Thursday July 18 2019
Australia Jobless Rate Steady at Highest Since August 2018
ABS | Rida Husna | rida@tradingeconomics.com

Australia's seasonally adjusted unemployment rate was unchanged at 5.2 percent in June 2019, remaining at its highest level since August last year and matching market expectations.

The number of unemployed rose by 6,600 to 711,500 in June. People looking for only part-time work grew 11,900 to 223,900, while those looking for full-time work dropped by 5,300 to 487,600. Female unemployment went up by 11,300, while male unemployment decreased by 4,700.

Employment rose by just 500 people to 12,871,700 in June, far below market consensus of a 10,000 gain and after an upwardly revised 45,300 increase in May. Full-time employed persons advanced 21,100 to 8,815,600, while part-time employed persons fell 20,600 to 4,056,100.

The participation rate was unchanged at a record-high of 66.0 percent in June, in line with forecasts. Meantime, the employment to population ratio edged down 0.1 points to 62.5.

The underemployment rate dropped 0.4 points to 8.2 percent in June while the underutilisation rate fell 0.3 points to 13.4 percent.

Seasonally adjusted monthly hours worked in all jobs decreased by 0.1 million hours to 1,773.9 million hours.




Wednesday July 03 2019
Australia Posts Largest Trade Surplus on Record
ABS l Rida Husna | rida@tradingeconomics.com

Australia's trade surplus widened sharply to AUD 5.75 billion in May 2019 from a marginally revised of AUD 4.82 billion in the previous month and beating market expectations of a surplus of AUD 5.25 billion. It was the largest trade surplus on record, as exports rose by 4 percent to an all time high of AUD 41.59 billion, while imports advanced at a softer 2 percent to AUD 35.84 billion.

Exports from Australia rose by 4 percent to an all time high of AUD 41.59 billion in May. Sales of non-rural goods grew by 5 percent to AUD 27.51 billion, driven by metal ores and minerals (13 percent), and coal, coke and briquettes (3 percent). Also, sales of rural goods rose 1 percent to AUD 4.08 billion, led by other rural (6 percent), and cereal grains and cereal preparations (17 percent). In addition, sales of non-monetary gold expanded 1 percent to AUD 1.69 billion and exports of services went up 1 percent to AUD 8.30 billion, mainly supported by travel (1 percent). In contrast, net exports of goods under merchanting fell 5 percent to AUD 18 million.

Meanwhile, imports increased 2 percent to AUD 35.84 billion. Purchases of capital goods advanced 5 percent to AUD 7.0 billion, namely civil aircraft and confidentialised items (67 percent), machinery and industrial equipment (5 percent), and telecommunications equipment (6 percent). In addition, imports of intermediate goods and other merchandise goods grew 1 percent to AUD 11.19 billion, mainly driven by fuels and lubricants (8 percent). Also, purchases of non-monetary gold surged 17 percent to AUD 478 million, and that of services went up 1 percent to  AUD 8.34 billion, mostly led by maintenance and repair services n.i.e. (64 percent), and transport (2 percent). Conversely, imports of consumption goods dropped 1 percent to AUD 8.87 billion, mainly due to textiles, clothing and footwear (-7 percent), and non-industrial transport equipment (-3 percent).

Considering the January to May period, the trade surplus soared to AUD 25.70 billion from AUD 5.32 billion in the corresponding period the prior year. 




Tuesday July 02 2019
RBA Cuts Cash Rate Again to Fresh Record Low of 1%
RBA l Rida Husna | rida@tradingeconomics.com

The Reserve Bank of Australia lowered its cash rate by 25 bps to a new record low of 1.0 percent at its July meeting, as widely expected. It is the first back-to-back cut in borrowing cost since 2012, aiming to support employment growth and to provide greater confidence that inflation will be consistent with the medium-term target. The Committee said they will continue to monitor developments in the labour market and adjust monetary policy if necessary.

Excerpt from the statement by the governor, Philip Lowe: 

The outlook for the global economy remains reasonable. However, the uncertainty generated by the trade and technology disputes is affecting investment and means that the risks to the global economy are tilted to the downside. In most advanced economies, inflation remains subdued, unemployment rates are low and wages growth has picked up. The slowdown in global trade has contributed to slower growth in Asia. In China, the authorities have taken steps to support the economy, while continuing to address risks in the financial system.

Global financial conditions remain accommodative. The persistent downside risks to the global economy combined with subdued inflation have led to expectations of easing of monetary policy by the major central banks. Long-term government bond yields have declined further and are at record lows in a number of countries, including Australia. Bank funding costs in Australia have also declined, with money-market spreads having fully reversed the increases that took place last year. Borrowing rates for both businesses and households are at historically low levels. The Australian dollar is at the low end of its narrow range of recent times.

