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/

Digital Finance Analytics (DFA) Blog
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The Narrow Path Says Rate Hikes Are Coming In Australia!
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Burnout: Households Shut Their Wallets As Living Costs Rise!

Trying to get a handle on what is going on in the economy is not easy, as I discussed recently in my show about retail turnover, which when adjusted for inflation is falling, and falling hard.

So no great surprise to see that the latest data from the ABS on Household spending growth showed it has slowed, up 0.1% over the year. The 0.1 per cent rise in May follows a 2.2 per cent increase in the 12 months to April.

Through the year household spending increased for four spending categories. The largest increases were in: health (+8.8%), miscellaneous goods and services (+7.3%) and furnishing and household equipment (+3.3%).

Through the year, household spending on: services rose 2.3%, driven by increased spending on health and other services. goods fell 2.5%, driven by decreased spending on clothing and footwear and goods for recreation and culture.

Once again, there was higher growth in spending on non-discretionary goods and services, – things people have to buy such as on health services and food, compared to discretionary items – things which are not necessary, rather more aspirational spending. Typically when people are under financial pressure, it shows first in a fall in non-discretionary items.

But this is not inflation adjusted, at 4% currently and if you adjust for inflation, in fact both are falling. Plus we have a population increase of circa 600,000 which should help the numbers. So this weak data might be seen as one indicator which suggests a further RBA rate hike is not needed, as the tightening is now showing, though of course the various tax cuts and other Government support flowing from 1 July 2024 worth at least $20 billion could well boost household spending.

At very least it does appear the Government and RBA are pulling in different directions – in what Tarric Brooker has coined as “burnout economics”- I love the smell of burnout in the morning!

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
Burnout: Households Shut Their Wallets As Living Costs Rise!
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Burnout: Households Shut Their Wallets As Living Costs Rise!

Trying to get a handle on what is going on in the economy is not easy, as I discussed recently in my show about retail turnover, which when adjusted for inflation is falling, and falling hard.

So no great surprise to see that the latest data from the ABS on Household spending growth showed it has slowed, up 0.1% over the year. The 0.1 per cent rise in May follows a 2.2 per cent increase in the 12 months to April.

Through the year household spending increased for four spending categories. The largest increases were in: health (+8.8%), miscellaneous goods and services (+7.3%) and furnishing and household equipment (+3.3%).

Through the year, household spending on: services rose 2.3%, driven by increased spending on health and other services. goods fell 2.5%, driven by decreased spending on clothing and footwear and goods for recreation and culture.

Once again, there was higher growth in spending on non-discretionary goods and services, – things people have to buy such as on health services and food, compared to discretionary items – things which are not necessary, rather more aspirational spending. Typically when people are under financial pressure, it shows first in a fall in non-discretionary items.

But this is not inflation adjusted, at 4% currently and if you adjust for inflation, in fact both are falling. Plus we have a population increase of circa 600,000 which should help the numbers. So this weak data might be seen as one indicator which suggests a further RBA rate hike is not needed, as the tightening is now showing, though of course the various tax cuts and other Government support flowing from 1 July 2024 worth at least $20 billion could well boost household spending.

At very least it does appear the Government and RBA are pulling in different directions – in what Tarric Brooker has coined as “burnout economics”- I love the smell of burnout in the morning!

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.

The Serious Money Is In Housing… But…

The ABS released their latest data on Household Wealth in the March 2024 quarter today. They say in aggregate terms, household wealth was up 2.7% in the March quarter, or $431 billion dollars.

The value of assets is skyrocketing at the moment, but incomes are hardly growing. So if you’re lucky enough to own any assets (like a residential property, or superannuation savings), your wealth is likely increasing. But if you don’t own any assets, you’re missing out.

So, the story continues, with asset prices continuing to swell, in response to policy from Central Banks and Governments, but there are two questions to consider, first will the asset growth continue, or are we reaching levels where the higher for longer interest rates will start hitting home and second, what of the growing number of households with zero assets, and a cash flow deficit.

While superficially the ABS numbers might sound promising, actually they tell a sad tale, of asset inflation, but one which few want to recognise. At least for now.

