Thursday October 18 2018
Australia Jobless Rate Falls to 6-1/2-Year Low of 5%
ABS l Rida | rida@tradingeconomics.com

Australia's seasonally adjusted unemployment rate unexpectedly dropped to 5 percent in September 2018 from 5.3 percent in the previous month while markets estimated 5.3 percent. It was the lowest jobless rate since April 2012, as the economy added 5,600 jobs while the number of unemployed declined by 37,200.

In September, the number of unemployed dropped by 37,200 to 665,800, as people looking for full-time work decreased by 38,000 to 449,700, while those only looking for part-time work increased by 900 to 216,100.

Employment went up 5,600 to 12,636,300, missing estimates of an increase of 15,000. Full-time employment increased 20,300 to 8,654,400 and part-time employment decreased 14,700 to 3,981,900.

The labor force participation rate edged down 0.2 points from a month earlier to 65.4 percent and below consensus 65.7 percent. Meantime, the employment to population ratio remained steady at  62.2 percent.

Seasonally adjusted monthly hours worked in all jobs increased 6.2 million hours, or 0.4 percent, to 1,757.5 million hours.




Thursday October 04 2018
Australia Trade Surplus Larger than Expected
ABS | Rida | rida@tradingeconomics.com

Australia's trade surplus widened to AUD 1.60 billion in August 2018 from a marginally revised AUD 1.55 billion in the previous month, above market consensus of a AUD 1.40 billion surplus. Exports rose 1 percent to a near record while imports were virtually unchanged at an all-time high.

Exports increased by 1 percent from a month earlier to a near record high of AUD 36.56 billion in August, mainly driven by sales of rural goods (3 percent to AUD 4.20 billion), in particular other rural (7 percent), meat & meat preparations (6 percent), and wool & sheepskins (5 percent). Also, exports of non-monetary gold soared 13 percent to AUD 2.02 billion, while sales of non-rural goods dropped 1 percent to AUD 22.71 billion dragged by a decline in shipments of metals (-14 percent), metal ores & minerals (-3 percent), coal, coke & briquettes (-2 percent), and machinery (-3 percent). Exports of services went up 1 percent to AUD 7.61 billion, boosted by travel (1 percent) and other services (1 percent).

Meanwhile, imports were virtually unchanged at an all-time high of AUD 34.96 billion in August. Purchases of consumption goods were flat at AUD 8.64 billion, as an increase in food & beverages (3 percent), non-industrial transport equipment (2 percent) and textiles, clothing & footwear (1 percent) offset a decline in toys, books & leisure goods (-5 percent) and household electrical items (-5 percent). Meanwhile, imports of capital goods grew 9 percent to AUD 6.77 billion, led by civil aircraft & confidentialised items (169 percent), telecommunications equipment (12 percent), ADP equipment (6 percent), and machinery & industrial equipment (3 percent). Arrivals of intermediate & other merchandise goods fell 2 percent to AUD 11.04 billion, due to a drop in fuels & lubricants (-11 percent), iron & steel (-24 percent) and parts for transport equipment (-2 percent). Imports of services increased 1 percent to AUD 8.09 billion, led by travel (2 percent), transport (1 percent) and other services (1 percent).

Considering the first eight months of the year, the trade surplus narrowed to AUD 10.46 billion from AUD 10.86 billion in the same period of 2017.





Tuesday October 02 2018
RBA Holds Cash Rate at 1.5%
RBA l Rida | rida@tradingeconomics.com

The Reserve Bank of Australia kept the cash rate at a record low of 1.5 percent at its October meeting, as widely expected, extending its record period of policy inaction beyond two years, amid sluggishness in inflation and wages and the risk to global growth from trade policy in the US.

Excerpt from the statement by the governor, Philip Lowe: 

Globally, inflation remains low, although it has increased due to both higher oil prices and some lift in wages growth. A further pick-up in inflation is expected given the tight labour markets, and in the United States, the sizeable fiscal stimulus. One ongoing uncertainty regarding the global outlook stems from the direction of international trade policy in the United States.

Financial conditions in the advanced economies remain expansionary, although they are gradually becoming less so in some countries. Yields on government bonds have moved a little higher, but credit spreads generally remain low. There has been a broad-based appreciation of the US dollar this year. In Australia, money-market interest rates are higher than they were at the start of the year, although they have declined since the end of June. In response, some lenders have increased their standard variable mortgage rates by small amounts, while at the same time reducing mortgage rates for some new loans.