Over the year to the March quarter, the Australian economy grew at a below-trend 1.8 percent. Consumption growth has been subdued, weighed down by a protracted period of low income growth and declining housing prices. Increased investment in infrastructure is providing an offset and a pick-up in activity in the resources sector is expected, partly in response to an increase in the prices of Australia's exports. The central scenario for the Australian economy remains reasonable, with growth around trend expected. The main domestic uncertainty continues to be the outlook for consumption, although a pick-up in growth in household disposable income is expected to support spending.

Employment growth has continued to be strong. Labour force participation is at a record level, the vacancy rate remains high and there are reports of skills shortages in some areas. There has, however, been little inroad into the spare capacity in the labour market recently, with the unemployment rate having risen slightly to 5.2 percent. The strong employment growth over the past year or so has led to a pick-up in wages growth in the private sector, although overall wages growth remains low. A further gradual lift in wages growth is still expected and this would be a welcome development. Taken together, these labour market outcomes suggest that the Australian economy can sustain lower rates of unemployment and underemployment.

Inflation pressures remain subdued across much of the economy. Inflation is still, however, anticipated to pick up, and will be boosted in the June quarter by increases in petrol prices. The central scenario remains for underlying inflation to be around 2 percent in 2020 and a little higher after that.

Conditions in most housing markets remain soft, although there are some tentative signs that prices are now stabilising in Sydney and Melbourne. Growth in housing credit has also stabilised recently. Demand for credit by investors continues to be subdued and credit conditions, especially for small and medium-sized businesses, remain tight. Mortgage rates are at record lows and there is strong competition for borrowers of high credit quality.

Today's decision to lower the cash rate will help make further inroads into the spare capacity in the economy. It will assist with faster progress in reducing unemployment and achieve more assured progress towards the inflation target.




Thursday June 13 2019
Australia Jobless Rate Holds at 8-Month High in May
ABS l Rida Husna | rida@tradingeconomics.com

Australia's seasonally adjusted unemployment rate stood at 5.2 percent in May 2019, unchanged from the previous month's eighth month-high and above market expectations of 5.1 percent. The economy added 42,300 jobs while the number of unemployed fell by 2,400.

The number of unemployed declined by 2,400 to 704,700 in May 2019. People looking for full-time work were little-changed from the preceding month at 492,900 while those looking for only part-time work dropped 2,400 to 211,700. Male unemployment increased by 5,100, while female unemployment declined 7,500.

Employment jumped 42,300 to 12,868,200 in May, easily beating market consensus of a 17,500 gain and after an upwardly revised 43,100 increase in April. Full-time employed persons advanced 2,400 to 8,792,900, while part-time employed persons went up 39,800 to 4,075,400.

The participation rate edged up 0.1 points from a month earlier to a record-high of 66.0 percent in May, beating forecasts of 65.8 percent. Meantime, the employment to population ratio rose 0.1 points to 62.6, the highest since October 2008.

The underemployment rate gained 0.1 points to 8.6 percent in May while the underutilisation rate remained steady at 13.7 percent.

Seasonally adjusted monthly hours worked in all jobs decreased by 5.9 million hours, or 0.3 percent, to 1,775.0 million hours.


Thursday June 06 2019
Australia Trade Surplus Smallest in 3 Months
Australian Bureau of Statistics l Chusnul Ch Manan | chusnul@tradingeconomics.com

Australia's trade surplus slightly narrowed to AUD 4.87 billion in April 2019 from a downwardly revised of AUD 4.89 billion in the previous month, and below market consensus of AUD 5.1 billion surplus. This was the smallest trade surplus since January, as exports rose 2 percent month-over-month while imports increased at a faster 3 percent.

Exports rose 2 percent month-over-month to AUD 40.43 billion in April. Sales of non-rural goods increased 3 percent to AUD 26.40 billion, driven by metal ores and minerals (16 percent), metals excluded non-monetary gold (8 percent), other manufactures (4 percent), other non-rural (9 percent), and goods procured in ports by carries (5 percent). Additionally, sales of non-monetary gold jumped 20 percent to AUD 1.67 billion. Also, exports of services went up 1 percent to AUD 8.23 billion, boosted by travel (1 percent). Meantime, net exports of goods under merchanting surged 73 percent to AUD 19 million. In contrast, sales of rural goods fell 2 percent to AUD 4.12 billion, due to other rural (-5 percent).

