Thursday November 15 2018
Australia Jobless Rate Unchanged at 6-1/2-Year Low of 5%
Rida | rida@tradingeconomics.com

Australia's seasonally adjusted unemployment rate stood at 5 percent in October 2018, the same as in the prior month but slightly below market estimates of 5.1 percent. The jobless rate remained at its lowest level since April 2012.

In October, the number of unemployed increased by 4,600 to 672,100, as people looking only for part-time work went up 9,800 to 226,700, while those looking for full-time work decreased 5,200 to 445,400.

Employment went up 32,800 to 12,671,500, easily beating market consensus of an increase of 20,000. Full-time employment increased 42,300 to 8,703,700, while part-time employment fell 9,500 to 3,967,900.

The labor force participation rate edged up 0.1 points from a month earlier to 65.6 percent and slightly above forecasts of  65.5 percent. Meantime, the employment to population ratio rose by 0.1 percentage points to 62.3 percent.

Seasonally adjusted monthly hours worked in all jobs increased 6.1 million hours, or 0.3 percent, to 1,764.4 million hours.




Tuesday November 06 2018
Australia Leaves Monetary Policy Unchanged
ABS l Rida | rida@tradingeconomics.com

The Reserve Bank of Australia left the cash rate at a record low of 1.5 percent at its November meeting, as widely expected, extending its record period of policy inaction beyond two years. While reiterating that inflation is expected to pick up gradually over the next couple of years, policymakers said they revised up slightly the forecasts for economic growth in 2018 and 2019 to average around 3-1/2 percent amid positive business conditions and rising non-mining investment.

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 but have tightened somewhat recently. Equity prices have declined and yields on government bonds in some economies have increased, although they remain low. There has also been a broad-based appreciation of the US dollar this year. In Australia, money-market interest rates have declined recently, after increasing earlier in the year. Standard variable mortgage rates are a little higher than a few months ago and the rates charged to new borrowers for housing are generally lower than for outstanding loans.

The Australian economy is performing well. Over the past year, GDP increased by 3.4 per cent and the unemployment rate declined to 5 per cent, the lowest in six years. The forecasts for economic growth in 2018 and 2019 have been revised up a little. The central scenario is for GDP growth to average around 3½ per cent over these two years, before slowing in 2020 due to slower growth in exports of resources. 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, debt levels are high and some asset prices have declined. 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 and have been stronger than earlier expected. This has helped boost national income. 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, although it is currently in the lower part of that range.

The outlook for the labour market remains positive. With the economy growing above trend, a further reduction in the unemployment rate is expected to around 4¾ per cent in 2020. The vacancy rate is high and there are reports of skills shortages in some areas. 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 still expected to be a gradual process.

Inflation remains low and stable. Over the past year, CPI inflation was 1.9 per cent and, in underlying terms, inflation was 1¾ per cent. These outcomes were in line with the Bank's expectations and were influenced by declines in some administered prices due to changes in government policies. Inflation is expected to pick up over the next couple of years, with the pick-up likely to be gradual. The central scenario is for inflation to be 2¼ per cent in 2019 and a bit higher in the following year.




Thursday November 01 2018
Australia Posts Largest Trade Surplus in 19 Months
Australian Bureau of Statistics l Chusnul Ch Manan | chusnul@tradingeconomics.com

Australia's trade surplus widened to AUD 3.02 billion in September 2018 from an upwardly revised AUD 2.34 billion in the previous month, far above market consensus of a AUD 1.70 billion surplus. It was the largest trade surplus since February 2017, as exports rose 1 percent to an all-time high of AUD 37.50 billion while imports declined 1 percent to AUD 34.48 billion.

Exports increased by 1 percent from a month earlier to an all-time high of AUD 37.50 billion in September 2018, mainly driven by sales of non-rural goods (3 percent to AUD 23.61 billion), in particular metal ores and minerals (7 percent), other mineral fuels (6 percent), and other manufactures (2 percent). Also, exports of rural goods went up (1 percent to AUD 4.21 billion), in particular wool & sheepskins (12 percent), cereal grains and cereal preparations (2 percent). Exports of services went up 1 percent to AUD 8.16 billion, boosted by travel (2 percent). By contrast, exports of non-monetary gold tumbled 26 percent to AUD 1.50 billion.
 