The latest national accounts confirmed that the Australian economy grew strongly over the past year, with GDP increasing by 3.4 per cent. The Bank's central forecast remains for growth to average a bit above 3 percent in 2018 and 2019. Business conditions are positive and non-mining business investment is expected to increase. Higher levels of public infrastructure investment are also supporting the economy, as is growth in resource exports. One continuing source of uncertainty is the outlook for household consumption. Growth in household income remains low and debt levels are high. The drought has led to difficult conditions in parts of the farm sector.

Australia's terms of trade have increased over the past couple of years due to rises in some commodity prices. While the terms of trade are expected to decline over time, they are likely to stay at a relatively high level. The Australian dollar remains within the range that it has been in over the past two years on a trade-weighted basis, but it has depreciated against the US dollar along with most other currencies.

The outlook for the labour market remains positive. The unemployment rate is trending lower and, at 5.3 percent, is the lowest in almost six years. The vacancy rate is high and there are reports of skills shortages in some areas. A further gradual decline in the unemployment rate is expected over the next couple of years to around 5 percent. Wages growth remains low, although it has picked up a little. The improvement in the economy should see some further lift in wages growth over time, although this is likely to be a gradual process.

Inflation is around 2 percent. The central forecast is for inflation to be higher in 2019 and 2020 than it is currently. In the interim, once-off declines in some administered prices in the September quarter are expected to result in inflation in 2018 being a little lower than otherwise.

The low level of interest rates is continuing to support the Australian economy. Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual. Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.





Thursday September 13 2018
Australia August Jobless Rate Matches Estimates
Australian Bureau of Statistics l Chusnul Ch Manan | chusnul@tradingeconomics.com

Australia's seasonally adjusted unemployment rate stood at 5.3 percent in August of 2018, the same as in the prior month and matching market consensus. The jobless rate remained at its the lowest level since November 2012, as the economy added 44,000 jobs while the number of unemployed increased by 5,800.

In August, the number of unemployed rose by 5,800 to 708,800, as people looking for only part-time work increased by 13,200 to 214,000, while those looking for full-time work decreased by 7,500 to 494,800.
 
Employment went up by 44,000 to 12,631,300, missing estimates of an increase of 15,000. Part-time employment increased by 10,200 to 4,000,600 while full-time employment went up by 33,700 to 8,603,700.
 
The labor force participation rate rose by 0.1 points from a month earlier to 65.7 percent while markets estimated 65.6 percent. Meantime, the employment to population ratio went up by 0.1 percentage points to 62.2 percent.
 
Seasonally adjusted monthly hours worked in all jobs increased by 0.6 million hours, or 0.03 percent, to 1,750.9 million hours.
 


Thursday September 06 2018
Australia Trade Surplus Narrows 20% in July
Australian Bureau of Statistics l Chusnul Ch Manan | chusnul@tradingeconomics.com

Australia's trade surplus narrowed by 20 percent month-over-month to AUD 1.55 billion in July of 2018 from an upwardly revised AUD 1.94 billion in the prior month and above market expectations of a AUD 1.4 billion surplus, as exports fell while imports showed no change.

Exports from Australia decreased by 1 percent month-on-month to AUD 36.07 billion in July 2018. Sales of non-rural goods dropped 1 percent to AUD 22.79 billion, mainly due to metal ores and minerals (-5 pct); other non-rural (-29 pct); and other mineral fuels (-1 pct). In addition, exports of rural goods went down 2 percent to AUD 4.06 billion, dragged by cereal grains & cereal preparations (-11 pct); and wool and sheepskins (-8 pct). Also, sales of non-monetary gold tumbled 10 percent to AUD 1.79 billion. Exports of services were almost unchanged at AUD 7.42 billion, due to travel sales which declined 1 percent while sales of other services increased by 2 percent. Meantime, net exports of goods under merchanting jumped 175 percent to AUD 11 million.

