Thursday, June 05, 2014

Australia’s weakening economy

Tonight, just a scan with a focus on economic statistics.

In a post (Should We Have Children?) Ramana referred to something that I hadn’t thought of, the impact of education debts on relationships and the decision to have children. I have written before on the very significant impact that the changing pattern in relationships has on other variables. As a simple example, by 1980, it was clear that the rise of two income families was reducing labour mobility because the need to earn two incomes, to have two careers, meant that couples had to take both careers into account before a move.

Yesterday, the Australian Bureau released the last of its series Employee Earnings, Benefits and Trade Union Membership, Australia, August 2013. One take home statistic: “Real (earnings adjusted by CPI) median weekly earnings in main job fell by 2.1% in the year to August 2013, the largest fall in a decade.” Mmm! That would fit with my observations.

That same day, the ABS released the Australian GDP figures for the March quarter 2014 showing a seasonally adjusted rise of 1.1 per cent for the quarter, up 3.5 per cent from the March quarter 2013. That’s a good result. However, the main driver in the rise was net exports, up 1.6 per cent. In industry terms, mining contributed 80 per cent of the growth in the quarter, The two results are linked, since rising export volumes of mining products was the main contributor to net exports,

Today, the ABS released the trade figures for April 2014 showing a biggish seasonally adjusted decline in trade terms. The main driver in the fall was coal, coke and briquettes, down $361m (10 per cent).
This fall was partly offsetting by metal ores and minerals, up $254m (3 per cent).  Since April, iron ore prices have come down suggesting that the trade figures may have deteriorated further. Oops! Building approvals have also continued to decline after a period of steady increases.  Then, in May Australian house prices fell by 1.9 per cent,the biggest single-month decline in house prices in more than five years, according to CommSec chief economist Craig James.

Finally back in May, the ABS released Australian Industry, 2012-13. It’s worth a browse.

In November last year, I was prepared to take something of a then contrarian view of 2014, suggesting the Australian economy was going to be strong than many expected. I held to that view in December - Friday Economics- economic outlook 2014. I’m not so sure now. I think that Australia may have stuffed up, despite the better than expected global economic growth. There have been too many shocks, too much instability.

I won’t call recession yet. That would be extreme. But it does look possible now, something I hadn’t expected I think that we will find out relatively quickly.


Yesterday, Leith van Onselen had a useful piece showing that while GDP went up in the March quarter, Gross National Expenditure went down after really flat lining for the year. Today, he followed this up with a piece  looking at the expenditure numbers adjusted for population increase. Australia’s population has been growing, so the per capita numbers are in negative territory.

Meantime, Chinese growth continues to weaken slightly, with the IMF advising against new stimulatory measures. The Chinese Government faces a difficult task in unwinding imbalances in the Chinese economy, so some further slowing is not necessarily a bad thing.

Yesterday, Roy Morgan released the results of its latest survey of business confidence. The survey was carried out following the budget. Business confidence in May fell 5.5 per cent from April to 114.3. Business confidence is now 16.1 per cent below the peak of 136.3 in October 2013 following the new government and 7.4 per cent below the average over the last 12 months.


Rummuser said...

Thanks for the plug in Jim. Just yesterday in our news papers, I read about a young couple killing their child before committing suicide because of the pressure that collectors were subjecting them to. It is not the first time that I read such a story either.

Anonymous said...

Meanwhile, New Zealand scientists have genetically sequenced the sheep!

First things first I always say.


Jim Belshaw said...

That's a sad story, Ramana. Is it an Indian issue? Here I was being far more prosaic.

kvd, I have to agree. By coincidence, next week's story in the Express tells the first part of the story of establishing wool selling at Newcastle. Remember I come from wool country. To me, genetically sequencing the sheep would seem far more useful, and probably cheaper, than developing a mobile app to find (say) dance locations. But then, I'm twisted!

Anonymous said...

Well, having made a living from (im)mobile apps for twentysome years, I'm not sure I agree. But that said, I gain great satisfaction these days from my three Merino- and two Suffolk- cross sheep, three of which/whom? provide me with very great pleasure each July-August by producing twin lambs.

One of my nieces was down last year at the time, and asked me for the names - I gave her a big hug and suggested LambChop, Roast, and Cutlet as my first preferences, but her lovely mother was not particularly pleased.


Jim Belshaw said...

Your last comment almost caused me to splutter a glass of wine over he screen, kvd. Do you do your own butchering?

Anonymous said...

No Jim. There's a very highly regarded butcher in a nearby village; supplies most of the locavore twee people round Bowral. Cutlet and LC probably provided suitable sustenance whilst they railed against/for the topic de jour - and bless their hungry little hearts :)

But Roast was quite tasty.


Jim Belshaw said...

You effete city chap, you. As kids, we sometimes watched Uncle Ron slaughtering a sheep. None of this lamb stuff. An old ewe for household use. Lambs were to valuable. It was a little gross. I hesitate to describe it here.

Anonymous said...

Accept that Jim - effete I am; and also, I can spell hydatid. But you carry on :)


Jim Belshaw said...

Oh dear, kvd. This time it was coffee that I almost spluttered over the screen when I laughed. Your comment and my reaction would probably seem quite obscure to most. Okay, I withdraw effete and also recognise your capacity to spell. One of the reasons, not the only one, that I laughed is that I was going to mention hydatids, but actually couldn't remember how to spell it!