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.
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Today’s post is brought to you by Ribbon Property Consultants.
Digital Finance Analytics (DFA) Blog
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.
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.
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.
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…
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Today’s post is brought to you by Ribbon Property Consultants.
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.
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.
Digital Finance Analytics (DFA) Blog
Will Rising Household Wealth Drive Interest Rates Higher?
The unemployment rate rose by 0.1 percentage point to 3.9 per cent in November (seasonally adjusted), up from a revised 3.8 per cent in October, according to data released today by the Australian Bureau of Statistics (ABS).
The ABS said: “With employment increasing by 61,000 people, and the number of unemployed people rising by 19,000, the unemployment rate rose to 3.9 per cent in November.
“The combination of strong growth in both employment and unemployment in November saw the employment-to-population ratio return to a record high of 64.6 per cent and the participation rate reach a new high of 67.2 per cent.
“We have continued to see employment growth keeping pace with high population growth through 2023. The employment-to-population ratio has been high for a long time now, between 64.4 per cent and 64.6 per cent since February 2023, and between 64.3 per cent and 64.6 per cent for the past 18 months.
“Similarly, participation continues to be high. In addition to strong employment growth over the past year, the number of unemployed people has also increased by around 81,000 people, and the unemployment rate has risen by 0.4 percentage points. However, both unemployment measures remain well below their pre-pandemic levels.”
At this point just note that from September 2023, the ABS sample frame has been updated with information from the 2021 Census, with sample selection from the new sample being phased in over eight months from September 2023 to April 2024.
And specifically, The ABS has revised the original Labour Force series from July 2016 to reflect the latest estimated resident population (ERP) based on the 2021 Census (final rebased ERP). So the usual resident civilian population in October 2023 was revised up by around 0.2% (around 37,200 people).
To add to the data tweaks, the incoming November sample had a higher unemployment rate and higher participation, which also helps to explain some of the slightly weird movements this month.
This helps to explain why while employment growth continued into November 2023, rising by 0.4 per cent, monthly hours worked rose by less than 0.1 per cent.
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The unemployment rate rose by 0.1 percentage point to 3.9 per cent in November (seasonally adjusted), up from a revised 3.8 per cent in October, according to data released today by the Australian Bureau of Statistics (ABS).
The ABS said: “With employment increasing by 61,000 people, and the number of unemployed people rising by 19,000, the unemployment rate rose to 3.9 per cent in November.
“The combination of strong growth in both employment and unemployment in November saw the employment-to-population ratio return to a record high of 64.6 per cent and the participation rate reach a new high of 67.2 per cent.
“We have continued to see employment growth keeping pace with high population growth through 2023. The employment-to-population ratio has been high for a long time now, between 64.4 per cent and 64.6 per cent since February 2023, and between 64.3 per cent and 64.6 per cent for the past 18 months.
“Similarly, participation continues to be high. In addition to strong employment growth over the past year, the number of unemployed people has also increased by around 81,000 people, and the unemployment rate has risen by 0.4 percentage points. However, both unemployment measures remain well below their pre-pandemic levels.”
At this point just note that from September 2023, the ABS sample frame has been updated with information from the 2021 Census, with sample selection from the new sample being phased in over eight months from September 2023 to April 2024.
And specifically, The ABS has revised the original Labour Force series from July 2016 to reflect the latest estimated resident population (ERP) based on the 2021 Census (final rebased ERP). So the usual resident civilian population in October 2023 was revised up by around 0.2% (around 37,200 people).
To add to the data tweaks, the incoming November sample had a higher unemployment rate and higher participation, which also helps to explain some of the slightly weird movements this month.
This helps to explain why while employment growth continued into November 2023, rising by 0.4 per cent, monthly hours worked rose by less than 0.1 per cent.
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 Australian Bureau of Statistics (ABS) has released the June quarter National Accounts, which were an unmitigated disaster and confirmed that Australia is in a deep per capita recession.
The economy as measured by real GDP grew by only 0.2% in the September quarter, driven by increased government consumption and capital investment over the quarter and badly missing economists’ expectations of a 0.4% print: Growth over the year was 2.1%, less than population growth over the same period. While the population surge earlier in the year has supported demand overall, it is now rolling over and will not provide the same support in 2024. Or as Luci Ellis, at Westpac put it The Australian economy limped along in the September quarter.
Real per capita GDP has fallen for three of the past five quarters, with the March quarter revised up to flat. Accordingly, GDP per capita fell 0.3% over the year. Expenditure by households was dead flat over the September quarter and would have fallen by around 0.7% per capita. By contrast, growth in both household consumption and GDP over 2023 slowed due to sustained cost of living pressures and higher interest rates. Household consumption would have fallen even further had the savings rate not fallen to just 1.1%, which is the lowest level since December 2007.
The savings rate is now well below the ‘par’ of 6.5% and notionally implies a draw-down on the ‘additional savings’ accumulated during the pandemic – estimated at around $260bn – running at about $12bn a quarter. In total, about $43bn, or 16.5% of this reserve now looks to have been drawn down. Of course these are not equally spread across households, with many now having no buffers at all.
As Westpac put it. the policy drag on Australian households is clearly biting.