Imports were almost unchanged month-over-month at AUD 34.52 billion in July. Purchases of intermediate and other merchandise goods rose by 6 percent to AUD 11.32 billion, driven by fuels and lubricants (23 pct). Also, purchases of non-monetary gold went up 11 percent to AUD 707 million. Imports of services increased 1 percent to AUD 7.75 billion, led by travel (2 pct); transport (2 pct); and other services(1 pct). In contrast, purchases of capital goods declined 6 percent to AUD 6.17 billion, due to civil aircraft and confidentialised items (-49 pct); telecommunications equipment (-4 pct); machinery and industrial equipment (-2 pct); ADP equipment(-4 pct); and industrial transport equipment n.e.s. (-3 pct). In addition, imports of consumption goods declined 4 percent to AUD 8.58 billion, mainly due to textiles, clothing and footwear (-9 pct); consumption goods n.e.s. (-2 pct); and food and beverages, mainly for consumption (-4 pct).
 
Considering the first seven months of the year, the trade surplus narrowed to AUD 8.21 billion from AUD 10.54 billion in the same period of 2017.
 
 


Wednesday September 05 2018
Australia Q2 GDP Growth Stronger than Expected
ABS l Rida | rida@tradingeconomics.com

The Australian economy advanced 0.9 percent in the June quarter of 2018, above market consensus of a 0.7 percent expansion and after an upwardly revised 1.1 percent growth in the previous quarter. Growth was mainly supported by strength in domestic demand and foreign trade while fixed investment was flat.

In the three months to June, the largest contribution to GDP growth came from final consumption expenditure (0.6 percentage points), namely household consumption (0.4 pp) and government spending (0.2 pp). Also, exports added 0.2 percentage points to growth, while changes in inventories were neutral. On the other hand, non-dwelling construction substracted 0.1 percentage points off growth.

Final consumption expenditure rose 0.7 percent. Household spending increased 0.7 percent (vs 0.5 percent in Q1), driven by rises in food (1.3 pct), recreation and culture (1 pct) and insurance and other financial services (0.9 pct). Government spending went up 1 percent (vs 1.6 pct in Q1), due to state and local government (0.4 pct ) and national government (1.9 pct).

Gross fixed capital formation was flat. Private investment recorded no movement, with a rise in total dwellings (1.7 pct) offset by falls in machinery and equipment (-1.6 pct), and non-dwelling construction (-1.2 pct). Public investment was also flat. A rise for the general government sector (2.2 pct) was offset by a fall for public corporations (-5.8 pct).

Total inventories increased AUD 1.16 billion following a rise of AUD 1.24 billion in the prior quarter. The increase was driven by wholesale trade inventories, which recorded a strong build up for the second straight quarter. Also, public authorities and mining industry inventories increased during the quarter.

Exports of goods and services rose by 1.1 percent (vs 3 percent in Q1. Sales of goods increased by 1.1 percent, with non-rural exports (1.4 pct) and rural exports (3.9 pct) rising. Sales of services went up 1.2 percent. Imports of goods and services grew by 0.4 percent (vs 1.7 percent in Q1). Purchases of goods rose 1.7 percent, driven by both capital (4.4 pct) and consumption goods (1.6 pct). There was a decline in imports of intermediate goods (-1.0 pct). Imports of services fell 3.8 percent. 

By industry, agriculture grew by 0.8 percent  after experiencing four consecutive falls. The rebound was supported by rises in both livestock and grains. Also, mining rose 1.5 percent, driven by coal mining (4.7 pct), exploration and other mining support services (4.2 pct) and oil and gas extraction (1.5 pct). This quarter featured the biggest rise in coal mining since Q3 2014, due to strong demand for thermal and hard coking coal. In addition, construction grew 1.9 percent, due to building construction (1.5 pct), heavy and civil engineering (2.6 pct) and construction services (1.8 pct). Retail trade rose 1.1 percent, driven by food retailing and other store-based retailing. Information, media and telecommunications increased 1.8 percent after a fall in Q1. The rebound was explained by telecommunications services (2.8 pct) and other information and media services (0.6 pct). Financial and insurance services increased by 0.7 percent, supported by a rise in other financial and insurance services (1.5 pct). At the same time, rental, hiring & real estate services grew 1.7 percent, supported by property operators and real estate services (1.8 pct) and rental, hiring and real estate services (0.9 pct). Health care rose 1.3 percent, boosted by rises in both public and private health. On the other hand, manufacturing sector fell 1.5 percent following a  strong growth in Q1. The decline was driven by other manufacturing (-3.7 pct), petroleum, coal, chemical and rubber products (-3.2 pct) and machinery and equipment (-1.7 pct).

Through the year to the second quarter, the economy grew 3.4 percent, following a 3.2 percent expansion in the prior quarter and beating expectations of a 2.8 percent growth. It is the fastest annual pace of expansion since Q3 2012.




