live show next Tuesday we will do another deep dive into my data at the post code level, so mark you diaries for that. Meantime, take vendor discounting with a truck load of salt.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Find more at https://digitalfinanceanalytics.com/blog/ where you can subscribe to our research alerts

Today’s post is brought to you by Ribbon Property Consultants.

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Don’t Be Misled By Vendor Discounting!
Loading
/

Home Lending Booms: But What Have They Got To Hide?

The ABS released their monthly lending indicators for September today, and it showed a strong uptick in new mortgage loans, in contrast to poor household spending trends and confidence overall, though as we will see there are questions about this dataset too. Significantly, we also note the ABS is about to terminate its monthly reporting of new loans data, saying the monthly Lending Indicators publication will transition to a quarterly release.

My observation is different because the monitoring of new loans for housing is an essential barometer for the economy, without the monthly data it will be easier for lenders to continue their push to reduce lending standards (something evidently being supported by the opposition party) and so drive home prices even higher.

So credit for home lending, especially investors is booming. Worth recalling here the RBA’s recent warning that falling interest rates could trigger a property price boom that encourages households to take on too much debt.

As you know my surveys highlight some households are under extreme financial pressure, and I will be discussing this in my live show next Tuesday, so official data on household spending, is also an important indicator. So conveniently, the ABS also released household spending data for August today. However, I have issues with these figures too as this data excludes, Rent and other dwelling services, Electricity, gas and other fuels, Communication Services, Education Services and Insurance and other financial services. IN other words, the spending data is partial and incomplete, and excludes more than half of a typical mortgaged or renting household.

So all up, the spending indicators are not really meaningful, yet the ABS will be enhancing the Monthly Household Spending Indicator and ceasing the Retail Trade publication after the June 2025 reference period. On the other hand, the data on lending will be only released four times a year.

This is another example of data not fit for purpose, and I assume the financial pressure the ABS is under. But it does beg the question. What have they got to hide – and who is pulling their strings?

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

The Rate Cut Dance Begins; But You’re Not Invited!

To the surprise of no one the Federal Reserve cut its benchmark interest rate on Wednesday as signalled in my earlier post, and they went for the more aggressive half percentage point. The Federal Open Market Committee voted 11 to 1 to lower the federal funds rate to a range of 4.75% to 5%, after holding it for more than a year at its highest level in two decades. It was the Fed’s first rate cut in more than four years. Governor Michelle Bowman dissented in favor of a smaller, quarter-point cut — the first dissent by a governor since 2005 and the first dissent from any member of the FOMC since 2022.

The impact of the first cut from the FED echoed through global markets. But remember that the FED shift lower to 4.75% to 5% probably won’t impact the Bank of England’s latest rate decision, which will most likely be a hold, following last month’s cuts.

So far as Australia is concerned, the new FED rates are still significantly higher than the RBA’s weak 4.35%, and inflation in Australia is running much hotter as a result. The data flows in Australia also suggests no reason for the RBA to cut anytime soon, as for example the the unemployment rate was steady at 4.2 per cent in August, according to seasonally adjusted data released today by the Australian Bureau of Statistics.

And another data point from the ABS showed that Australia’s population grew by 2.3 per cent to 27.1 million people in March 2024. Our population at 31 March 2024 was 27.1 million people, having grown by 615,300 people over the previous year. Net overseas migration drove 83 per cent of this population growth, while births and deaths, known as natural increase, made up the other 17 per cent.

I don’t thing the FED’s move based on inflation at 2.2% there has much relevance in the short term in Australia. Were it not for the massive flood of migrants and the job creation programmes funded by state and federal government, we would probably be in a recession, and rate cuts would already be in play. But the brutal truth is Government policy is keeping rates higher for longer.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

The Latest Inflation News Says We Still Have A Problem!

The RBA has said that the battle to control inflation is not yet over, and the latest data from the ABS, the monthly CPI report for July came out today and confirms that inflation does remain a problem. The monthly Consumer Price Index (CPI) indicator rose 3.5 per cent in the 12 months to July 2024, down from 3.8 per cent in June. The annual trimmed mean movement was 3.8% in July, down from 4.1% in June. But still well above the target range.

The monthly indicator is not as reliable. It covers only about 60 to 70 per cent of household items in the quarterly basket of goods and services. Moreover, the composition of measured items jumps around between being more heavily skewed towards goods in some months and more towards services in other months, making it harder to get an “apples with apples” comparison on prices.