Imports increased 3 percent to AUD 35.55 billion, as purchases of consumption goods rose 3 percent to AUD 8.93 billion, mainly food and beverages, mainly for consumption (3 percent), non-industrial transport equipment (6 percent), and textiles, clothing and footwear (9 percent). In addition, imports of capital goods increased 5 percent to AUD 6.60 billion, mainly driven by industrial transports equipment n.e.s (19 percent), ADP equipment (2 percent). Also, imports of intermediate and other merchandise goods went up 4 percent to AUD 11.26 billion, in particular fuels and lubricants (4 percent), parts for transport equipment (10 percent), other parts for capital goods (9 percent), and processed industrial supplies (4 percent). Conversely, purchases of services slightly fell to AUD 8.35 billion, dragged down by transport (-0.5 percent). Also, purchases of non-monetary gold fell 9 percent to AUD 410 million.

Considering the first four months of the year, the trade surplus surged to AUD 19.27 billion from AUD 4.67 billion in the corresponding period of the prior year.


Wednesday June 05 2019
Australia Q1 GDP Growth Below Forecasts
ABS l Rida Husna | rida@tradingeconomics.com

The Australian economy advanced a seasonally adjusted 0.4 percent in the first quarter of 2019, accelerating from a 0.2 percent expansion in the previous period but missing market consensus of 0.5 percent. A rise in government spending and a rebound in exports offset a slowdown in household consumption and a decline in fixed investment.

Government spending rose 0.8 percent (vs 2 percent in Q4), led by national non-defense (2.4 percent), national government consumption (1.4 percent) and state and local government consumption (0.4 percent). Meanwhile, household spending slowed to 0.3 percent from 0.4 percent in the last quarter of 2018, reflecting a reduced spending on recreation and culture (-0.5 percent), hotels, cafes and restaurants (-0.4 percent) and clothing and footwear (-0.6 percent). In contrast, expenditure increased in insurance and other financial services (0.6 percent), health (0.7 percent), electricity, gas and other fuel (1.8 percent) and food (0.3 percent). 

Gross fixed capital formation shrank 0.7 percent (vs -1 percent in Q4), due to private investment (-1 percent) driven by ownership transfer costs (-13.0 percent) reflecting the slowing housing market, while gains were recorded in non-dwelling construction (2.1 percent). On the other hand, public investment grew 0.4 percent, led by state and local general government (3 percent), partially offset by national general government (-4.8 percent) and state and local public corporations (-3.7 percent).

Total inventories went up AUD 460 million following a rise of AUD 1,048 million in the prior period, driven by retail trade and manufacturing inventories. 

Exports of goods and services went up 1 percent (vs -0.5 percent in Q4), as sales of goods advanced 0.7 percent, boosted by rural goods (6.5 percent) which was partially offset by non-rural goods (-2.5 percent) and sales of services increased 2 percent. Imports of goods and services fell 0.1 percent (vs 0.4 pct in Q4), mainly due to lower purchases of services (-1.4 percent). Imports of goods rose 0.3 percent, of which consumption (3 percent) and capital goods (1.2 percent) while intermediate (-2.7 percent).

By industry, output rose faster for wholesale trade (0.9 percent vs 0.8 percent in Q4), financial and insurance services (1.2 percent vs 0.1 percent), administrative & support services (1.7 percent vs 0.4 percent), and other services (1.8 percent vs 0.2 percent). Additionally, output rebound in manufacturing (0.7 percent vs -0.7 percent); and electricity, gas, water and waste services (1.2 percent vs -1.3 percent). Also, output shrank less for agriculture, forestry and fishing (-0.2 percent vs -4.4 percent); construction (-0.9 percent vs -2 percent); accommodation and food services (-0.2 percent vs -0.4 percent); and rental, hiring and real estate (-0.4 percent vs -0.6 percent).Meanwhile, growth eased in mining (0.1 percent vs 1.5 percent); transport, postal and warehousing (0.2 percent vs 1.3 percent); information media and telecommunications (0.7 percent vs 2.4 percent); public administration (0.6 percent vs 2.4 percent); and healthcare and social assistance (1.2 percent vs 2.2 percent). In addition, education advanced 0.5 percent, the same pace as in previous period.

Through the year to the first quarter, the economy advanced by 1.8 percent, the weakest growth rate since the Global Financial Crisis, after a 2.3 percent expansion in the last quarter of 2018.




Tuesday June 04 2019
RBA Cuts Cash Rate to Fresh Record Low
RBA l Rida Husna | rida@tradingeconomics.com

The Reserve Bank of Australia lowered the cash rate by 25 basis points to a new record low of 1.25 percent at its June meeting, as widely expected. It is the first cut in borrowing cost since August 2016, aiming to support employment growth and to achieve progress towards the inflation target range.