Meanwhile, imports fell 1 percent to AUD 34.48 billion in September. Purchases of capital goods dropped 9 percent to AUD 6.09 billion, dragged by civil aircraft & confidentialised items (-45 percent), telecommunications equipment (-1 percent), ADP equipment (-3 percent), machinery and industrial equipment (-5 percent), and capital goods n.e.s (-18 percent). Also, imports of non-monetary gold decreased 14 percent to AUD 0.40 billion. Meantime, consumption goods rose 1 percent to AUD 8.68 billion, as an increase in food & beverages (3 percent), textiles, clothing & footwear (1 percent), toys, books & leisure goods (3 percent), and household electrical items (7 percent) while those of non-industrial transport equipment fell by 3 percent. Arrivals of intermediate & other merchandise goods went up 2 percent to AUD 11.19 billion, due to a rise in fuels & lubricants (8 percent), iron & steel (20 percent), parts for transport equipment (1 percent), parts for ADP equipment (6 percent), paper and paperboard (2 percent), textile yam and fabrics (6 percent), plastics (3 percent), processed industrial supplies n.e.s (4 percent), and goods procured in ports by carriers (1 percent). Imports of services almost unchanged at AUD 8.17 billion, as a rise in transport (1 percent) offset a decline in travel (1 percent).
 
Considering the first nine months of the year, the trade surplus widened to AUD 15.50 billion from AUD 10.88 billion in the same period of 2017.
 




Wednesday October 31 2018
Australia Q3 Inflation Rate Slows to 1.9%
ABS l Rida | rida@tradingeconomics.com

Australia's consumer price inflation eased to 1.9 percent year-on-year in the third quarter of 2018 from 2.1 percent in the previous period. The latest figure was in line with market expectations, mainly due to a marked slowdown in cost of housing.

Year-on-year, cost of housing increased by 1.6 percent in the September quarter, slower than a 3.1 percent rise in the prior quarter, mainly driven by new dwelling purchase by owner-occupiers (2 percent vs 2.7 percent) and utilities (1.9 percent vs 8 percent). Also, cost advanced at a softer rate for: alcoholic and tobacco (6.8 percent vs 7.8 percent in the June quarter); health (3.2 percent vs 3.4 percent); and insurance and financial services (1.4 percent vs 1.5 percent). In addition, cost fell further for: furnishings, household equipment and services (-2 percent vs -0.5 percent); and communication (-4.3 percent vs -4.2 percent).

On the other hand, prices of food and non-alcoholic beverages increased 1.6 percent, faster than a 0.3 percent rise in the second quarter. It was the highest food inflation since the June quarter 2017, largely due to fruits and vegetables (5 percent vs -3.2 percent), bread and cereal products (0.2 percent vs -0.8 percent), and meat and seafood (1.4 percent vs 1.1 percent). Meanwhile, cost of transport went up at a higher 6 percent, after a 5.2 percent gain in the previous period, mostly due to automotive fuels (20.8 percent vs 16.3 percent). At the same time, cost advanced faster for recreation and culture (1.2 percent vs 0.8 percent); and education (2.8 percent vs 2.7 percent), while declined less for clothing and footwear (-0.8 percent vs -2 percent).

RBA Trimmed Mean CPI rose 1.8 percent year-on-year, compared to a 1.9 percent gain in the second quarter and slightly below expectations of 1.9 percent. Quarter-on-quarter, the index increased by 0.4 percent, easing from a 0.5 percent rise in the prior three months and matching estimates. RBA Weighted Mean CPI went up 1.7 percent year-on-year in the three months to September, following a 1.9 percent rise in the June quarter and below forecasts of 1.9 percent.

On a quarterly basis, consumer prices went up 0.4 percent, the same as in the June quarter and matching market consensus. The most significant price rises were international holiday travel and accommodation (4.3 percent), domestic holiday travel and accommodation (2.4 percent), tobacco (1.8 percent) and automotive fuel (1.4 percent). The rise was partially offset by falls in child care (-11.8 percent) and telecommunications equipment and services (-1.5 percent).




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.