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
The Serious Money Is In Housing… But…
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The Serious Money Is In Housing… But…

The ABS released their latest data on Household Wealth in the March 2024 quarter today. They say in aggregate terms, household wealth was up 2.7% in the March quarter, or $431 billion dollars.

The value of assets is skyrocketing at the moment, but incomes are hardly growing. So if you’re lucky enough to own any assets (like a residential property, or superannuation savings), your wealth is likely increasing. But if you don’t own any assets, you’re missing out.

So, the story continues, with asset prices continuing to swell, in response to policy from Central Banks and Governments, but there are two questions to consider, first will the asset growth continue, or are we reaching levels where the higher for longer interest rates will start hitting home and second, what of the growing number of households with zero assets, and a cash flow deficit.

While superficially the ABS numbers might sound promising, actually they tell a sad tale, of asset inflation, but one which few want to recognise. At least for now.

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.

If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.

Buying property, is both challenging and adversarial. The vendor has a professional on their side.

Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.

Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.

Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.

CPI: Making Sense Of The Senseless??

The ABS released the latest monthly CPI data today, and it reports that Inflation is still sticky in Australia, and accelerated faster than expected for a third straight month in May, sending the currency higher as traders boosted bets that the Reserve Bank will resume raising interest rates at its next meeting. The report comes after RBA Governor Michele Bullock restated last week that the rate-setting board isn’t ruling out a rate hike after leaving the benchmark at a 12-year high of 4.35%.

Wednesday’s figures suggest inflation is running ahead of the RBA’s forecast for underlying inflation to ease to 3.8 per cent in the June quarter. That said, the monthly numbers are at best partial, compared with the more complete quarterly data which provides a fuller picture of inflation.

In truth, for many households real inflation is much higher than the statistics suggest, with continued massive lifts in insurance costs for example, but Warren Hogan may end up being right, with further rate hikes a clear threat if the Q2 quarterly inflation print confirms the uptrend.

This is a mess, created by taking rates too low in the first place, saying they would stay low into 2024, then not returning them to normal rates soon enough, meantime luring many into property are extended prices and big loans. The route out of the years of policy failure will be difficult for many, though somehow policy makers and politicians seem to be able to find someone else to blame. How about some real accountability?

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
CPI: Making Sense Of The Senseless??
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CPI: Making Sense Of The Senseless??

The ABS released the latest monthly CPI data today, and it reports that Inflation is still sticky in Australia, and accelerated faster than expected for a third straight month in May, sending the currency higher as traders boosted bets that the Reserve Bank will resume raising interest rates at its next meeting. The report comes after RBA Governor Michele Bullock restated last week that the rate-setting board isn’t ruling out a rate hike after leaving the benchmark at a 12-year high of 4.35%.

Wednesday’s figures suggest inflation is running ahead of the RBA’s forecast for underlying inflation to ease to 3.8 per cent in the June quarter. That said, the monthly numbers are at best partial, compared with the more complete quarterly data which provides a fuller picture of inflation.

In truth, for many households real inflation is much higher than the statistics suggest, with continued massive lifts in insurance costs for example, but Warren Hogan may end up being right, with further rate hikes a clear threat if the Q2 quarterly inflation print confirms the uptrend.

This is a mess, created by taking rates too low in the first place, saying they would stay low into 2024, then not returning them to normal rates soon enough, meantime luring many into property are extended prices and big loans. The route out of the years of policy failure will be difficult for many, though somehow policy makers and politicians seem to be able to find someone else to blame. How about some real accountability?

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.

If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.

Buying property, is both challenging and adversarial. The vendor has a professional on their side.

Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.

Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.

Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.

Let’s Play Some More Numberwang!

The seasonally adjusted unemployment rate fell by 0.1 percentage point to 4.0 per cent in May, according to data released today by the Australian Bureau of Statistics (ABS).

With employment rising by around 40,000 people and the number of unemployed falling by 9,000 people, the unemployment rate fell to 4.0 per cent.

In April we saw more unemployed people than usual waiting to start work. Some of the fall in unemployment and rise in employment in May reflects these people starting or returning to their jobs.

