Tag: ABS

Australian Inflation Wobbles Lower But…

The ABS released the quarterly inflation read today, together with the monthly update. Overall the Consumer Price Index (CPI) rose 0.6 per cent in the December 2023 quarter, lower than the 1.2 per cent rise in the September 2023 quarter and 4.1 per cent annually, This was the smallest quarterly rise since the March 2021 quarter. The RBA’s preferred measure of underlying inflation (the trimmed mean), which strips out irregular or temporary price changes, rose 4.2 per cent annually, down from 5.1 per cent in the September quarter.

Remember of course this still means that prices continued to rise for most goods and services, though annual CPI inflation has fallen from a peak of 7.8 per cent in December 2022, to 4.1 per cent in December 2023.

Markets reacted by pushing the ASX 200 to a new all-time high, closing at 7,680.70 on Wednesday, 50 points higher that its previous peak set in August 2021 on the assumption that this CPI result will mean the RBA holds interest rates when they meet next Tuesday. Falls however are not expected until later in the year, or into 2025, depending on which economists you chose to listen to.

Money market traders are now fully pricing the first 0.25 of a percentage point cut to the 4.35 per cent cash rate in August, from September before the inflation data. A second rate cut is fully factored in by December.

Westpac chief economist and former RBA assistant governor Luci Ellis said the RBA was “unlikely to raise rates further this cycle”.

there is certainly some more positive news in these numbers, though of course real felt inflation is way off the official reported average numbers for some households.

But that said, domestic-generated inflation remained firm due to strong price rises for new dwellings (5.1 per cent), rents (7.3 per cent after extra rent assistance), insurance (16.2 per cent) and electricity (6.9 per cent after bill subsidies).

The inflation for so-called non-tradable goods and services, which are mostly influenced by domestic factors, rose 5.4 per cent, down from 6.2 per cent.

ANZ economist Catherine Birch said non-tradables inflation was “still very strong” and could make the RBA retain its “hawkish” tone on monetary policy at its meeting next week.

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
Australian Inflation Wobbles Lower But…
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Australian Inflation Wobbles Lower But…

The ABS released the quarterly inflation read today, together with the monthly update. Overall the Consumer Price Index (CPI) rose 0.6 per cent in the December 2023 quarter, lower than the 1.2 per cent rise in the September 2023 quarter and 4.1 per cent annually, This was the smallest quarterly rise since the March 2021 quarter. The RBA’s preferred measure of underlying inflation (the trimmed mean), which strips out irregular or temporary price changes, rose 4.2 per cent annually, down from 5.1 per cent in the September quarter.

Remember of course this still means that prices continued to rise for most goods and services, though annual CPI inflation has fallen from a peak of 7.8 per cent in December 2022, to 4.1 per cent in December 2023.

Markets reacted by pushing the ASX 200 to a new all-time high, closing at 7,680.70 on Wednesday, 50 points higher that its previous peak set in August 2021 on the assumption that this CPI result will mean the RBA holds interest rates when they meet next Tuesday. Falls however are not expected until later in the year, or into 2025, depending on which economists you chose to listen to.

Money market traders are now fully pricing the first 0.25 of a percentage point cut to the 4.35 per cent cash rate in August, from September before the inflation data. A second rate cut is fully factored in by December.

Westpac chief economist and former RBA assistant governor Luci Ellis said the RBA was “unlikely to raise rates further this cycle”.

there is certainly some more positive news in these numbers, though of course real felt inflation is way off the official reported average numbers for some households.

But that said, domestic-generated inflation remained firm due to strong price rises for new dwellings (5.1 per cent), rents (7.3 per cent after extra rent assistance), insurance (16.2 per cent) and electricity (6.9 per cent after bill subsidies).

The inflation for so-called non-tradable goods and services, which are mostly influenced by domestic factors, rose 5.4 per cent, down from 6.2 per cent.

ANZ economist Catherine Birch said non-tradables inflation was “still very strong” and could make the RBA retain its “hawkish” tone on monetary policy at its meeting next week.

http://www.martinnorth.com/

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

Falling Trend Hours Worked May Signal Interest Rate Peak!