The accumulated price increases in the past 3 years or so remain much higher than Income growth, so as my surveys show, many households are under significant financial pressure. A slowing in the rate of growth frankly is largely symbolic, we are not seeing much price deflation at all.

The extended and expanded Commonwealth Energy Bill Relief Fund rebate, and the introduction of State government rebates, have begun to take affect from July 2024. These rebates have the effect of reducing electricity costs for households, but of course the RBA is looking through this short-term support when assessing monetary policy. The rate-setting board left the benchmark at a 12-year high of 4.35% three weeks ago, saying it remains vigilant to upside risks for inflation.

With the data unlikely to sway the Reserve Bank from its hawkish stance, the yield on policy sensitive three-year notes climbed to 3.54% while the local currency rose as much as 0.3% to erase its year-to-date loss against the greenback. Money markets are still pricing in a rate cut in December.

Broader federal and state government spending has forced the RBA to delay by six months the expected return to inflation to the midpoint of the 2-3 per cent target to late 2026. Hence, governor Michele Bullock doesn’t expect to be cutting interest rates this year.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Find more at https://digitalfinanceanalytics.com/blog/ where you can subscribe to our research alerts

Today’s post is brought to you by Ribbon Property Consultants.

Australian Employment Booms Even As Unemployment Rises!

You have to ask the question: are the ABS stats on employment, which were released today, meaningful? Because according to the data for July, a record share of Australians are either working or looking for a job and about 58,000 people found work last month. The increase in employment was not enough to stop the jobless rate from rising to 4.2 per cent last month from 4.1 per cent in June, (though less than 1% on a two decimal rounding) as the share of the working-age population with a job or looking for one climbed to a record high of 67.1 per cent.

This was better than market expectations for gains of 20,000 and accorded with the RBA’s view that the labour market is cooling, but only very gradually, so it appears to show its holding up in the face of a rapidly cooling economy. This will keep pressure on the Reserve Bank of Australia to maintain high interest rates.

The first question of course is where did all if the extra workers come from? Perhaps the mega high immigration where the influx of migrants, who are relatively likely to work, helps to explain the data, as well as financial pressure on local workers to grab more work, and multiple jobs to try and make ends meet. There is no good analysis to split these two factors apart, perhaps surprisingly, or perhaps not! But we know multiple job holders continues to rise.

Across the states, Victoria had the highest unemployment rate of 4.6% in seasonally adjusted terms. Western Australia had the lowest at 3.7%, reflecting the very different economic stories across the states. The participation rate was highest in the NT and ACT, at 73.6% and 72.9% respectively and lowest in Tasmania at 60.3%.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Today’s post is brought to you by Ribbon Property Consultants.

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Australian Employment Booms Even As Unemployment Rises!
Loading
/

Australian Employment Booms Even As Unemployment Rises!

You have to ask the question: are the ABS stats on employment, which were released today, meaningful? Because according to the data for July, a record share of Australians are either working or looking for a job and about 58,000 people found work last month. The increase in employment was not enough to stop the jobless rate from rising to 4.2 per cent last month from 4.1 per cent in June, (though less than 1% on a two decimal rounding) as the share of the working-age population with a job or looking for one climbed to a record high of 67.1 per cent.

This was better than market expectations for gains of 20,000 and accorded with the RBA’s view that the labour market is cooling, but only very gradually, so it appears to show its holding up in the face of a rapidly cooling economy. This will keep pressure on the Reserve Bank of Australia to maintain high interest rates.

The first question of course is where did all if the extra workers come from? Perhaps the mega high immigration where the influx of migrants, who are relatively likely to work, helps to explain the data, as well as financial pressure on local workers to grab more work, and multiple jobs to try and make ends meet. There is no good analysis to split these two factors apart, perhaps surprisingly, or perhaps not! But we know multiple job holders continues to rise.

Across the states, Victoria had the highest unemployment rate of 4.6% in seasonally adjusted terms. Western Australia had the lowest at 3.7%, reflecting the very different economic stories across the states. The participation rate was highest in the NT and ACT, at 73.6% and 72.9% respectively and lowest in Tasmania at 60.3%.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Today’s post is brought to you by Ribbon Property Consultants.

Is The Door Closed On A Further Rate Rise In Australia?

The ABS released their latest on CPI, with the quarterly results to June, and the monthly. The data of course feeds into the RBA rate decision next Tuesday. The Consumer Price Index (CPI) rose 1.0 per cent in the June 2024 quarter and 3.8 per cent annually. So real prices are still rising. Underlying inflation which measures reduce the impact of irregular or temporary price changes in the CPI – the annual trimmed mean inflation was 3.9 per cent, down from 4.0 per cent in the March quarter. This is the sixth quarter in a row of lower annual trimmed mean inflation, down from the peak of 6.8 per cent in the December 2022 quarter.