Excerpt from the statement by the governor, Philip Lowe: 

The outlook for the global economy remains reasonable, although the downside risks stemming from the trade disputes have increased. Growth in international trade remains weak and the increased uncertainty is affecting investment intentions in a number of countries. In China, the authorities have taken steps to support the economy, while addressing risks in the financial system. In most advanced economies, inflation remains subdued, unemployment rates are low and wages growth has picked up.

The central scenario remains for the Australian economy to grow by around 2¾ per cent in 2019 and 2020. This outlook is supported by increased investment in infrastructure and a pick-up in activity in the resources sector, partly in response to an increase in the prices of Australia's exports. The main domestic uncertainty continues to be the outlook for household consumption, which is being affected by a protracted period of low income growth and declining housing prices. Some pick-up in growth in household disposable income is expected and this should support consumption.

Employment growth has been strong over the past year, labour force participation has been increasing, the vacancy rate remains high and there are reports of skills shortages in some areas. Despite these developments, there has been little further inroads into the spare capacity in the labor market of late. The unemployment rate had been steady at around 5 per cent for some months, but ticked up to 5.2 per cent in April. The strong employment growth over the past year or so has led to a pick-up in wages growth in the private sector, although overall wages growth remains low. A further gradual lift in wages growth is expected and this would be a welcome development. Taken together, these labour market outcomes suggest that the Australian economy can sustain a lower rate of unemployment.

The recent inflation outcomes have been lower than expected and suggest subdued inflationary pressures across much of the economy. Inflation is still however anticipated to pick up, and will be boosted in the June quarter by increases in petrol prices. The central scenario remains for underlying inflation to be 1¾ per cent this year, 2 per cent in 2020 and a little higher after that.

The adjustment in established housing markets is continuing, after the earlier large run-up in prices in some cities. Conditions remain soft, although in some markets the rate of price decline has slowed and auction clearance rates have increased. Growth in housing credit has also stabilised recently. Credit conditions have been tightened and the demand for credit by investors has been subdued for some time. Mortgage rates remain low and there is strong competition for borrowers of high credit quality.

Today's decision to lower the cash rate will help make further inroads into the spare capacity in the economy. It will assist with faster progress in reducing unemployment and achieve more assured progress towards the inflation target. The board will continue to monitor developments in the labour market closely and adjust monetary policy to support sustainable growth in the economy and the achievement of the inflation target over time.


Thursday May 16 2019
Australia Jobless Rate Rises to 8-Month High of 5.2%
ABS l Rida Husna | rida@tradingeconomics.com

Australia's seasonally adjusted unemployment rate edged up to 5.2 percent in April 2019 from an upwardly revised 5.1 percent in the previous month and slightly above market expectations of 5.1 percent. It was the highest jobless rate since August last year, as the economy added 28,400 jobs while the number of unemployed increased by 21,200.

The number of unemployed rose by 21,200 to 703,900 in April. People looking for full-time work advanced 16,600 to 490,900 and those looking for only part-time work went up 4,600 to 212,900. Male unemployment increased by 11,400 and female unemployment went up by 9,800.

Employment went up 28,400 to 12,822,900 in April, easily beating market consensus of a 14,000 gain and after an upwardly revised 27,661 increase in March. Part-time employed persons went up 34,700 to 4,030,200, while full-time employed persons fell 6,300 to 8,792,700

The participation rate rose 0.2 points from a month earlier to 65.8 percent in April, slightly higher than forecasts of 65.7 percent. Meantime, the employment to population ratio was unchanged at 62.4 percent.

The underemployment rate rose 0.3 points to 8.5 percent in April. 

Seasonally adjusted monthly hours worked in all jobs increased by 2.5 million hours, or 0.1 percent, to 1,788.5 million hours.


Tuesday May 07 2019
Australia Leaves Monetary Policy Unchanged
RBA l Rida Husna | rida@tradingeconomics.com

The Reserve Bank of Australia kept the cash rate at a record low of 1.5 percent at its May meeting, extending record period of policy inaction and defying speculation that it may ease monetary policy following a lower-than-expected inflation rate in the first quarter of the year. Policymakers were confident 2019 headline inflation would be around 2 percent supported by the recent increase in oil prices, while the underlying inflation is projected to be around 1.75 percent in 2019 and 2 percent in 2020. The Committee added that there was still spare capacity in the economy and that a further improvement in the labour market was likely to be needed for inflation to be consistent with the target.