While the total number of unemployed people fell by 9,000 in May, this followed a 33,000 increase in April. Unemployment was around 24,000 people more than in March, an average increase of around 12,000 people each month.

“There are now almost 600,000 unemployed people, however, that is still nearly 110,000 fewer people than in March 2020, just before the pandemic.

As a result of the increase in employment and the fall in unemployment, the seasonally adjusted employment-to-population ratio remained at 64.1 per cent and the participation rate remained at 66.8 per cent.

The latest net overseas migration figures showed that Australia’s NOM was 178,500 in Q3 and 129,400 in Q4, totalling 307,900 for the half. This leaves only 87,100 worth of NOM over the first half of this year to meet the federal budget’s 395,000 NOM target for 2023-24.

Given that net permanent and long-term arrivals have remained hot so far in 2024, NOM is once again going to blow way past the budget’s forecast.

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
Let’s Play Some More Numberwang!
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Let’s Play Some More Numberwang!

The seasonally adjusted unemployment rate fell by 0.1 percentage point to 4.0 per cent in May, according to data released today by the Australian Bureau of Statistics (ABS).

With employment rising by around 40,000 people and the number of unemployed falling by 9,000 people, the unemployment rate fell to 4.0 per cent.

In April we saw more unemployed people than usual waiting to start work. Some of the fall in unemployment and rise in employment in May reflects these people starting or returning to their jobs.

While the total number of unemployed people fell by 9,000 in May, this followed a 33,000 increase in April. Unemployment was around 24,000 people more than in March, an average increase of around 12,000 people each month.

“There are now almost 600,000 unemployed people, however, that is still nearly 110,000 fewer people than in March 2020, just before the pandemic.

As a result of the increase in employment and the fall in unemployment, the seasonally adjusted employment-to-population ratio remained at 64.1 per cent and the participation rate remained at 66.8 per cent.

The latest net overseas migration figures showed that Australia’s NOM was 178,500 in Q3 and 129,400 in Q4, totalling 307,900 for the half. This leaves only 87,100 worth of NOM over the first half of this year to meet the federal budget’s 395,000 NOM target for 2023-24.

Given that net permanent and long-term arrivals have remained hot so far in 2024, NOM is once again going to blow way past the budget’s forecast.

http://www.martinnorth.com/

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

No Homes For You: The Structural Desolation Of Dwelling Approval Falls!

Yesterday the ABS released the latest data on dwellings approved and they fell 0.3 per cent in April, after a 2.7 per cent rise in March, according to the seasonally adjusted data after just 13,078 new homes were signed off for construction.

Looing at the mix, Approvals for private houses fell 1.6 per cent. While approvals for private sector dwellings excluding houses also fell 1.1 per cent in April in seasonally adjusted terms.

In the year to April, just 163,493 new dwelling permits were issued, a level which has been broadly consistent since December as surging home building costs and elevated interest rates batter construction activity. The annual result was vastly outpaced by population growth over the same period, which soared by 626,871 mostly due to surging net migration levels. From July 1, Labor is targeting the construction of 1.2 million well-located homes over five years, requiring a 12 month rolling average of 240,000 new homes.

Aprils figure is well short of the 20,000 homes that need to be constructed each month if the country is to hit the federal government’s target of building 1.2 million new homes in the space of five years, starting in July.

So the chronic housing supply issue will remain a problem and put upward pressure on home prices and rents, leading to higher inflation, and so higher interest rates for longer.

So unless things change, the gap between the supply of dwellings and meeting demand will continue to grow, driving home prices and rents higher, and pushing inflation higher which leads to higher interest rates and mortgage costs.

Step one should be to trim migration meaningfully back to bring the supply and demand back into better balance, remembering that on capita we are still currently building MORE dwellings than other western countries, as I discussed with Tarric Brooker recently. There is a strategic path to tackle the issues we face, but it seems to be politically impossible so more people will struggle to find a place to live – something which should be a basic human right, and a priority for Government.

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
No Homes For You: The Structural Desolation Of Dwelling Approval Falls!
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