Tuesday September 04 2018
Australia Holds Cash Rate at 1.5% in September
RBA l Rida | rida@tradingeconomics.com

The Reserve Bank of Australia kept the cash rate at a record low of 1.5% at its September meeting, as widely expected, extending its record period of policy inaction beyond two years, amid weak inflation and low wage growth.

Excerpt from the statement by the governor, Philip Lowe: 

Globally, inflation remains low, although it has increased in some economies and further increases are expected given the tight labour markets. One ongoing uncertainty regarding the global outlook stems from the direction of international trade policy in the United States.

The Bank's central forecast is for growth of the Australian economy to average a bit above 3 per cent in 2018 and 2019. In the first half of 2018, the economy is estimated to have grown at an above-trend rate. Business conditions are positive and non-mining business investment is expected to increase. Higher levels of public infrastructure investment are also supporting the economy, as is growth in resource exports. One continuing source of uncertainty is the outlook for household consumption. Household income has been growing slowly and debt levels are high. The drought has led to difficult conditions in parts of the farm sector.

Australia's terms of trade have increased over the past couple of years due to rises in some commodity prices. While the terms of trade are expected to decline over time, they are likely to stay at a relatively high level. The Australian dollar remains within the range that it has been in over the past two years on a trade-weighted basis, but it has depreciated against the US dollar along with most other currencies.

The outlook for the labour market remains positive. The unemployment rate has fallen to 5.3 per cent, the lowest level in almost six years. The vacancy rate is high and there are reports of skills shortages in some areas. A further gradual decline in the unemployment rate is expected over the next couple of years to around 5 per cent. Wages growth remains low, although it has picked up a little recently. The improvement in the economy should see some further lift in wages growth over time, although this is likely to be a gradual process.

Inflation is around 2 per cent. The central forecast is for inflation to be higher in 2019 and 2020 than it is currently. In the interim, once-off declines in some administered prices in the September quarter are expected to result in headline inflation in 2018 being a little lower, at 1¾ per cent.

Conditions in the Sydney and Melbourne housing markets have continued to ease and nationwide measures of rent inflation remain low. Housing credit growth has declined to an annual rate of 5½ per cent. This is largely due to reduced demand by investors as the dynamics of the housing market have changed. Lending standards are also tighter than they were a few years ago, partly reflecting APRA's earlier supervisory measures to help contain the build-up of risk in household balance sheets. There is competition for borrowers of high credit quality.

The low level of interest rates is continuing to support the Australian economy. Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual. Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.


Thursday August 16 2018
Australia July Jobless Rate Falls to Near 6-Year Low of 5.3%
ABS l Rida | rida@tradingeconomics.com

Australia's seasonally adjusted unemployment rate unexpectedly inched lower to 5.3 percent in July of 2018 from 5.4 percent in the prior month and below market consensus of 5.4 percent. It was the lowest jobless rate since November 2012, as the economy lost 3,900 jobs and the number of unemployed declined by 5,700.

In July, the number of unemployed fell by 5,700 to 706,000, as people looking for only part-time work decreased by 8,000 to 201,900, while those looking for full-time work increased by 2,300 to 504,100.

Employment declined by 3,900 to 12,575,200, missing estimates of an increase of 15,000 and marking the first drop since February. Part-time employment decreased by 23,200 to 3,987,700 while full-time employment went up by 19,300 to 8,587,500.

The labor force participation rate decreased by 0.1 points from a month earlier to 65.5 percent while markets estimated 65.7 percent. Meantime, the employment to population ratio went down by 0.1 percentage points to 62.1 percent.

Seasonally adjusted monthly hours worked in all jobs increased by 4 million hours, or 0.2 percent, to 1,749.6 million hours.


Tuesday August 07 2018
Australia Leaves Monetary Policy Unchanged for Two Years
RBA l Rida | rida@tradingeconomics.com

The Reserve Bank of Australia left the cash rate unchanged at a record low of 1.5 percent for two years running at its August meeting. It is the longest policy pause in the central bank's modern history, amid sluggishness in inflation and wages.

Excerpt from the statement by the governor, Philip Lowe: 

Globally, inflation remains low, although it has increased in some economies and further increases are expected given the tight labour markets. One uncertainty regarding the global outlook stems from the direction of international trade policy in the United States.