Excerpt from the statement by the governor, Philip Lowe: 
The outlook for the global economy remains reasonable, although the risks are tilted to the downside. Growth in international trade has declined and investment intentions have softened in a number of countries. In China, the authorities have taken steps to support the economy, while addressing risks in the financial system. In most advanced economies, inflation remains subdued, unemployment rates are low and wages growth has picked up.

The central scenario is for the Australian economy to grow by around 2¾ percent in 2019 and 2020. This outlook is supported by increased investment in infrastructure and a pick-up in activity in the resources sector, partly in response to an increase in the prices of Australia's exports. The main domestic uncertainty continues to be the outlook for household consumption, which is being affected by a protracted period of low income growth and declining housing prices. Some pick-up in growth in household disposable income is expected and this should support consumption.

The Australian labour market remains strong. There has been a significant increase in employment, the vacancy rate remains high and there are reports of skills shortages in some areas. Despite these positive developments, there has been little further progress in reducing unemployment over the past six months. The unemployment rate has been broadly steady at around 5 percent over this time and is expected to remain around this level over the next year or so, before declining a little to 4¾ percent in 2021. The strong employment growth over the past year or so has led to some pick-up in wages growth, which is a welcome development. Some further lift in wages growth is expected, although this is likely to be a gradual process.

The adjustment in established housing markets is continuing, after the earlier large run-up in prices in some cities. Conditions remain soft and rent inflation remains low. Credit conditions for some borrowers have tightened over the past year or so. At the same time, the demand for credit by investors in the housing market has slowed noticeably as the dynamics of the housing market have changed. Growth in credit extended to owner-occupiers has eased over the past year. Mortgage rates remain low and there is strong competition for borrowers of high credit quality.

The inflation data for the March quarter were noticeably lower than expected and suggest subdued inflationary pressures across much of the economy. Over the year, inflation was 1.3 percent and, in underlying terms, was 1.6 percent. Lower housing-related costs and a range of policy decisions affecting administered prices both contributed to this outcome. Looking forward, inflation is expected to pick up, but to do so only gradually. The central scenario is for underlying inflation to be 1¾ per cent this year, 2 percent in 2020 and a little higher after that. In headline terms, inflation is expected to be around 2 percent this year, boosted by the recent increase in petrol prices.
The board judged that it was appropriate to hold the stance of policy unchanged at this meeting. In doing so, it recognised that there was still spare capacity in the economy and that a further improvement in the labour market was likely to be needed for inflation to be consistent with the target. Given this assessment, the Board will be paying close attention to developments in the labour market at its upcoming meetings.


Tuesday May 07 2019
Australia Trade Surplus Narrows in March
Australian Bureau of Statistics l Chusnul Ch Manan | chusnul@tradingeconomics.com

Australia's trade surplus narrowed to AUD 4.94 billion in March 2019 from an upwardly revised of AUD 5.14 billion in the previous month, but easily beating market consensus of AUD 4.25 billion surplus. Export fell 2 percent month-over-month to AUD 39.34 billion while imports dropped at a softer 1 percent to AUD 34.39 billion.

Exports dropped 2 percent month-over-month to AUD 39.34 billion in March. Sales of non-rural goods declined 1 percent to AUD 25.58 billion, dragged by metal ores and minerals (-12 percent) and other mineral fuels (-1 percent). Additionally, sales of non-monetary gold plunged 31 percent to AUD 1.39 billion. Meantime, exports of services remained steady at AUD 8.16 billion. In contrast, sales of rural goods rose 3 percent to AUD 4.20 billion, due to meat and meat preparations (8 percent) and wool and sheepskins (8 percent). Also, net exports of goods under merchanting increased 10 percent to AUD 11 million.

Imports shrank 1 percent to AUD 34.39 billion, as purchases of consumption goods fell 3 percent to AUD 8.61 billion, mainly non-industrial transport equipment (-15 percent), and textiles, clothing and footwear (-3 percent). In addition, imports of capital goods dropped 5 percent to AUD 6.15 billion, mainly driven by industrial transports equipment n.e.s (-26 percent); and machinery and industrial transport equipment (-10 percent). Also, purchases of services decreased 1 percent to AUD 8.37 billion, dragged down by travel (-3 percent) and transport (-1 percent). Conversely, imports of intermediate and other merchandise goods rose 2 percent to AUD 10.81 billion, in particular fuels and lubricants (12 percent), and other parts for capital goods (2 percent). Additionally, purchases of non-monetary gold went up 5 percent to AUD 450 million. 

Considering the first three month of the year, the trade surplus surged to AUD 14.74 billion from AUD 3.83 billion in the corresponding period of the prior year.