Economists got a surprise today as employment fell 65,100 in the month, compared with an average expected rise of 15,000, as hours worked and participation both fell. That said, the prospect of the RBA delivering one final rise in February appears over. Only a big surprise in the December quarter inflation numbers, which will be released on January 31, could force economists to revise their near universal forecast for rates to remain on hold next month. And the monthly inflation data doesn’t point to a shock.

The ABS Labour Force statistics for December was based on surveys run from Sunday 26 November to Saturday 9 December, and collected over the period from Sunday 3 December to Wednesday 20 December. They also rotate the sample, with the new incoming group showing a higher unemployment rate than the outgoing group.

The results from the survey showed that in seasonally adjusted terms with employment dropping by 65,000 people, along with a small fall in the number of unemployed people (1,000), the unemployment rate remained steady at 3.9 per cent in December.

Actually, the falling participation rate stopped the Unemployment rate from climbing as hiring eases, though perhaps most concerning is the trend in hours worked, which has been falling for the better part of a year. How much of this is summer holiday related is an open question, but it seems more structural to me. We also need to note the loss of 106,000 full time jobs, compared to 41,000 part time roles, especially among part-time women. And remember given the current migration settings we need more that 30,000 additional jobs just to stand still.

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
Falling Trend Hours Worked May Signal Interest Rate Peak!
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Falling Trend Hours Worked May Signal Interest Rate Peak!

Economists got a surprise today as employment fell 65,100 in the month, compared with an average expected rise of 15,000, as hours worked and participation both fell. That said, the prospect of the RBA delivering one final rise in February appears over. Only a big surprise in the December quarter inflation numbers, which will be released on January 31, could force economists to revise their near universal forecast for rates to remain on hold next month. And the monthly inflation data doesn’t point to a shock.

The ABS Labour Force statistics for December was based on surveys run from Sunday 26 November to Saturday 9 December, and collected over the period from Sunday 3 December to Wednesday 20 December. They also rotate the sample, with the new incoming group showing a higher unemployment rate than the outgoing group.

The results from the survey showed that in seasonally adjusted terms with employment dropping by 65,000 people, along with a small fall in the number of unemployed people (1,000), the unemployment rate remained steady at 3.9 per cent in December.

Actually, the falling participation rate stopped the Unemployment rate from climbing as hiring eases, though perhaps most concerning is the trend in hours worked, which has been falling for the better part of a year. How much of this is summer holiday related is an open question, but it seems more structural to me. We also need to note the loss of 106,000 full time jobs, compared to 41,000 part time roles, especially among part-time women. And remember given the current migration settings we need more that 30,000 additional jobs just to stand still.

http://www.martinnorth.com/

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

Households Spend Less But Borrow More, What Could Possibly Go Wrong?

The ABS reported that In November 2023, new loan commitments (seasonally adjusted): rose 1.0% for housing, fell 5.6% for personal fixed term loans, fell 4.8% for business construction (a typically volatile series) and rose 0.6% in trend terms and fell 6.4% for business purchase of property (a typically volatile series) but was flat in trend terms. So housing credit is still relatively strong despite higher interest rates, and potentially signalling that the RBA will need to dampen demand further in its inflation battle.

Also on Friday, the rather meaningless Monthly Household Spending Indicators was published by the ABS. As these are based on current prices, they are not adjusted for the impacts of inflation. The indicator is produced using aggregated and de-identified card and bank transactions from banking and financial institutions. They reported that Household spending increased 3.1% through the year on a current price, calendar adjusted basis.

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
Households Spend Less But Borrow More, What Could Possibly Go Wrong?
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Households Spend Less But Borrow More, What Could Possibly Go Wrong?

The ABS reported that In November 2023, new loan commitments (seasonally adjusted): rose 1.0% for housing, fell 5.6% for personal fixed term loans, fell 4.8% for business construction (a typically volatile series) and rose 0.6% in trend terms and fell 6.4% for business purchase of property (a typically volatile series) but was flat in trend terms. So housing credit is still relatively strong despite higher interest rates, and potentially signalling that the RBA will need to dampen demand further in its inflation battle.