The Bank's central forecast for the Australian economy remains unchanged. GDP growth is expected to average a bit above 3 per cent in 2018 and 2019. This should see some further reduction in spare capacity. Business conditions are positive and non-mining business investment is continuing to increase. Higher levels of public infrastructure investment are also supporting the economy, as is growth in resource exports. One continuing source of uncertainty is the outlook for household consumption. Household income has been growing slowly and debt levels are high. The drought has led to difficult conditions in parts of the farm sector.

Australia's terms of trade have increased over the past couple of years due to rises in some commodity prices. While the terms of trade are expected to decline over time, they are likely to stay at a relatively high level. The Australian dollar remains within the range that it has been in over the past two years.

The outlook for the labour market remains positive. The vacancy rate is high and other forward-looking indicators continue to point to solid growth in employment. Employment growth continues to be faster than growth in the working-age population. A further gradual decline in the unemployment rate is expected over the next couple of years to around 5 per cent. Wages growth remains low. This is likely to continue for a while yet, although the improvement in the economy should see some lift in wages growth over time. Consistent with this, the rate of wages growth appears to have troughed and there are increased reports of skills shortages in some areas.

The latest inflation data were in line with the Bank's expectations. Over the past year, the CPI increased by 2.1 per cent, and in underlying terms, inflation was close to 2 per cent. The central forecast is for inflation to be higher in 2019 and 2020 than it is currently. In the interim, once-off declines in some administered prices in the September quarter are expected to result in headline inflation in 2018 being a little lower than earlier expected, at 1¾ per cent.

Conditions in the Sydney and Melbourne housing markets have continued to ease and nationwide measures of rent inflation remain low. Housing credit growth has declined to an annual rate of 5½ per cent. This is largely due to reduced demand by investors as the dynamics of the housing market have changed. Lending standards are also tighter than they were a few years ago, partly reflecting APRA's earlier supervisory measures to help contain the build-up of risk in household balance sheets. There is competition for borrowers of high credit quality.

The low level of interest rates is continuing to support the Australian economy. Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual. Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time. 


Thursday August 02 2018
Australia June Trade Surplus Largest in 13 Months
Australian Bureau of Statistics l Chusnul Ch Manan | chusnul@tradingeconomics.com

Australia's trade surplus widens sharply 158 percent to AUD 1.87 billion in June of 2018 from a downwardly revised AUD 0.73 billion in the prior month and far above market expectations of a AUD 0.9 billion surplus. It is the largest trade surplus since May last year, as exports rose to an all-time high while imports declined.

Exports increased by 3 percent month-on-month to an all-time high of AUD 36.44 billion in June. Sales of non-rural goods rose by 2 percent to AUD 22.92 billion, mainly due to metal ores and minerals (1 percent); other mineral fuels (1 percent); other manufactures (6 percent); and transport equipment (16 percent). In addition, exports of non-monetary gold increased by 6 percent to AUD 1.98 billion while those of rural goods went up 5 percent to AUD 4.16 billion, mainly due to meat and meat preparations (2 percent), cereal grains and cereal preparations (10 percent) and other rural products (6 percent). Exports of services went up by 1 percent to AUD 7.39 billion, due to a rise in travel sales (2 percent) while other services were almost unchanged. 
 
Imports fell 1 percent to AUD 34.57 billion in June. Imports of intermediate and other merchandise goods went down by 4 percent to AUD 10.74 billion, mainly dragged down by fuels and lubricants (-11 percent); processed industrial supplies (-2 percent); parts for transport equipment (-5 percent); other parts for capital goods (-1 percent). Also, purchases of non-monetary gold tumbled 15 percent to AUD 0.64 billion. Meantime, purchases of consumption goods were almost unchanged at AUD 8.96 billion, mostly due to a fall in non-industrial transport equipment (-3 percent) was offset by a rise in both textiles, clothing and footwear (2 percent); food and beverages (2 percent), and household electrical items (1 percent). Imports of services were almost unchanged at AUD 7.62 billion, as an increase in purchases of other services (1 percent) was offset by a drop in transport ( -3 percent); travel (-1 percent). By contrast, inbound shipments of capital goods increased by 5 percent to AUD 6.61 billion, led by industrial transport equipment n.e.s (9 percent); civil aircraft and confidentialised items (13 percent).capital goods n.e.s (14 percent), and ADP equipment (6 percent).
 
Considering the first half of the year, the trade surplus narrowed to AUD 6.55 billion from AUD 10.16 billion in the same period of 2017.