At first blush, the data could be bent in support of an argument that inflation continues to fall, especially if you focus on the core measure, which is precisely where Treasure Chalmers went in his statement, and in which he also argued that inflation was about 0.5% lower thanks to Government support for electricity and rents, etc. ““While headline inflation is proving sticky and stubborn, and is more persistent than we would like, it is less than half its peak,” he said. “Inflation is lingering for longer than we had hoped across the globe, and Australia’s experience is no different.”

But then, remembering RBA Governor Bullock said she would look through these temporary adjustments, the story swings more to the rise in headline inflation, which came in as expected. Actually the RBA was forecasting CPI inflation to reach 3.8%yr in the June quarter, in line with today’s result. However, for core inflation, the RBA was also forecasting 3.8%yr for June, so the 3.9%yr pace was a touch stronger than they were expecting.

All this means if the RBA felt the need to lift rates they could justify it, but also if not, they could find reason to hold, so if comes down to judgement and weighting the political and economic consequences. Nothing here though to justify a rate cut.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Is The Door Closed On A Further Rate Rise In Australia?
Loading
/

Is The Door Closed On A Further Rate Rise In Australia?

The ABS released their latest on CPI, with the quarterly results to June, and the monthly. The data of course feeds into the RBA rate decision next Tuesday. The Consumer Price Index (CPI) rose 1.0 per cent in the June 2024 quarter and 3.8 per cent annually. So real prices are still rising. Underlying inflation which measures reduce the impact of irregular or temporary price changes in the CPI – the annual trimmed mean inflation was 3.9 per cent, down from 4.0 per cent in the March quarter. This is the sixth quarter in a row of lower annual trimmed mean inflation, down from the peak of 6.8 per cent in the December 2022 quarter.

At first blush, the data could be bent in support of an argument that inflation continues to fall, especially if you focus on the core measure, which is precisely where Treasure Chalmers went in his statement, and in which he also argued that inflation was about 0.5% lower thanks to Government support for electricity and rents, etc. ““While headline inflation is proving sticky and stubborn, and is more persistent than we would like, it is less than half its peak,” he said. “Inflation is lingering for longer than we had hoped across the globe, and Australia’s experience is no different.”

But then, remembering RBA Governor Bullock said she would look through these temporary adjustments, the story swings more to the rise in headline inflation, which came in as expected. Actually the RBA was forecasting CPI inflation to reach 3.8%yr in the June quarter, in line with today’s result. However, for core inflation, the RBA was also forecasting 3.8%yr for June, so the 3.9%yr pace was a touch stronger than they were expecting.

All this means if the RBA felt the need to lift rates they could justify it, but also if not, they could find reason to hold, so if comes down to judgement and weighting the political and economic consequences. Nothing here though to justify a rate cut.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

The Narrow Path Says Rate Hikes Are Coming In Australia!

The ABS released the latest employment data today, and in response, investors have bumped up their bets on an August interest rate rise after the jobs market recorded another month of strong employment gains in June.

As always there is a degree of numberwanging here, and the numbers are being flattered by the still strong migration, but the seasonally adjusted unemployment rate rose by less than 0.1 percentage point to 4.1 per cent in June, With employment rising by around 50,200 people and the number of unemployed growing by 10,000 people, the unemployment rate rose slightly to 4.1 per cent, and the participation rate rose to 66.9 per cent.

The employment growth figures were better than market expectations for gains of 20,000 and highlighted the continuing resilience of the local jobs market in the face of the fastest interest rate tightening cycle in decades.

“The participation rate in June was only 0.1 percentage point lower than the historical high of 67.0 per cent in November 2023. The employment-to-population ratio rose by 0.1 percentage point to 64.2 per cent, which was also close to its historical high of 64.4 per cent in November 2023.

This increase in employment was not enough to stop the jobless rate from rising to 4.1 per cent last month from 4 per cent in May, as a continuing surge in foreign arrivals helped push the participation rate to a near-record high of 66.9 per cent.

With inflationary pressures remaining uncomfortably strong, investors now ascribe a one-in-five chance the RBA board will increase the cash rate from 4.35 per cent to 4.6 per cent when it next meets on August 6, up from a 14 per cent chance before the jobs data. They are also pricing a 28 per cent chance of a move higher by September, up from 17 per cent on Wednesday.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/