Also on Friday, the rather meaningless Monthly Household Spending Indicators was published by the ABS. As these are based on current prices, they are not adjusted for the impacts of inflation. The indicator is produced using aggregated and de-identified card and bank transactions from banking and financial institutions. They reported that Household spending increased 3.1% through the year on a current price, calendar adjusted basis.

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.

No Wriggle Room For The RBA!

The latest monthly inflation read was out today, and it suggests rates will be higher for longer. While there was a drop, some of this was helped by Government intervention, and some other factors in the incomplete monthly numbers were still strong.

The RBA started tightening later than peers, yet shifted to smaller, quarter-point moves earlier. Now, as global disinflation trends beg the question whether Australia will again lag its peers, what’s clear is that the RBA will stay hawkish until it sees credible signs that inflation is moving back to target.

This month’s annual increase of 4.3 per cent is down from the 4.9 per cent rise in October and is the smallest annual increase since January 2022.

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 Wriggle Room For The RBA!
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No Wriggle Room For The RBA!

The latest monthly inflation read was out today, and it suggests rates will be higher for longer. While there was a drop, some of this was helped by Government intervention, and some other factors in the incomplete monthly numbers were still strong.

The RBA started tightening later than peers, yet shifted to smaller, quarter-point moves earlier. Now, as global disinflation trends beg the question whether Australia will again lag its peers, what’s clear is that the RBA will stay hawkish until it sees credible signs that inflation is moving back to target.

This month’s annual increase of 4.3 per cent is down from the 4.9 per cent rise in October and is the smallest annual increase since January 2022.

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.

Construction Firms Are Failing Faster Than Ever!

News.com.au reported that a staggering 2,349 construction firms have collapsed in the past year – with fears more may fall soon.

A “perfect storm” of high interest rates, soaring material costs and an ongoing worker shortage across the Aussie industry have sent tradies into freefall.

Insolvencies in the construction industry have reached an annual record this year, according to fresh data published by the corporate regulator ASIC.
The September quarter was the worst for the industry in 2023, where 785 construction businesses traded as insolvent. Just this month four building companies went bust in the first three days of the month.

And amid a chronic shortage of housing fuelled by Australia’s record overseas migration intake, the collapse of builders, contractors and subcontractors will not only have an immediate impact but could crimp future supply of new homes.

We look in more detail at the numbers…

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
Construction Firms Are Failing Faster Than Ever!
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Will Rising Household Wealth Drive Interest Rates Higher?

The ABS reported that Household wealth rose for the fourth straight quarter (+2.3 per cent or $339 billion) in the September quarter 2023. What you say, we are not feeling it!

The key of course is distribution across households, and the nexus is property values. The ABS says “Household wealth is supported by house prices which have continued to grow despite increases in interest rates” so that total household wealth was $15.3 trillion in the September quarter, which was 7.0 per cent ($998 billion) higher than a year ago. This was largely driven by residential land and dwellings, which contributed 1.7 percentage points to quarterly growth.

And the growth in household wealth was also supported by seasonal tax refunds coming in at the start of the financial year, with deposits increasing 3.4 per cent ($52.8 billion) over the September quarter.

Deposits into accessible transaction accounts (known as Transferrable Deposits) made up $24.4 billion of this increase, with most going into offset accounts. Another $26.1 billion was invested in high interest Non-Transferable Deposits, including term deposits.

So, if you are in the right cohorts, with savings, mortgage free houses, and other assets, you are doing well, whereas many others are simply not. If you are a renter, or mortgaged up to the gills your wealth could well be minimal, while debts are building. So actually, this a symptom of the building inequality in the system.

This puts the RBA in a tricky position. And in fact, while markets doubt the Reserve Bank of Australia will deliver any more rate rises, with current cash rate at 4.35%, the central bank warned on Tuesday it may need to deliver another cash rate increase if inflation remains too high.

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.